SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 3, 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 1-4415
Park Electrochemical Corp.
(Exact name of registrant as specified in its charter)
New York 11-1734643
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Dakota Drive, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 354-4100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
5.5% Convertible Subordinated Notes New York Stock Exchange
due 2006
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.
As of close
Title of Class Aggregate market value of business on
Common Stock, $285,876,459* May 3, 1996
$.10 par value
[cover page 1 of 2 pages]
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
Shares As of close
Title of Class outstanding of business on
Common Stock, 11,550,564 May 3, 1996
$.10 par value
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Shareholders to be held July
17, 1996 incorporated by reference into Part III of this Report.
=====================================================================
*Included in such amount are 1,060,612 shares of common stock valued
at $24.75 per share and held by Jerry Shore, the Registrant's Chief
Executive Officer and Chairman of the Board and a member of the
Registrant's Board of Directors.
[cover page 2 of 2 pages]
PART I
Item 1. Business.
General
Park Electrochemical Corp. ("Park"), through its subsidiaries
(unless the context otherwise requires, Park and its subsidiaries are
hereinafter called the "Company"), is primarily engaged in the design,
production and marketing of advanced electronic materials used to fabricate
complex multilayer printed circuit boards and other electronic interconnect
systems. The Company is also engaged in the design, manufacture and
marketing of plumbing hardware and industrial components. Park was founded
in 1954 by Jerry Shore, the Company's Chairman of the Board, Chief Executive
Officer and largest shareholder.
Unless otherwise indicated, all information in this Report has been
adjusted to give effect to the Company's two-for-one stock split in the form
of a stock dividend, which was distributed August 15, 1995 to shareholders
of record at the close of business on July 24, 1995.
The Company's business is divided into two industry segments:
(1) electronic materials and (2) plumbing and industrial components. See
Note 12 of the Notes to Consolidated Financial Statements included in Item
8 of this Report for information concerning the amounts of sales to
unaffiliated customers, operating profit, identifiable assets, depreciation
and amortization, and capital expenditures attributable to each of the
Company's industry segments during its last three fiscal years.
The sales, operating profit and identifiable assets of the Company's
foreign operations for the last three fiscal years are also set forth in
Note 12 of the Notes to Consolidated Financial Statements included in Item
8 of this Report. Such operations are conducted principally by the
Company's subsidiaries in the United Kingdom, France and Singapore. The
Company's foreign operations are subject to the impact of foreign currency
fluctuations. See Note 1 of the Notes to Consolidated Financial Statements
contained in Item 8 of this Report.
Electronic Materials Operations
The Company is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards and other electronic interconnect systems, such as backplanes, PC
cards and semiconductor packaging systems. The Company's multilayer printed
circuit materials include copper-clad laminates, prepregs and semi-finished
multilayer printed circuit board panels. The Company has long-term
relationships with its major customers, which include leading independent
printed circuit board fabricators and major electronic equipment manufac-
turers. Multilayer printed circuit boards and interconnect systems are used
in virtually all advanced electronic equipment to direct, sequence and
control electronic signals between semiconductor devices (such as micropro-
cessors and memory and logic devices) and passive components (such as
resistors and capacitors). Examples of end uses of the Company's printed
circuit materials range from supercomputers to laptops and from satellite
switching equipment to cellular phones. The Company has developed long-term
relationships with major customers as a result of its leading edge products,
extensive technical and engineering service support and responsive
manufacturing capabilities.
Park founded the modern day printed circuit industry in 1957 by
inventing a composite material consisting of an epoxy resin substrate
reinforced with fiberglass cloth which was laminated together with sheets of
thin copper foil. This epoxy-glass copper-clad laminate system is still
used to construct the large majority of today's advanced printed circuit
products. In 1962, the Company invented the first multilayer printed
circuit materials system used to construct multilayer printed circuit
boards. The Company also pioneered vacuum lamination and many other
manufacturing technologies used in the industry today. The Company believes
it is one of the industry's technological leaders.
As a result of its leading edge products, extensive technical and
engineering service support and responsive manufacturing capabilities, the
Company expects to continue to take advantage of several industry trends.
These trends include the increasing global demand for electronic products
and technology, the increasing complexity of electronic products, the
increasingly advanced electronic materials required for interconnect
performance and manufacturability, the consolidation of the printed circuit
board fabrication industry and the time-to-market and time-to-volume
pressures requiring closer collaboration with materials suppliers.
The Company believes that it is one of the world's largest
manufacturers of multilayer printed circuit materials and the market leader
in North America and Southeast Asia. It also believes that it is the only
significant independent manufacturer of multilayer printed circuit materials
in the world. The Company was the first manufacturer in the printed circuit
materials industry to establish manufacturing presences in the three major
global markets of North America, Europe and Asia, with facilities estab-
lished in Europe in 1969 and Southeast Asia in 1986.
Industry Background
The electronic materials manufactured by the Company and its
competitors are used to construct and fabricate complex multilayer printed
circuit boards and other advanced electronic interconnect systems.
Multilayer printed circuit materials consist of prepregs and copper-clad
laminates, as well as semi-finished multilayer printed circuit board panels.
Prepregs are chemically and electrically engineered plastic resin systems
which are impregnated into and reinforced by a specially manufactured
fiberglass cloth product or other woven or non-woven reinforcing fiber.
This insulating dielectric substrate is .030 inch to .002 inch in thickness
or less in some cases. These resins systems are usually based upon an epoxy
chemistry. One or more plies of prepreg are laminated together to form an
insulating dielectric substrate to support the copper circuitry patterns of
a multilayer printed circuit board. Copper-clad laminates consist of one or
more plies of prepreg laminated together with specialty thin copper foil
laminated on the top and bottom. Copper foil is specially formed in thin
sheets which may vary from .0030 inch to .0002 inch in thickness and
normally have a thickness of .0014 inch or .0007 inch. The Company supplies
both copper-clad laminates and prepregs to its customers, which use these
products as a system to construct multilayer printed circuit boards.
The printed circuit board fabricator processes copper-clad laminates
to form the inner layers of a multilayer printed circuit board. The
fabricator photoimages these laminates with a dry film or liquid photo-
resist. After development of the photoresist, the copper surfaces of the
laminate are etched to form the circuit pattern. The fabricator then
assembles these etched laminates by inserting one or more plies of
dielectric prepreg between each of the inner layer etched laminates and also
between an inner layer etched laminate and the outer layer copper plane, and
then laminating the entire assembly in a press. Prepreg serves as the
insulator between the multiple layers of copper circuitry patterns found in
the multilayer circuit board. When the multilayer configuration is
laminated, these plies of prepreg form an insulating dielectric substrate
supporting and separating the multiple inner and outer planes of copper
circuitry. The fabricator drills vertical through holes or vias in the
multilayer assembly and then plates the through holes or vias to form
vertical conductors between the multiple layers of circuitry patterns.
These through holes or vias combine with the conductor paths on the
horizontal circuitry planes to create a three-dimensional electronic
interconnect system. The outer two layers of copper foil are then imaged
and etched to form the finished multilayer printed circuit board. The
completed multilayer board is a three-dimensional interconnect system with
electronic signals traveling in the horizontal planes of multiple layers of
copper circuitry patterns, as well as the vertical plane through the plated
holes or vias.
The global market for advanced electronic products is growing as a
result of technological change and frequent new product introductions. This
growth is principally attributable to increased sales and more complex
electronic content of newer products, such as cellular phones, pagers,
personal computers and portable computing devices, and greater use of
electronics in other products, such as automobiles. Further, large, almost
completely untapped markets for advanced electronics equipment have emerged
in such areas as India and China and other areas of the Pacific Rim.
Semiconductor manufacturers have introduced successive generations
of more powerful microprocessors and memory and logic devices. Electronic
equipment manufacturers have designed these advanced semiconductors into
more compact and often portable products. High performance computing
devices in these smaller portable platforms require greater reliability,
closer tolerances, higher component and circuit density and increased
overall complexity. As a result, the interconnect industry has developed
smaller, lighter, faster and more cost-effective interconnect systems,
including advanced multilayer printed circuit boards and new types of
semiconductor packaging systems such as ball-grid arrays and multi-chip
modules.
Advanced interconnect systems require higher technology printed
circuit materials to insure the performance of the electronic system and to
improve the manufacturability of the interconnect platform. The growth of
the market for more advanced printed circuit materials has outpaced the
market growth for standard printed circuit materials in recent years.
Printed circuit board fabricators and electronic equipment manufacturers
require advanced printed circuit materials that have increasingly higher
temperature tolerances and more advanced electrical properties in order to
support high speed computing in a miniaturized and often portable environ-
ment.
With the very high density circuit demands of miniaturized high
performance interconnect systems, the uniformity, purity, consistency,
performance predictability, dimensional stability and production tolerances
of printed circuit materials have become successively more critical. High
density printed circuit boards and interconnect systems often involve higher
layer count multilayer circuit boards where the multiple planes of circuitry
and dielectric insulating substrates are very thin (dielectric insulating
substrate layers may be .002 inch or less) and the circuit line and space
geometries in the circuitry plane are very narrow (.003 inch or less). In
addition, advanced surface mount interconnect systems are typically designed
with very small pad sizes and very narrow plated through holes or vias which
electrically connect the multiple layers of circuitry planes. High density
interconnect systems must utilize printed circuit materials whose dimension-
al characteristics and purity are consistently manufactured to very high
tolerance levels in order for the printed circuit board fabricator to attain
and sustain acceptable production yields.
Shorter product life cycles and competitive pressures have induced
electronic equipment manufacturers to bring new products to market and
increase production volume to commercial levels more quickly. These trends
have highlighted the importance of front-end engineering of electronic
products and have increased the level of collaboration among system
designers, fabricators and printed circuit materials suppliers. As the
complexity of electronic products increases, materials suppliers must
provide greater technical support to interconnect systems fabricators on a
timely basis regarding manufacturability and performance of new materials
systems.
Products and Services
The Company produces a broad line of advanced printed circuit
materials used to fabricate complex multilayer printed circuit boards and
other electronic interconnect systems, including backplanes, PC cards and
semiconductor packaging systems. The Company also manufactures semi-
finished multilayer printed circuit board panels for a select group of
customers. The Company's diverse advanced printed circuit materials product
line is designed to address a wide array of end-use applications and
performance requirements.
The Company's product line has been developed internally and through
long-term development projects with its principal suppliers. The Company
focuses its research and development efforts on developing industry leading
product technology to meet the most demanding product requirements and has
designed its product line with a focus on the higher performance, higher
technology end of the materials spectrum. All of the Company's existing
electronic materials products have been introduced since 1990.
Most of the Company's research and development expenditures are
attributable to the efforts of its electronic materials operations. In
response to the rapid technological changes in the electronic materials
business, these expenditures on research and product development have
increased over the past several years.
The Company's products include high-temperature modified epoxies,
bismaleimide triazine epoxies ("BT epoxy"), non-MDA polyimides, enhanced
polyimides, high performance epoxy Thermount materials ("Thermount" is a
registered trademark of E.I. duPont de Nemours & Co.), cyanate esters and
PTFE materials.
In March 1996, the Company entered into a technical license
agreement with Mitsubishi Gas Chemical Company, Inc. of Japan ("MGC"), which
grants the Company a license to use MGC's technology relating to the
production of BT/epoxy copper-clad laminate materials which are specially
designed for the manufacture of advanced semiconductor packages, such as
plastic ball grid arrays, plastic pin grid arrays and other advanced high
density plastic laminate chip packages. The Company expects to supply
these new plastic laminate semiconductor packaging materials to certain
leading packaging and semiconductor manufacturing companies in the North
American and European markets. Plastic laminate chip packages are gaining
wider acceptance in the semiconductor industry for advanced chip packaging
applications, particularly for high pin count and fast clock speed
semiconductor packages.
In addition to prepreg and copper-clad laminate printed circuit
materials products, the Company also manufactures semi-finished multilayer
printed circuit board panels as a value-added service for a limited number
of its key customers. Production of the Company's semi-finished multilayer
product involves several additional manufacturing steps beginning with the
photoimaging and etching of the copper-clad laminate product into the
circuitry patterns specified by the customer. These etched laminates form
the inner layers of the multilayer circuit board. The etched inner layers
are then laminated into a multilayer assembly with insulating dielectric
prepreg inserted between the multiple etched inner layers and outer layer
copper planes. The outer planes of copper foil are left in unprocessed
"blank" form and the product is delivered to the customer at this stage in
the process. The fabricator customer then drills and plates the through
holes or vias and finishes the outer layers of circuitry patterns to
complete the product.
The Company has developed long-term relationships with select
customers through broad-based technical support and service, as well as
manufacturing proximity and responsiveness at multiple levels of the
customer's organization. The Company focuses on developing a thorough
understanding of its customer's business, product lines, processes and
technological challenges. The Company seeks customers which are industry
leaders committed to maintaining and improving their industry leadership
positions and which are committed to long-term relationships with their
suppliers. The Company also seeks business opportunities with the more
advanced printed circuit fabricators and electronic equipment manufacturers
which are interested in the full value of products and services provided by
their suppliers. The Company believes its proactive and timely support in
assisting its customers with the integration of advanced materials
technology into new product designs further strengthens its relationships
with its customers.
The Company's emphasis on service and close relationship with its
customers is reflected in its relatively short lead times. The Company has
designed its manufacturing processes and service organizations to provide
the customer with its printed circuit materials products on a just-in-time
basis.
The Company has located its advanced printed circuit materials
manufacturing operations in strategic locations intended to serve specific
regional markets. By situating its facilities in close geographical
proximity to its customers, the Company is able to rapidly adjust its
manufacturing processes to meet customers' new requirements and respond
quickly to customers' technical needs. The Company has full technical
staffs based at each of its manufacturing locations, which allows the rapid
dispatch of technical personnel to a customer's facility to assist the
customer in quickly solving design, process, production or manufacturing
problems.
Customers and End Markets
The Company's customers for its advanced electronic materials
include the leading independent printed circuit board fabricators and major
electronic equipment manufacturers in the computer, telecommunications,
transportation, aerospace and instrumentation industries located throughout
the United States, Canada, Europe and the Far East. The Company seeks to
align itself with the larger, more technologically-advanced and better
capitalized independent printed circuit board fabricators and major
electronic equipment manufacturers which are industry leaders committed to
maintaining and improving their industry leadership positions and to
building long-term relationships with their suppliers. The Company's
selling effort typically involves several stages and relies on the talents
of Company personnel at different levels, from management to sales personnel
and quality engineers. The Company's strategy emphasizes the use of
multiple facilities established in market areas in close proximity to its
customers.
During the Company's 1996 fiscal year, more than 10% of the
Company's sales were made to a major domestic manufacturing concern. This
concern has purchased a significant amount of product from the Company for
more than three years, and the Company believes its relations with this
customer are strong and that this customer will continue to make significant
purchases of printed circuit materials product from the Company in the
immediate future. Although the Company's electronic materials segment is
not dependent on this single customer, the loss of this customer could have
a material adverse effect on the business of this segment. Although no
other single customer accounted for 10% or more of total sales of the
Company for the 1996 fiscal year and the electronic materials segment is not
dependent on any other single customer, the loss of a major customer or of
a group of this segment's customers could have a material adverse effect
upon the business of this segment.
The Company's electronic materials segment's products are marketed
by sales personnel in industrial centers in the United States, Europe and
the Far East. Such personnel include both salaried employees and indepen-
dent sales representatives who work on a commission basis.
Manufacturing
The process for manufacturing multilayer printed circuit materials
is capital intensive and requires sophisticated equipment as well as clean-
room environments. The key steps in the Company's manufacturing process
include: the impregnation of specially designed fiberglass cloth with a
resin system and the partial curing of that resin system; the assembling of
laminates consisting of single or multiple plies of prepreg and copper foil
in a clean-room environment; the vacuum lamination of the copper-clad
assemblies under simultaneous exposure to heat, pressure and vacuum; and the
finishing of the laminates to customer specifications.
Prepreg is manufactured in a treater. A treater is a roll-to-roll
continuous machine which sequences specially designed fiberglass cloth or
other reinforcement fabric into a resin tank and then sequences the resin-
coated cloth through a series of ovens which partially cure the resin system
into the cloth. This partially cured product or prepreg is then sheeted or
paneled and packaged by the Company for sale to customers, or used by the
Company to construct its copper-clad laminates.
The Company manufactures copper-clad laminates by first setting up
in a clean room an assembly of one or more plies of prepreg stacked together
with a sheet of specially manufactured copper foil on the top and bottom of
the assembly. This assembly, together with a large quantity of other
laminate assemblies, is then inserted into a large, multiple opening vacuum
lamination press. The laminate assemblies are then laminated under
simultaneous exposure to heat, pressure and vacuum. After the press cycle
is complete, the laminates are removed from the press and sheeted, paneled
and finished to customer specifications. The product is then inspected and
packaged for shipment to the customer.
The Company manufactures multilayer printed circuit materials at
eight fully integrated facilities located in the United States, Europe and
Southeast Asia. The Company opened its California facility in 1965, its
United Kingdom facility in 1969, its first Arizona and France facilities in
1984, its Singapore facility in 1986 and its second Arizona and France
facilities in 1992. The Company services the North American market
principally through its United States manufacturing facilities, the European
market principally through its manufacturing facilities in the United
Kingdom and France, and the Asian market principally through its Singapore
manufacturing facility. The Company has located its manufacturing
facilities in its important markets. By maintaining full technical and
engineering staffs at each of its manufacturing facilities, the Company is
able to deliver fully-integrated products and services on a timely basis.
During the 1996 fiscal year, the Company expanded its New York State
operations to increase its production capacity for advanced printed circuit
materials principally for the United States market and expanded its Tempe,
Arizona operations to provide enhanced capability and capacity to produce
high density, semi-finished multilayer panels and interconnect systems. It
commenced commercial operations at these expanded facilities during the
early part of its 1997 fiscal year. The Company is considering further
expansions of its electronic materials operations in one or more additional
locations during the 1997 fiscal year, particularly in the United States and
Southeast Asia.
All of the Company's multilayer printed circuit materials manufac-
turing facilities are used for manufacturing, engineering and product
development, except for the facility located in Lannemezan, France, which is
principally a product research and development facility. All of the
Company's printed circuit materials manufacturing facilities are ISO 9002
certified.
Materials and Sources of Supply
The principal materials used in the manufacture of the Company's
electronic products are specially manufactured copper foil, fiberglass cloth
and synthetic reinforcements, and specially formulated resins and chemicals.
The Company attempts to develop and maintain close working relationships
with suppliers of those materials who have dedicated themselves to complying
with the Company's stringent specifications and technical requirements.
While the Company's philosophy is to work with a limited number of
suppliers, the Company has identified alternate sources of supply for each
of these materials. However, there are a limited number of qualified
suppliers of these materials, substitutes for these materials are not
readily available, and, in the recent past, the industry has experienced
shortages in the market for certain of these materials. While the Company
has not experienced significant problems in the delivery of these materials
and considers its relationships with its suppliers to be strong, a
disruption of the supply of material from one of the Company's principal
suppliers or an inability to obtain essential materials could materially
adversely affect the business, financial condition and results of operations
of the Company. Significant increases in the cost of materials purchased by
the Company could also have a material adverse effect on the Company's
business, financial condition and results of operations if the Company were
unable to pass such price increases through to its customers.
Competition
The multilayer printed circuit materials industry is characterized
by intense competition and ongoing consolidation. The Company's competitors
are primarily divisions or subsidiaries of very large, diversified
multinational manufacturers which are substantially larger and have greater
financial resources than the Company and, to a lesser degree, smaller
regional producers. Because the Company focuses on the higher technology
segment of the electronic materials market, technological innovation,
quality and service, as well as price, are significant competitive factors.
The Company believes that there are approximately ten significant
multilayer printed circuit materials manufacturers in the world and many of
these competitors have or are developing significant presences in the three
major global markets of North America, Europe and Asia. The Company
believes that the multilayer printed circuit materials industry is rapidly
becoming more global and that the remaining smaller regional manufacturers
will find it increasingly difficult to remain competitive. The Company
believes that it is currently one of the world's largest multilayer printed
circuit materials manufacturers and the market leader in North America and
Southeast Asia. The Company further believes it is the only significant
independent manufacturer of multilayer printed circuit materials in the
world today.
The markets in which the Company's electronic materials operations
compete are characterized by rapid technological advances, and the Company's
position in these markets depends largely on its continued ability to
develop technologically advanced and highly specialized products. Although
the Company believes it is an industry technology leader and directs a
significant amount of its time and resources toward maintaining its
technological competitive advantage, there is no assurance that the Company
will be technologically competitive in the future, or that the Company will
continue to develop new products that are technologically competitive.
Plumbing and Industrial Component Operations
The Company's plumbing and industrial component segment is comprised
of its plumbing, advanced composite, and industrial adhesive tape busi-
nesses. The Company markets plumbing hardware products which it designs and
manufactures typically from chrome and brass plated zinc and plastic. The
Company also markets brass cast and plastic plumbing hardware products and
components. These products are sold to original equipment manufacturers,
hardware and plumbing wholesalers and home improvement centers. The
Company's plumbing hardware products are designed for low cost and ease of
installation and repair and also for water and energy conservation. The
advanced composite business' products are utilized by the defense, aerospace
and other commercial industries. The Company's specialty industrial
adhesive tape business produces tapes and bonding films for a variety of
applications including joining industrial components together.
Marketing and Customers
The Company's plumbing and industrial component customers,
substantially all of which are located in the United States, include OEMs,
hardware and plumbing wholesalers, home improvement centers and manufactur-
ers in the defense and aerospace industry. All of such products are
marketed by sales personnel including both salaried employees and
independent sales representatives who work on a commission basis. Zinc and
plastic plumbing hardware products are manufactured and assembled at the
Company's facilities in Grand Rapids and Comstock Park, Michigan. The
Company's brass cast plumbing hardware products are designed by the Company
and manufactured by a prominent Mexican faucet manufacturer under a long-
term contract between the Company and this manufacturer. The Company's
advanced composite manufacturing facility is located in Waterbury,
Connecticut. Holyoke, Massachusetts is the site of the Company's specialty
adhesive tape business.
While no single plumbing and industrial component customer accounted
for 10% or more of the Company's total sales during the last fiscal year,
the loss of a major customer or of a group of some of the largest customers
of the plumbing and industrial component segment could have a material
adverse effect upon this segment.
Manufacturing and Sources of Supply
The Company designs and manufactures its plumbing hardware to its
own specifications and to the specifications of original equipment
manufacturers, using combinations of materials and product designs that are
developed by its personnel. The Company's product development efforts
relating to its plumbing hardware business operations are directed toward
the development of new decorative plumbing hardware product designs and new
materials to be used in the manufacture of plumbing products. This requires
market research, industrial design, engineering and testing for ease of
installation and durability. The Company usually combines chrome-plated
zinc and plastic moldings for its products.
The principal materials used in the manufacture of the Company's
plumbing hardware products consist of zinc, plastics, plating materials, and
other component parts. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for these materials are not
readily available, the Company has experienced no difficulties in obtaining
such materials. The Company purchases brass castings from one supplier and
the Company has a long-term contract with this supplier.
In addition, the Company designs and manufactures its advanced
composites and industrial tapes to its own specifications and to the
specifications of its customers. Product development efforts are devoted
toward the conforming of the Company's advanced composites to the specifica-
tions of, and the obtaining of approvals from, the Company's customers. The
materials used in the manufacture of these industrial components include
chemicals, films, resins, fiberglass, plastics, and other fabricated
materials and adhesives. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for many of these materials
are not readily available, the Company has experienced no difficulties in
obtaining such materials.
Competition
The Company has many competitors in the plumbing and industrial
component segment, including some major corporations which have substantial-
ly greater financial resources than the Company. The Company competes for
industrial components business on the basis of product performance and
development, product qualification and approval, the ability to manufacture
and deliver products in accordance with customers' needs and requirements,
and price. The Company's plumbing hardware business can be affected by
fluctuations in the housing industry.
Backlog
The Company records an item as backlog when it receives a purchase
order specifying the number of units to be purchased, the purchase price,
specifications and other customary terms and conditions. At May 3, 1996,
the unfilled portion of all purchase orders believed to be firm was
approximately $18,917,000, compared to $20,381,000 at April 28, 1995.
Backlog of the Company's two industry segments at May 3, 1996, compared to
April 28, 1995, was as follows:
May 3, 1996 April 28, 1995
Electronic Materials $ 9,747,000 $11,614,000
Plumbing and Industrial
Components 9,170,000 8,767,000
Total $18,917,000 $20,381,000
Various factors contribute to the size of the Company's backlog.
Accordingly, the foregoing information may not be indicative of the
Company's results of operations for any period subsequent to the fiscal year
ended March 3, 1996.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto.
In the Company's opinion, some of these patents and trademarks are important
to its products. Generally, however, the Company does not believe that an
inability to obtain new, or to defend existing, patents and trademarks would
have a material adverse effect on the Company.
Employees
At March 3, 1996, the Company had approximately 2,240 employees. Of
these employees, 1,890 were engaged in the Company's electronic material
operations, 330 in its plumbing and industrial components operations and 20
consisted of executive personnel and general administrative staff.
Approximately 8% of the Company's employees, all of whom are engaged in the
plumbing and industrial components operations, are subject to collective
bargaining agreements. Management considers its labor relations to be
satisfactory.
Environmental Matters
The Company is subject to stringent environmental regulation of its
use, storage, treatment and disposal of hazardous materials and the release
of emissions into the environment. The Company believes that it currently
is in substantial compliance with the applicable federal, state and local
environmental laws and regulations to which it is subject and that
continuing compliance therewith will not have a material effect on its
capital expenditures, earnings or competitive position. The Company does
not currently anticipate making material capital expenditures for environ-
mental control facilities for its existing manufacturing operations during
the remainder of its current fiscal year or its succeeding fiscal year.
However, developments, such as the enactment or adoption of even more
stringent environmental laws and regulations, could conceivably result in
substantial additional costs to the Company.
The Company and certain of its subsidiaries have been named by the
Environmental Protection Agency (the "EPA") or a comparable state agency
under the Comprehensive Environmental Response, Compensation and Liability
Act (the "Superfund Act") or similar state law as potentially responsible
parties for a number of hazardous waste disposal sites or other potentially
contaminated areas. Under the Superfund Act and similar state laws, all
parties who may have contributed any waste to a hazardous waste disposal
site or contaminated area identified by the EPA or comparable state agency
are jointly and severally liable for the cost of cleanup unless the EPA or
such agency agrees otherwise. Generally, these sites are locations at which
numerous persons disposed of hazardous waste. In the case of the Company's
subsidiaries, generally the waste was removed from their manufacturing
facilities and disposed at the waste sites by various companies which
contracted with the subsidiaries to provide waste disposal services.
Neither the Company nor any of its subsidiaries have been accused of or
charged with any wrongdoing or illegal acts in connection with any such
sites. The Company believes it maintains an effective and comprehensive
environmental compliance program. Management believes the ultimate
disposition of known environmental matters will not have a material adverse
effect upon the Company.
Item 2. Properties.
The following chart indicates the significant properties owned and
leased by the Company, the industry segment which uses the properties, and
the location and size of each such property. All of such properties, except
for the Lake Success, New York property, are used principally as manufactur-
ing, warehouse and assembly facilities.
<TABLE>
<CAPTION> Size
Owned or (Square
Location Leased Use Footage)
<S> <C> <C> <C>
Lake Success, NY Leased Executive Offices 7,000
Walden, NY Owned Electronic Materials 51,000
Newburgh, NY Leased Electronic Materials 57,000
Fullerton, CA Leased Electronic Materials 95,000
Anaheim, CA Leased Electronic Materials 26,000
Tempe, AZ Leased Electronic Materials 86,000
Tempe, AZ Leased Electronic Materials 38,000
Tempe, AZ Leased Electronic Materials 15,000
Mirebeau, France Owned Electronic Materials 81,000
Lannemezan, France Owned Electronic Materials 29,000
Skelmersdale, England Owned Electronic Materials 54,000
Chippenham, England Leased Electronic Materials 5,000
Singapore Leased Electronic Materials 48,000
Singapore Leased Electronic Materials 10,000
Grand Rapids, MI Owned Plumbing Components 165,000
Comstock Park, MI Leased Plumbing Components 39,000
Holyoke, MA Leased Industrial Components- 24,000
Specialty Adhesive
Tapes and Films
Waterbury, CT Leased Industrial Components- 100,000
Advanced Composites
</TABLE>
The Company believes its facilities and equipment to be in good
condition and reasonably suited and adequate for its current needs.
Item 3. Legal Proceedings.
(a) There are no material pending legal proceedings to which the
Company is a party or to which any of its properties is subject.
(b) No material pending legal proceeding was terminated during the
fiscal quarter ended March 3, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant.
Name Title Age
Jerry Shore Chairman of the Board, Chief 70
Executive Officer and a Director
Brian E. Shore President and a Director 44
E. Phillip Smoot Executive Vice President and a 58
Director
Paul R. Shackford Vice President and Chief 46
Financial Officer, Secretary and
Treasurer
Jerry Shore has served the Company in the capacities stated above
for more than the past five years.
Brian Shore has served as a Director of the Company for more than
the past five years. Brian Shore was elected a Vice President of the
Company in January 1993, Executive Vice President in May 1994 and President
effective March 4, 1996, the first day of the Company's current fiscal year.
Brian Shore also served as General Counsel of the Company from April 1988
until April 1994.
Mr. Smoot has served the Company in the capacities stated above for
more than the past five years.
Mr. Shackford became Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company in August 1995. Prior to that time,
he served as Executive Vice President, Chief Financial Officer and Assistant
Secretary of Equitable Bag Co., Inc. ("Equitable") from January 1993 and
also as Treasurer from June 1993 and as Secretary from June 1994. From
January 1991 to December 1992, he was Vice President-Finance and Chief
Financial Officer of Equitable.
There are no family relationships between the directors or executive
officers of the Company, except that Brian Shore is the son of Jerry Shore.
The term of office of each executive officer of the Company expires
upon the election and qualification of his successor.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder Matters.
The Company's Common Stock is listed and trades on the New York
Stock Exchange (trading symbol PKE). (The Common Stock also trades on the
Midwest Stock Exchange.) The following table sets forth, for each of the
quarterly periods indicated, the high and low sale prices for the Common
Stock as reported on the New York Stock Exchange Composite Tape and
dividends declared on the Common Stock, all as adjusted for the two-for-one
stock split in the form of a stock dividend distributed August 15, 1995 to
shareholders of record at the close of business on July 24, 1995.
For the Fiscal Year Stock Price Dividends
Ended March 3, 1996 High Low Declared
First Quarter 20 1/16 16 7/8 $.06
Second Quarter 31 1/2 17 1/8 $.06
Third Quarter 34 1/8 28 $.08
Fourth Quarter 37 7/8 28 3/8 $.08
For the Fiscal Year Stock Price Dividends
Ended February 26, 1995 High Low Declared
First Quarter 15 7/16 12 15/16 $.04
Second Quarter 17 3/8 12 13/16 $.04
Third Quarter 17 7/8 14 11/16 $.06
Fourth Quarter 17 11/16 13 5/8 $.06
As of May 3, 1996, there were 2,451 holders of record of Common
Stock.
The Company expects, for the immediate future, to continue to pay
regular cash dividends.
Item 6. Selected Financial Data.
The following selected consolidated financial data of Park and its
subsidiaries is qualified by reference to, and should be read in conjunction
with, the consolidated financial statements, related notes, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere herein. Insofar as such consolidated financial
information relates to the five fiscal years ended March 3, 1996 and is as
of the end of such periods, it is derived from the consolidated financial
statements for such periods and as of such dates audited by Ernst & Young
LLP, independent Certified Public Accountants, for the three fiscal years
ended March 3, 1996 and Deloitte & Touche LLP, independent Certified Public
Accountants, for all prior periods presented. The consolidated financial
statements as of March 3, 1996 and February 26, 1995 and for the three years
ended March 3, 1996, together with the auditors' reports for the three years
ended March 3, 1996, appear elsewhere in this Report.
Item 6
<TABLE>
<CAPTION>
Fiscal Year Ended
Mar. 3, Feb. 26, Feb. 27, Feb. 28, Mar. 1,
1996 1995 1994 1993 1992
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS INFORMATION:
Net sales $312,966 $253,022 $208,410 $175,176 $165,287
Cost of sales 242,655 196,917 168,175 149,145 141,717
Gross profit 70,311 56,105 40,235 26,031 23,570
Selling, general and administrative
expenses 35,236 29,995 25,930 22,865 21,250
Profit from operations 35,075 26,110 14,305 3,166 2,320
Other income (expense):
Interest and other income, net 2,285 1,822 947 1,967 2,252
Interest expense (96) (431) (2,407) (2,058) (2,649)
Total other income (expense) 2,189 1,391 (1,460) (91) (397)
Earnings before income taxes 37,264 27,501 12,845 3,075 1,923
Income tax provision 12,366 10,156 4,783 810 608
Net earnings $ 24,898 $ 17,345 $ 8,062 $ 2,265 $ 1,315
Earnings per share:
Primary $ 2.11 $ 1.59 $ 1.01 $ .25 $ .15
Fully diluted $ 2.10 $ 1.52 $ .84 $ .25 $ .15
Weighted average number of common
and common equivalent shares
outstanding:
Primary 11,794 10,858 7,986 9,068 9,056
Fully diluted 11,860 11,570 11,454 9,068 9,056
Cash dividends per common share $ .28 $ .20 $ .16 $ .16 $ .16
BALANCE SHEET INFORMATION:
Working capital $160,965 $ 55,035 $ 45,867 $ 45,811 $ 51,737
Total assets 298,975 162,051 140,750 129,009 130,734
Long-term debt 100,000 23 32,861 33,957 33,439
Stockholders' equity 134,427 112,048 61,454 60,700 62,275
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Park is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards and other electronic interconnect systems, such as backplanes, PC
cards and semiconductor packaging systems. The Company's customers for its
advanced printed circuit materials include leading independent circuit board
fabricators and large electronic equipment manufacturers in the computer,
telecommunications, transportation, aerospace and instrumentation indus-
tries. The Company's electronic materials operations accounted for more
than 86% of net sales worldwide and more than 95% of operating profit in
each of the last three fiscal years. The Company's foreign electronic
materials operations accounted for an average of approximately 24% of net
sales worldwide for the 1994 and 1995 fiscal years and approximately 29% for
the fiscal year ended March 3, 1996.
The Company's sales growth during the last three fiscal years has
been led by strong growth in sales by its United States and Singapore
electronic materials operations. More recently, increased sales by the
Company's European operations have also contributed to this growth. The
Company's ongoing efforts to expand its higher technology, higher margin
product lines have contributed to the growth of the Company's sales of
electronic materials during this period.
The Company has also improved the manufacturing efficiencies of its
electronic materials business since the beginning of its 1993 fiscal year.
These improvements have been the result of consolidating functions, more
effective capacity utilization, reducing manufacturing waste and improving
yields, improving the overall productivity of the Company's workforce, and
redesigning product in order to reduce material costs.
Sales volume of the Company's electronic materials segment has
increased during each of the last three fiscal years. However, growth of
the Company's electronic materials business was constrained during the 1996
fiscal year by the Company's available manufacturing capacity. During the
1996 fiscal year, the Company expanded its manufacturing capacity in
Newburgh, New York and Tempe, Arizona, and commenced commercial operations
in both locations during the early part of the 1997 fiscal year. The
Company is considering further expansions of its electronic materials
operations, particularly in the United States and Southeast Asia.
Fiscal Year 1996 Compared with Fiscal Year 1995:
The Company's electronic materials business was responsible for the
improvement in the Company's results of operations for the fiscal year ended
March 3, 1996. The United States and Asian markets for sophisticated
printed circuit materials were strong during the 1996 fiscal year, and the
Company's electronic materials operations located in these regions performed
well as a result. While the market in Europe for sophisticated printed
circuit materials has not been as strong as in the United States or Asia, it
improved over the prior fiscal year, and the Company's European operations
benefitted from this improvement.
During the 1996 fiscal year, the Company's electronic materials
business incurred raw material cost increases and additional costs
associated with the Company's ongoing major expansion projects in Newburgh,
New York and Tempe, Arizona. In addition, the electronic materials business
experienced temporary inefficiencies caused by operating certain facilities
at levels in excess of their designed manufacturing capacity. These cost
increases and temporary operating inefficiencies adversely affected the
Company's gross margins. However, the Company was able to offset such
effects by improving its overall operating efficiencies, in part, by
consolidating functions, by continuing to reduce manufacturing waste and
improve yields, and by improving the overall productivity of its workforce.
In addition, the Company redesigned product in order to reduce material
costs. The Company was also able to offset these cost increases and
inefficiencies through its ongoing efforts to expand its higher technology,
higher margin product lines.
Operating results of the Company's plumbing and industrial components
business were not significant during the 1996 fiscal year.
Results of Operations
Sales for the fiscal year ended March 3, 1996 increased 24% to $313.0
million from $253.0 million for the fiscal year ended February 26, 1995.
Sales of the electronic materials business for the 1996 fiscal year were
$274.9 million, or 88% of total sales worldwide, compared with $218.3
million, or 86% of total sales worldwide, for the 1995 fiscal year. This
26% increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped and an increase in sales of
higher technology products. Sales of the plumbing and industrial components
business for the 1996 fiscal year increased 10% to $38.1 million from $34.7
million for the 1995 fiscal year.
The Company's foreign electronic materials operations accounted for
$91.7 million of sales, or 29% of the Company's total sales worldwide,
during the 1996 fiscal year compared with $61.9 million of sales, or 24% of
total sales worldwide, during the 1995 fiscal year. Sales by the Company's
foreign operations during the 1996 fiscal year increased 48% from the 1995
fiscal year. While sales by each of the Company's foreign operations were
higher in the 1996 fiscal year compared with the 1995 fiscal year, the
increase in sales by foreign operations was principally due to an increase
in sales by the Company's Singapore operations. The expansion of the
Company's Singapore manufacturing facility was completed at the end of the
Company's 1995 fiscal year.
The gross margin for the Company's worldwide operations was 22.5%
during the 1996 fiscal year compared with 22.2% for the 1995 fiscal year.
The improvement in the gross margin was attributable to the increase in
sales volume over the prior fiscal year, the continuing growth in sales of
higher technology, higher margin products and improved operating efficien-
cies. This improvement was offset in part by higher raw material costs,
costs associated with the start-up of the new facilities in Newburgh, New
York and Tempe, Arizona, and inefficiencies caused by operating certain
facilities at levels in excess of designed capacity.
Selling, general and administrative expenses, measured as a percentage
of sales, were 11.3% during the 1996 fiscal year compared with 11.9% during
the 1995 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales.
For the reasons set forth above, profit from operations for the 1996
fiscal year increased 34% to $35.1 million from $26.1 million for the 1995
fiscal year.
Interest and other income, principally investment income, increased
25% to $2.3 million for the 1996 fiscal year from $1.8 million for the 1995
fiscal year. The increase in investment income was attributable to the
increase in the prevailing interest rates during the current year and to the
increase in cash available for investment. The Company's investments were
primarily short-term taxable instruments and government securities.
Interest expense for the 1996 fiscal year was minimal compared with $0.4
million during the 1995 fiscal year. During the first quarter of the prior
fiscal year, the Company called its 7.25% Convertible Subordinated
Debentures for redemption; as a result, nearly all of such Debentures
outstanding at the beginning of the prior fiscal year were converted into
Common Stock during that fiscal year's first quarter, which eliminated the
Company's long-term debt and the associated interest expense.
The Company's effective income tax rate for the 1996 fiscal year was
33.2% compared with 36.9% for the 1995 fiscal year. This decrease in the
effective tax rate was primarily the result of favorable foreign tax rate
differentials.
Net earnings for the 1996 fiscal year increased 44% to $24.9 million
from $17.3 million for the 1995 fiscal year. Primary and fully diluted
earnings per share increased to $2.11 and $2.10, respectively, for the 1996
fiscal year from $1.59 and $1.52, respectively, for the 1995 fiscal year.
This increase in net earnings and earnings per share was primarily
attributable to the increase in the profit from operations, the effects of
the conversion of the Debentures and the lower effective tax rate.
Fiscal Year 1995 Compared with Fiscal Year 1994:
The electronic materials business in the United States and Singapore
continued its strong growth in the fiscal year ended February 26, 1995 which
significantly improved the Company's operating results during that fiscal
year. As a result of this growth, enhanced operating efficiencies and
continued emphasis on higher technology products, the operating profits of
the electronic materials business were sufficient to offset the impact of
rising raw material costs and pricing pressures. The Company's European
electronic materials operations also improved during the 1995 fiscal year as
a result of strengthening in the European market for the Company's products.
The Company focused its capital investments during the 1995 fiscal
year principally on its electronic materials business for the purpose of
enhancing capability and expanding capacity. The Company also continued to
invest in its electronic materials business' leading edge technology and
product development efforts. The expansion of the Company's Singapore
facility was completed at the end of the Company's 1995 fiscal year.
During the second half of the 1995 fiscal year, the Company's plumbing
hardware business returned to modest profitability. The Company's advanced
composite business' performance improved during the 1995 fiscal year under
its new management team as it refocused its products towards non-military
applications, such as wireless communications. The Company's specialty
adhesive tape business performed well during the 1995 fiscal year, with
increased sales and earnings due in part to focusing towards high-
technology, high-margin products.
Results of Operations
Sales for the fiscal year ended February 26, 1995 increased 21% to
$253.0 million from $208.4 million for the fiscal year ended February 27,
1994. Sales of the electronic materials operations for the 1995 fiscal year
were $218.3 million, or 86% of total sales worldwide, compared with $182.6
million, or 88% of total sales worldwide, for the 1994 fiscal year. This
20% increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped. Sales of the plumbing and
industrial component business for the 1995 fiscal year increased 34% to
$34.7 million from $25.8 million for the 1994 fiscal year, principally due
to increased volume.
The Company's foreign electronic materials operations accounted for
$61.9 million of sales, or 24% of the Company's total sales worldwide,
during the 1995 fiscal year compared with $46.5 million, or 22% of total
sales worldwide, during the 1994 fiscal year. Sales by the Company's
foreign operations during the 1995 fiscal year increased 33% from the 1994
fiscal year. While sales by the Company's foreign operations were higher in
the 1995 fiscal year at each of the Company's foreign operations compared
with the 1994 fiscal year, the increase in sales by foreign operations was
principally due to increased sales of the Company's Singapore operations.
The gross margin for the Company's worldwide operations was 22.2% for
the 1995 fiscal year compared with 19.3% for the 1994 fiscal year. The
gross margin improved as a result of operating efficiencies, attributable in
part to the increase in sales volume, more effective capacity utilization
and reduced manufacturing waste.
Selling, general and administrative expenses, measured as a percentage
of sales, were 11.9% during the 1995 fiscal year compared with 12.4% during
the 1994 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales.
For the reasons set forth above, profit from operations for the 1995
fiscal year increased 83% to $26.1 million from $14.3 million for the 1994
fiscal year.
Interest and other income, principally investment income, increased
92% to $1.8 million during the 1995 fiscal year from $0.9 million during the
1994 fiscal year. This increase in investment income occurred because the
average rate of interest earned by the Company during the 1995 fiscal year
was higher than during the 1994 fiscal year and because the Company had more
cash available for investment. The Company's investments were primarily
short-term taxable instruments and government securities. During the 1995
fiscal year, interest expense decreased 82% to $0.4 million from $2.4
million during the 1994 fiscal year. This expense was attributable to
interest on the Company's 7.25% Convertible Subordinated Debentures and, to
a lesser extent, on loans carried by certain of the Company's foreign
subsidiaries. The decrease in this expense was due to the call for
redemption of such Debentures, nearly all of which were converted into
Common Stock by May 31, 1994.
The Company's effective income tax rate for the 1995 fiscal year was
36.9% compared with 37.2% for the 1994 fiscal year. The effective tax rate
for the 1995 fiscal year decreased due to the impact of foreign net
operating losses without tax benefit and favorable foreign tax rate
differentials, offset in part by a reduction in general business credits.
The Company's net earnings increased 115% in the 1995 fiscal year to
$17.3 million from $8.1 million during the 1994 fiscal year. Primary and
fully diluted earnings per share increased to $1.59 and $1.52, respectively,
for the 1995 fiscal year compared with $1.01 and $.84, respectively, for the
1994 fiscal year. The increase in net earnings and earnings per share was
attributable principally to the increase in profit from operations and the
effects of the conversion of Debentures into Common Stock.
Liquidity and Capital Resources:
At March 3, 1996, the Company's cash and temporary investments were
$143.2 million compared with $45.9 million at February 26, 1995, the end of
the Company's 1995 fiscal year. The increase in the Company's cash and
investment position at March 3, 1996 was attributable to the receipt of
$96.8 million from the sale of the Company's 5.5% Convertible Subordinated
Notes due 2006 (the "Notes") on February 28, 1996 and cash provided from
operating activities in excess of investments in property, plant and
equipment, as discussed below. The Company's working capital was $161.0
million at March 3, 1996 compared with $55.0 million at February 26, 1995.
The increase at March 3, 1996 compared with February 26, 1995 was due to the
proceeds from the sale of the Notes and increases in receivables and
inventories, offset in part by higher payables. The increase in receivables
at March 3, 1996 compared with February 26, 1995 was due principally to
increased sales; the increase in inventories for the same period was due to
increased sales and to higher purchases of raw materials to ensure adequate
supply of such materials. The Company's current ratio (the ratio of current
assets to current liabilities) was 3.8 to 1 at March 3, 1996 compared with
2.3 to 1 at February 26, 1995.
During the 1996 fiscal year, the Company generated funds from
operations of $27.4 million and expended $24.5 million for the purchase of
property, plant and equipment. Cash provided by net earnings before
depreciation and amortization of $34.7 million was reduced by a net increase
in non-cash working capital items, resulting in $27.4 million of cash
provided from operating activities. A significant portion of the 1996
fiscal year's capital expenditures related to installation of additional
capacity at new electronic materials facilities in Newburgh, New York and
Tempe, Arizona. These expansions will increase the Company's capacity and
capability for the production of sophisticated printed circuit materials.
Expenditures for property, plant and equipment were $24.5 million, $17.5
million and $9.6 million in the 1996, 1995 and 1994 fiscal years, respec-
tively. The Company expects the level of capital expenditures in the 1997
fiscal year to be in the same range as in the 1996 fiscal year. The Company
is currently considering further expansions of its electronic materials
operations, particularly in the United States and Southeast Asia.
At March 3, 1996, the Company's only long-term debt was the Notes.
The Company believes its financial resources will be sufficient, for the
foreseeable future, to provide for continued investment in property, plant
and equipment and for general corporate purposes. Such resources, including
the proceeds from the Notes, would also be available for appropriate
acquisitions and other expansions of the Company's business.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a new
"safe harbor" for forward-looking statements to encourage companies to
provide prospective information about their companies without fear of
litigation so long as those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
projected in the statement. Accordingly, the Company hereby identifies the
following important factors which could cause the Company's actual results
to differ materially from any such results which might be projected,
forecast, estimated or budgeted by the Company in forward-looking state-
ments.
. The Company's business is dependent on certain aspects of the
electronics industry, which is a cyclical industry and which has
experienced recurring downturns. The downturns, such as occurred in
the first quarter of the Company's fiscal year ending March 2, 1997,
can be unexpected and have often reduced demand for, and prices of,
electronic materials.
. The Company's operating results are affected by a number of factors,
including various factors beyond the Company's control. Such factors
include economic conditions in the electronics industry, the timing of
customer orders, product prices, process yields, the mix of products
sold and maintenance-related shutdowns of facilities. Operating
results also can be influenced by development and introduction of new
products and the costs associated with the start-up of new facilities.
. Rapid technological advances in semiconductors and electronic
equipment have placed rigorous demands on the electronic materials
manufactured by the Company and used in printed circuit board
production. The Company's operating results will be affected by the
Company's ability to maintain and increase its technological and
manufacturing capability and expertise in this rapidly changing
industry.
. The electronic materials industry is intensely competitive and the
Company competes worldwide in the market for materials used in the
production of complex multilayer printed circuit boards. The
Company's competitors are substantially larger and have greater
financial resources than the Company, and the Company's operating
results will be affected by its ability to maintain its competitive
position in the industry.
. There are a limited number of qualified suppliers of the principal
materials used by the Company in its manufacture of electronic
materials products. Substitutes for these products are not readily
available, and in the recent past there have been shortages in the
market for certain of these materials.
. The Company's customer base is concentrated, in part, because the
Company's business strategy has been to develop long-term relation-
ships with a select group of customers. During the Company's fiscal
year ended March 3, 1996, the Company's ten largest customers
accounted for approximately 43% of net sales. The Company expects
that sales to a relatively small number of customers will continue to
account for a significant portion of its net sales for the foreseeable
future. A loss of one or more of such key customers could affect the
Company's profitability.
. The Company typically does not obtain long-term purchase orders or
commitments. Instead, it relies primarily on continual communication
with its customers to anticipate the future volume of purchase orders.
A variety of conditions, both specific to the individual customer and
generally affecting the customer's industry, can cause a customer to
reduce or delay orders previously anticipated by the Company.
. The Company, from time to time, is engaged in the expansion of certain
of its manufacturing facilities for electronic materials. The
anticipated costs of such expansions cannot be determined with
precision and may vary materially from those budgeted. In addition,
such expansions will increase the Company's fixed costs. The
Company's future profitability depends upon its ability to utilize its
manufacturing capacity in an effective manner.
. The Company's business is capital intensive and, in addition, the
introduction of new technologies could substantially increase the
Company's capital expenditures. In order to remain competitive the
Company must continue to make significant investments in capital
equipment and expansion of operations. This may require that the
Company continue to be able to access capital on terms acceptable to
the Company.
. The Company may acquire businesses, product lines or technologies that
expand or complement those of the Company. The integration and
management of an acquired company or business may strain the Company's
management resources and technical, financial and operating systems.
In addition, implementation of acquisitions can result in large one-
time charges and costs. A given acquisition, if consummated, may
materially affect the Company's business, financial condition and
results of operations.
. The Company's international operations are subject to risks, including
unexpected changes in regulatory requirements, exchange rates, tariffs
and other barriers, political and economic instability and potentially
adverse tax consequences.
. A portion of the sales and costs of the Company's international
operations are denominated in currencies other than the U.S. dollar
and may be affected by fluctuations in currency exchange rates.
. The company's success is dependant upon its relationship with key
management and technical personnel.
. The Company's future success depends in part upon its intellectual
property which the Company seeks to protect through a combination of
contract provisions, trade secret protections, copyrights and patents.
. The Company's production processes require the use, storage, treatment
and disposal of certain materials which are considered hazardous under
applicable environmental laws and the Company is subject to a variety
of regulatory requirements relating to the handling of such materials
and the release of emissions and effluents into the environment.
Other possible developments, such as the enactment or adoption of
additional environmental laws, could result in substantial costs to
the Company.
. The market price of the Company's securities can be subject to
fluctuations in response to quarter to quarter variations in operating
results, changes in analysts' earnings estimates, market conditions in
the electronic materials industry, as well as general economic
conditions and other factors external to the Company.
. The Company's results could be affected by changes in the Company's
accounting policies and practices or changes in the Company's
organization, compensation and benefit plans, or changes in the
Company's material agreements or understandings with third parties.
Item 8. Financial Statements and Supplementary Data.
The Company's Financial Statements begin on the next page.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York
We have audited the accompanying consolidated balance sheets of Park
Electrochemical Corp. and subsidiaries as of March 3, 1996 and February 26,
1995 and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended March
3, 1996. Our audits also included the financial statement schedule listed
in the Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Park Electrochemical Corp. and subsidiaries as of March 3, 1996
and February 26, 1995 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended March 3,
1996, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
April 18, 1996
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
<CAPTION>
March 3, February 26,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 75,970 $ 30,803
Marketable securities (Note 2) 67,243 15,107
Accounts receivable, less allowance for
doubtful accounts of $1,857 and $2,490,
respectively 42,821 33,172
Inventories (Note 3) 27,712 16,181
Prepaid expenses and other current
assets (Note 7) 4,026 3,057
Total current assets 217,772 98,320
Property, plant and equipment, at cost, less
accumulated depreciation and amortization
(Note 4) 76,439 61,427
Other assets (Notes 7 and 10) 4,764 2,304
Total $298,975 $162,051
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 35,924 $ 24,616
Accrued liabilities (Note 5) 16,941 15,844
Income taxes payable 3,942 2,825
Total current liabilities 56,807 43,285
Long-term debt (Note 6) 100,000 23
Deferred income taxes (Note 7) 6,324 5,243
Deferred pension liability (Note 10) 1,417 1,452
Commitments and contingencies (Notes 10 and 11)
Stockholders' equity (Notes 6, 8, 9 and 10):
Preferred stock, $1 par value per share--
authorized, 500,000 shares; issued, none - -
Common stock, $.10 par value per share--
authorized, 30,000,000 and 15,000,000
shares, respectively; issued, 13,580,018 shares 1,358 1,358
Additional paid-in capital 50,958 50,728
Retained earnings 93,892 72,216
Currency translation adjustments 1,328 1,545
Pension liability adjustment (1,001) (972)
Unrealized losses on investments (30) (139)
146,505 124,736
Less treasury stock, at cost, 2,033,704 and
2,136,416 shares, respectively (12,078) (12,688)
Total stockholders' equity 134,427 112,048
Total $298,975 $162,051
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
March 3, February 26, February 27,
1996 1995 1994
<S> <C> <C> <C>
Net sales $312,966 $253,022 $208,410
Cost of sales 242,655 196,917 168,175
Gross profit 70,311 56,105 40,235
Selling, general and administrative
expenses 35,236 29,995 25,930
Profit from operations 35,075 26,110 14,305
Other income (expense):
Interest and other income, net 2,285 1,822 947
Interest expense (Note 6) (96) (431) (2,407)
Total other income (expense) 2,189 1,391 (1,460)
Earnings before income taxes 37,264 27,501 12,845
Income tax provision (Note 7) 12,366 10,156 4,783
Net earnings $ 24,898 $ 17,345 $ 8,062
Earnings per share (Note 9):
Primary $2.11 $1.59 $1.01
Fully diluted $2.10 $1.52 $ .84
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share amounts)
<CAPTION> Additional Currency Pension Unrealized
Common Stock Paid-in Retained Translation Liability Losses on Treasury Stock
Shares Amount Capital Earnings Adjustments Adjustment Investments Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 28, 1993 10,354,902 $1,036 $16,732 $50,312 $ 109 $ (398) $ - 1,270,922 $ (7,091)
Net earnings 8,062
Exchange rate changes 68
Change in pension
liability adjustment (750)
Stock options exercised 184 (87,250) 499
Conversion of debentures 52,748 5 528
Cash dividends ($.16 per
share) (1,276)
Purchase of treasury stock 1,117,612 (6,566)
Balance, February 27, 1994 10,407,650 1,041 17,444 57,098 177 (1,148) - 2,301,284 (13,158)
Net earnings 17,345
Exchange rate changes 1,368
Change in pension
liability adjustment 176
Market revaluation (139)
Stock options exercised 696 (212,700) 1,220
Conversion of debentures 3,172,368 317 32,588
Cash dividends ($.20 per
share) (2,227)
Purchase of treasury stock 47,832 (750)
Balance, February 26, 1995 13,580,018 1,358 50,728 72,216 1,545 (972) (139) 2,136,416 (12,688)
Net earnings 24,898
Exchange rate changes (217)
Change in pension
liability adjustment (29)
Market revaluation 109
Stock options exercised 230 (102,726) 610
Cash dividends ($.28 per
share) (3,222)
Purchase of treasury stock 14 -
Balance, March 3, 1996 13,580,018 $1,358 $50,958 $93,892 $1,328 $(1,001) $ (30) 2,033,704 $(12,078)
<FN>
See notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
March 3, February 26, February 27,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 24,898 $ 17,345 $ 8,062
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 9,849 8,951 8,733
Provision for doubtful accounts receivable (495) (44) (3)
(Gain) loss on sale of marketable securities (38) 17 (61)
Provision for deferred income taxes 1,425 355 (52)
Accrued interest in connection with
Debenture conversion - 389 -
Other, net 64 (89) 282
Changes in operating assets and liabilities:
(Increase) in accounts receivable (9,277) (3,536) (2,773)
(Increase) decrease in inventories (11,671) 249 (1,908)
(Increase) decrease in prepaid expenses
and other current assets (1,057) (77) 89
(Increase) decrease in other assets (42) 25 164
Increase (decrease) in accounts payable 11,409 (620) 5,265
Increase in accrued liabilities 1,108 3,719 3,247
Increase in income taxes payable 1,260 277 1,007
Net cash provided by operating activities 27,433 26,961 22,052
Cash flows from investing activities:
Purchases of property, plant and equipment, net (24,510) (17,523) (9,627)
Purchases of marketable securities (74,881) (11,161) (200,404)
Proceeds from sales of marketable securities 22,952 19,827 200,309
Net cash used in investing activities (76,439) (8,857) (9,722)
Cash flows from financing activities:
Convertible notes offering 100,000 - -
Convertible notes issuance costs (3,250) - -
Repayments of borrowings - (84) (64)
Dividends paid (3,222) (2,227) (1,276)
Proceeds from exercise of stock options 697 1,499 683
Purchase of treasury stock - (750) (6,566)
Other 4 (100) -
Net cash provided by (used in)
financing activities 94,229 (1,662) (7,223)
Increase in cash and cash equivalents
before effect of exchange rate changes 45,223 16,442 5,107
Effect of exchange rate changes on
cash and cash equivalents (56) 226 22
Increase in cash and cash equivalents 45,167 16,668 5,129
Cash and cash equivalents, beginning of year 30,803 14,135 9,006
Cash and cash equivalents, end of year $ 75,970 $ 30,803 $ 14,135
<FN>
See notes to consolidated financial statements.
</TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended March 3, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Park Electrochemical Corp. ("Park"), through its subsidiaries
(collectively, the "Company"), is a leading global designer and producer
of advanced electronic materials used to fabricate complex multilayer
printed circuit boards and other electronic interconnect systems. The
Company's multilayer printed circuit board materials include copper-clad
laminates, prepregs and semi-finished multilayer printed circuit board
panels. Multilayer printed circuit boards and interconnect systems are
used in virtually all advanced electronic equipment to direct, sequence
and control electronic signals between semiconductor devices and passive
components. Examples of end uses of the Company's printed circuit board
materials range from supercomputers to laptops and from satellite
switching equipment to cellular phones.
a. Principles of Consolidation - The consolidated financial statements
include the accounts of Park and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions
have been eliminated.
b. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
c. Accounting Period - The Company's fiscal year is the 52 or 53 week
period ending the Sunday nearest to the last day of February. The
1996, 1995 and 1994 fiscal years ended on March 3, 1996, February 26,
1995 and February 27, 1994, respectively. Fiscal 1996 included 53
weeks; fiscal 1995 and 1994 each included 52 weeks.
d. Marketable Securities - All marketable securities are classified as
available-for-sale and are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of
stockholders' equity. Realized gains and losses, amortization of
premiums and discounts, and interest and dividend income are included
in other income. The cost of securities sold is based on the specific
identification method.
e. Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
f. Depreciation and Amortization - Depreciation and amortization are
computed principally by the straight-line method over the estimated
useful lives of the related assets or, with respect to leasehold
improvements, the term of the lease, if shorter.
g. Deferred Charges - Costs incurred in connection with the issuance of
debt financing are deferred and included in other assets and
amortized, using the effective interest method, over the respective
debt repayment period.
h. Income Taxes - Deferred income taxes are provided for temporary
differences in the reporting of certain items, primarily depreciation,
for income tax purposes as compared with financial accounting
purposes.
United States ("U.S.") Federal income taxes have not been provided on
the undistributed earnings (approximately $17,600,000 at March 3,
1996) of the Company's foreign subsidiaries, since it is management's
practice and intent to reinvest such earnings in the operations of
these subsidiaries.
i. Stock Based Compensation - The Company grants to certain employees
stock options for a fixed number of shares with an exercise price
equal to the fair value of the shares at the date of grant. The
Company accounts for stock option grants in accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees," and,
accordingly, recognizes no compensation expense for such grants.
j. Foreign Currency Translation - Assets and liabilities of foreign
subsidiaries using currencies other than the U.S. dollar as their
functional currency are translated into U.S. dollars at year-end
exchange rates and income and expense items are translated at average
exchange rates for the period. Gains and losses resulting from
translation are recorded as currency translation adjustments in
stockholders' equity.
k. Consolidated Statements of Cash Flows - The Company considers all
money market securities and investments with maturities at the date of
purchase of 90 days or less to be cash equivalents.
Supplemental cash flow information:
<TABLE>
<CAPTION> Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ - $ 42,000 $2,352,000
Income taxes 9,701,000 9,712,000 3,960,000
</TABLE>
2. MARKETABLE SECURITIES
<TABLE>
The following is a summary of available-for-sale securities:
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
March 3, 1996:
U.S. Treasury and other
government securities $50,602,000 $32,000 $ 62,000 $50,572,000
U.S. corporate debt
securities 16,680,000 7,000 22,000 16,665,000
Total debt securities 67,282,000 39,000 84,000 67,237,000
Equity securities 6,000 - - 6,000
$67,288,000 $39,000 $ 84,000 $67,243,000
February 26, 1995:
U.S. Treasury and other
government securities $12,019,000 $ - $235,000 $11,784,000
U.S. corporate debt
securities 3,000,000 - 5,000 2,995,000
Total debt securities 15,019,000 - 240,000 14,779,000
Equity securities 303,000 25,000 - 328,000
$15,322,000 $25,000 $240,000 $15,107,000
</TABLE>
The Company adopted SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective February 28, 1994. The cumulative
effect of the adoption of SFAS No. 115 was not significant.
The gross realized gains on sales of available-for-sale securities
totalled $50,000 for 1996 and $76,000 for 1994, and the gross realized
losses totalled $12,000, $17,000 and $15,000 for 1996, 1995 and 1994,
respectively.
The amortized cost and estimated fair value of the debt and marketable
equity securities at March 3, 1996, by contractual maturity, are shown
below:
<TABLE>
<CAPTION> Estimated
Fair
Cost Value
<S> <C> <C>
Due in one year or less $56,917,000 $56,859,000
Due after one year through five years 10,365,000 10,378,000
67,282,000 67,237,000
Equity securities 6,000 6,000
$67,288,000 $67,243,000
</TABLE>
<TABLE>
3. INVENTORIES
<CAPTION>
March 3, February 26,
1996 1995
<S> <C> <C>
Raw materials $13,040,000 $ 5,215,000
Work-in-process 4,280,000 2,997,000
Finished goods 9,674,000 7,446,000
Manufacturing supplies 718,000 523,000
$27,712,000 $16,181,000
</TABLE>
<TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
<CAPTION>
March 3, February 26,
1996 1995
<S> <C> <C>
Land, buildings and improvements $ 27,054,000 $ 21,353,000
Machinery, equipment, furniture
and fixtures 121,661,000 103,822,000
148,715,000 125,175,000
Less accumulated depreciation
and amortization 72,276,000 63,748,000
$ 76,439,000 $ 61,427,000
</TABLE>
Depreciation and amortization expense relating to property, plant and
equipment amounted to $9,382,000, $8,501,000 and $8,188,000 for fiscal
1996, 1995 and 1994, respectively. Interest expense capitalized to
property, plant and equipment amounted to $109,000 for fiscal 1994.
<TABLE>
5. ACCRUED LIABILITIES
<CAPTION> March 3, February 26,
1996 1995
<S> <C> <C>
Payroll and commissions $ 5,040,000 $ 4,641,000
Taxes, other than income taxes 1,014,000 1,230,000
Other 10,887,000 9,973,000
$16,941,000 $15,844,000
</TABLE>
<TABLE>
6. LONG-TERM DEBT
<CAPTION> March 3, February 26,
1996 1995
<S> <C> <C>
5.5% Convertible Subordinated Notes $100,000,000 $ -
Other - 29,000
100,000,000 29,000
Less current portion (included
in accrued liabilities) - 6,000
$100,000,000 $23,000
</TABLE>
On February 28, 1996, the Company issued $100,000,000 principal amount
of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") with
interest payable semiannually on March 1 and September 1 of each year,
commencing September 1, 1996. The Notes are unsecured and subordinated
to other long-term debt and are convertible at the option of the holder
at any time prior to maturity, unless previously redeemed or
repurchased, into shares of the Company's common stock at $42.188 per
share, subject to adjustment under certain conditions. The Notes are
not redeemable at the option of the Company prior to March 1, 1999; at
any time on or after such date, the Notes will be redeemable at the
option of the Company, in whole or in part, initially at 102.75% of the
principal amount of such Notes redeemed and thereafter at prices
declining to 100% on March 1, 2001, together with accrued interest. At
March 3, 1996, the fair value of the Notes approximated the principal
amount of the Notes.
On June 12, 1986, the Company issued $35,000,000 principal amount of
7.25% Convertible Subordinated Debentures due 2006 (the "Debentures").
On and prior to May 31, 1994, $33,381,000 principal amount of Debentures
were converted into 3,225,116 shares of the Company's common stock and
$1,619,000 principal amount of Debentures were either purchased on the
open market or redeemed by the Company. If the conversion of the
Debentures, which were converted into common stock in fiscal 1995, had
occurred as of the beginning of the 1995 fiscal year, primary earnings
per share for fiscal 1995 would have approximated fully diluted earnings
per share for that period.
Foreign lines of credit totalled $5,400,000 at March 3, 1996, all of
which remains available to the subsidiaries.
7. INCOME TAXES
<TABLE>
The income tax provision includes the following:
<CAPTION>
Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $ 9,980,000 $ 8,798,000 $4,300,000
State and local 961,000 1,003,000 535,000
10,941,000 9,801,000 4,835,000
Deferred:
Federal 655,000 50,000 396,000
State and local 60,000 40,000 (145,000)
Foreign 710,000 265,000 (303,000)
1,425,000 355,000 (52,000)
$12,366,000 $10,156,000 $4,783,000
</TABLE>
The Company's effective income tax rate differs from the statutory U.S.
Federal income tax rate as a result of the following:
Fiscal Year
1996 1995 1994
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 1.8 2.5 2.0
Effect of foreign net operating
losses (.1) .5 4.6
Foreign tax rate differentials (4.5) (2.0) (.9)
General business credits (.2) (.5) (2.8)
Other, net 1.2 1.4 (.7)
33.2% 36.9% 37.2%
The Company has foreign net operating loss carryforwards of
approximately $16,800,000 which was primarily acquired through a
business combination, none of which relates to goodwill or other
intangible assets. Approximately $5,600,000 of the foreign net
operating loss carryforwards expire in varying amounts from fiscal 1997
through fiscal 1999; the remainder have an indefinite expiration.
At March 3, 1996 and February 26, 1995, current deferred tax assets of
$1,082,000 and $1,099,000, respectively, which are primarily
attributable to expenses not currently deductible for tax purposes, are
included in other current assets. Long-term deferred tax assets of $0
and $319,000 are net of valuation reserves of approximately $5,900,000
and $6,200,000 at March 3, 1996 and February 26, 1995, respectively,
which are primarily attributable to foreign net operating loss
carryforwards, and are included in other assets. The long-term deferred
tax liabilities consist primarily of temporary differences relating to
depreciation.
8. STOCKHOLDERS' EQUITY
a. Stock Split and Number of Authorized Shares - On July 12, 1995, the
Company's Board of Directors voted a two-for-one stock split in the
form of a 100% common stock dividend. The stock dividend was
distributed August 15, 1995, to shareholders of record on July 24,
1995. All share and per share data for prior periods have been
retroactively restated to reflect the stock split. In addition, on
July 12, 1995, the Company's stockholders approved an increase in
the number of authorized shares of common stock from 15,000,000 to
30,000,000 shares.
b. Stock Options - Under the stock option plans approved by the
Company's stockholders, key employees may be granted options to
purchase shares of common stock exercisable at prices not less than
the fair market value at the date of grant. Options become
exercisable 25% one year from the date of grant, with an additional
25% exercisable each succeeding year. The options expire 10 years
from the date of grant.
On July 14, 1992, the Company's stockholders approved the adoption
of a 1992 stock option plan (the "1992 Plan") pursuant to which
options to acquire 600,000 shares of the Company's common stock are
available for grant to key employees. The purchase price for common
stock to be acquired, upon the exercise of options, will be no less
than 100% of the fair market value of such stock at the date the
options are granted. The 1992 Plan will expire in March, 2002.
Information with respect to the Company's stock option plans
follows:
Range of Outstanding Options
Exercise Prices Granted Exercisable
Balance, February 28, 1993 $ 5.50 - $ 8.59 421,418 195,350
Options becoming exercisable 5.50 - 7.43 - 73,104
Granted 7.38 - 7.44 181,300 -
Exercised 5.50 - 8.59 (87,250) (87,250)
Cancelled 5.50 - 7.43 (24,000) (7,600)
Balance, February 27, 1994 5.50 - 8.59 491,468 173,604
Options becoming exercisable 5.50 - 7.44 - 112,682
Granted 13.13 - 17.00 139,600 -
Exercised 5.50 - 8.59 (112,700) (112,700)
Cancelled 5.50 - 13.13 (13,650) (6,526)
Balance, February 26, 1995 5.50 - 17.00 504,718 167,060
Options becoming exercisable 5.50 - 17.00 - 140,999
Granted 18.31 - 27.19 124,000 -
Exercised 5.50 - 13.13 (102,726) (102,726)
Cancelled 5.50 - 18.13 (6,374) (1,944)
Balance, March 3, 1996 $ 5.50 - $27.19 519,618 203,389
At March 3, 1996, 136,356 stock options were available for future
grant under the 1992 Plan.
c. Treasury Stock - The Company repurchased 14, 24 and 12 shares of its
common stock under authorizations of the Board of Directors during
fiscal 1996, 1995 and 1994, respectively.
On March 9, 1993, in a privately negotiated transaction with an
unaffiliated third party, the Company repurchased 1,117,600 shares of
its common stock for $6,566,000. The purchase was made outside the
Company's stock repurchase program.
Pursuant to a grant approved by the Company stockholders dated July
24, 1985, an officer of the Company exercised options on November 22,
1994 to purchase 100,000 shares of the Company's common stock. As
permissible under the terms of the option agreement, the exercise
price was paid by surrendering 47,808 shares of the Company's common
stock (which was held as a long-term investment by the officer) to
the Company, valued at $15.6875 per share, the market price at that
time.
d. Stockholders' Rights Plan - On February 2, 1989, the Company adopted
a stockholders' rights plan designed to protect stockholder interests
in the event the Company is confronted with coercive or unfair
takeover tactics. Under the terms of the plan, as amended on July
12, 1995, each share of the Company's common stock held of record on
February 15, 1989 or issued thereafter received one right. In the
event that a person has acquired, or has the right to acquire, 15%
(25% in certain cases) or more of the then outstanding common stock
of the Company (an "Acquiring Person") or tenders for 15% or more of
the then outstanding common stock of the Company, such rights will
become exercisable, unless the Board of Directors otherwise
determines. Upon becoming exercisable as aforesaid, each right will
entitle the holder thereof to purchase one one-hundredth of a share
of Series A Preferred Stock for $75, subject to adjustment (the
"Purchase Price"). In the event that any person becomes an Acquiring
Person, each holder of an unexercised exercisable right, other than
an Acquiring Person, shall have the right to purchase, at a price
equal to the then current Purchase Price, such number of shares of
the Company's common stock as shall equal the then current Purchase
Price divided by 50% of the then market price per share of the
Company's common stock. In addition, if after a person becomes an
Acquiring Person, the Company engages in any of certain business
combination transactions as specified in the plan, the Company will
take all action to ensure that, and will not consummate any such
business combination unless, each holder of an unexercised
exercisable right, other than an Acquiring Person, shall have the
right to purchase, at a price equal to the then current Purchase
Price, such number of shares of common stock of the other party to
the transaction for each right held by such holder as shall equal the
then current Purchase Price divided by 50% of the then market price
per share of such other party's common stock. The Company may redeem
the rights for a nominal consideration at any time, and after any
person becomes an Acquiring Person, but before any person becomes the
beneficial owner of 50% or more of the outstanding common stock of
the Company, the Company may exchange all or part of the rights for
shares of the Company's common stock at a one-for-one exchange ratio.
Unless redeemed, exchanged or exercised earlier, all rights expire on
July 12, 2005.
e. Reserved Common Shares - At March 3, 1996, 2,370,342 shares of common
stock were reserved for issuance upon conversion of the Notes and
655,974 shares were reserved for issuance upon exercise of stock
options.
9. EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
number of common and common equivalent shares outstanding during the
period.
The weighted average number of common and common equivalent shares used
to compute earnings per share are as follows:
<TABLE>
<CAPTION> Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Primary 11,794,000 10,858,000 7,986,000
Fully diluted 11,860,000 11,570,000 11,454,000
</TABLE>
10. EMPLOYEE BENEFIT PLANS
a. Profit Sharing Plan - Park and certain of its subsidiaries have a
noncontributory profit sharing retirement plan covering their regular
full-time employees. The plan may be modified or terminated at any
time, but in no event may any portion of the contributions revert to
the Company. The Company's contributions under the plan amounted to
$2,329,000, $2,297,000 and $1,513,000 for fiscal 1996, 1995 and 1994,
respectively. Contributions are discretionary and may not exceed the
amount allowable as a tax deduction under the Internal Revenue Code.
In addition, the Company sponsors a 401(k) savings plan; commencing
in fiscal 1996, the contributions of employees of certain
subsidiaries were partially matched by the Company, amounting to
$499,000 in fiscal 1996.
b. Pension Plans - A subsidiary of the Company has two pension plans
covering its union employees. The pension plans are noncontributory
defined benefit plans. The Company's funding policy is to contribute
annually the amounts necessary to satisfy applicable funding
standards.
In accordance with SFAS No. 87, the Company records its unfunded
pension liability related to its two defined benefit pension plans,
which amounted to $1,417,000 and $1,452,000 at March 3, 1996 and
February 26, 1995, respectively. The effect on the Company's
consolidated financial statements in recording the liability is to
recognize an asset (included in other assets) of $416,000 and
$480,000 at March 3, 1996 and February 26, 1995, respectively, and to
record a corresponding reduction of stockholders' equity of
$1,001,000 and $972,000 at those same dates.
Net pension cost includes the following components:
<TABLE>
<CAPTION>
Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Service cost--benefits earned
during the period $ 51,000 $ 65,000 $ 48,000
Interest cost on projected
benefit obligation 299,000 279,000 276,000
Return on plan assets--actual (400,000) (24,000) (40,000)
Net amortization and deferral 354,000 9,000 (39,000)
Net periodic pension cost $304,000 $329,000 $245,000
</TABLE>
<TABLE>
The funded status of the pension plans follows:
<CAPTION>
March 6, February 26,
1996 1995
<S> <C> <C>
Accumulated benefit obligation
(including vested benefit
obligation of $4,028,000
and $3,665,000, respectively) $4,043,000 $3,671,000
Projected benefit obligation $4,043,000 $3,671,000
Plan assets at fair value 2,616,000 1,997,000
Excess of projected benefit obligation
over plan assets 1,427,000 1,674,000
Unrecognized net loss (1,001,000) (976,000)
Unrecognized prior service cost (237,000) (268,000)
Unrecognized initial net obligation
being amortized over 15 years (179,000) (208,000)
Accrued pension liability $ 10,000 $ 222,000
</TABLE>
The projected benefit obligation was determined using an assumed
discount rate of 7.5% and 8.25% for fiscal 1996 and 1995,
respectively, and the assumed long-term rate of return on plan assets
was 8% for both fiscal years. Projected wage increases are not
applicable as benefits pursuant to the plans are based upon years of
service without regard to levels of compensation.
At March 3, 1996, plan assets were invested in U.S. government
securities, corporate debt securities, common stocks, mutual funds and
money market funds.
11. COMMITMENTS AND CONTINGENCIES
a. Lease Commitments - The Company conducts certain of its operations
from leased facilities which include several manufacturing plants,
warehouses and offices, and land leases. The leases on facilities are
for terms of up to 10 years, the latest of which expires in 2005.
Many of the leases contain renewal options for periods ranging from
one to ten years and require the Company to pay real estate taxes and
other operating costs. The latest land lease expiration is 2013 and
this land lease contains renewal options of up to 35 years.
These noncancelable operating leases have the following payment
schedule:
Fiscal Year Amount
1997 $ 1,893,000
1998 1,859,000
1999 1,434,000
2000 1,319,000
2001 1,030,000
Thereafter 3,681,000
$11,216,000
Rental expense, inclusive of real estate taxes and other costs,
amounted to $2,259,000, $2,226,000 and $2,142,000 for fiscal 1996,
1995 and 1994, respectively.
b. Environmental Contingencies - The Company and certain of its
subsidiaries have been named by the Environmental Protection Agency
(the "EPA") or a comparable state agency under the Comprehensive
Environmental Response, Compensation and Liability Act (the "Superfund
Act") or similar state law as potentially responsible parties for a
number of hazardous waste disposal sites or other potentially
contaminated areas. Under the Superfund Act and similar state laws,
all parties who may have contributed any waste to a hazardous waste
disposal site or contaminated area identified by the EPA or comparable
state agency are jointly and severally liable for the cost of cleanup
unless the EPA or such agency agrees otherwise. Generally, these
sites are locations at which numerous persons disposed of hazardous
waste. In the case of the Company's subsidiaries, generally the waste
was removed from their manufacturing facilities and disposed at waste
sites by various companies which contracted with the subsidiaries to
provide waste disposal services. Neither the Company nor any of its
subsidiaries have been accused of or charged with any wrongdoing or
illegal acts in connection with any such sites. The Company believes
it maintains an effective and comprehensive environmental compliance
program.
Included in cost of sales are charges for actual expenditures and
accruals, based on estimates, for certain environmental matters
described above. The Company accrues estimated costs associated with
known environmental matters, when such costs can be estimated.
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.
12. BUSINESS SEGMENTS
The Company has two major business segments: electronic materials and
plumbing and industrial components. The Company's electronic materials
products are marketed primarily to major independent printed circuit board
fabricators and to large electronic original equipment manufacturers
("OEMs") that are located throughout the United States, Canada, Europe and
the Far East. The Company's plumbing and industrial components customers,
the majority of which are located in the United States, include OEMs,
hardware and plumbing wholesalers, home improvement centers and aerospace
and defense manufacturers.
Financial information concerning the Company's business segments follows
(in thousands):
<TABLE>
<CAPTION> Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Sales to unaffiliated customers:
Electronic materials $274,903 $218,288 $182,559
Plumbing and industrial components 38,063 34,734 25,851
Net sales $312,966 $253,022 $208,410
Operating profit(1):
Electronic materials $ 37,699 $ 28,710 $ 18,597
Plumbing and industrial components 1,466 1,226 (1,244)
Total operating profit 39,165 29,936 17,353
General corporate expense (4,090) (3,826) (3,048)
Interest and other income, net 2,285 1,822 947
Interest expense (96) (431) (2,407)
Total other income (expense) 2,189 1,391 (1,460)
Earnings before income taxes $ 37,264 $ 27,501 $ 12,845
Identifiable assets(2):
Electronic materials $146,549 $104,478 $ 91,786
Plumbing and industrial components 13,260 12,588 9,516
159,809 117,066 101,302
Corporate assets 139,166 44,985 39,448
Total assets $298,975 $162,051 $140,750
Depreciation and amortization:
Electronic materials $ 9,013 $ 8,133 $ 7,910
Plumbing and industrial components 813 793 737
9,826 8,926 8,647
Corporate depreciation 23 25 86
Total depreciation and
amortization $ 9,849 $ 8,951 $ 8,733
Capital expenditures:
Electronic materials $ 23,852 $ 16,302 $ 9,193
Plumbing and industrial components 689 1,472 266
24,541 17,774 9,459
Corporate capital expenditures 21 30 23
Total capital expenditures $ 24,562 $ 17,804 $ 9,482
<FN>
(1) Operating profit is comprised of total operating revenues, less
costs and expenses other than interest expense, general corporate
expense and income taxes.
(2) Identifiable assets consist of those assets which are used by the
segments. Corporate identifiable assets consist primarily of cash,
cash equivalents and marketable securities.
</TABLE>
Intersegment sales and sales between geographic areas were not
significant.
Financial information regarding the Company's foreign operations, which
are conducted principally in the United Kingdom, France and Singapore,
follows (in thousands):
<TABLE>
Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Sales to unaffiliated customers $91,686 $61,919 $46,491
Sales to U.S. affiliates(1) 2,564 2,992 -
$94,250 $64,911 $46,491
Operating income (loss) $ 5,955 $ 1,531 $(3,252)
Income (loss) before income
taxes $ 6,122 $ 1,535 $(3,242)
Identifiable assets $58,002 $44,150 $38,477
(1) Sales to U.S. affiliates are accounted for at cost and are
eliminated in consolidation.
</TABLE>
13. RISKS AND UNCERTAINTIES
a. Customers - Sales to a major domestic manufacturing concern, which
were principally made by the electronic materials segment, were
17.1%, 21.8% and 25.3% of the Company's consolidated sales for fiscal
1996, 1995 and 1994, respectively. The Company believes its
relations with this customer to be very satisfactory and further
believes this customer will continue to make significant purchases in
the immediate future. Although the Company's electronic materials
segment is not dependent on this single customer, the loss of this
customer could have a material adverse effect on the business of this
segment.
Furthermore, while no other customer accounts for 10% or more of the
total sales of the Company in fiscal 1996 and the Company is not
dependent on any other single customer, the loss of a major customer
or of a group of customers within each significant business segment
could have a material adverse effect on the Company's business.
b. Sources of Supply - The principal materials used in the manufacture
of the Company's electronic materials products are specially
manufactured copper foil, fiberglass cloth and synthetic
reinforcements, and specially formulated resins and chemicals.
Although there are a limited number of qualified suppliers of these
materials, the Company has nevertheless identified alternate sources
of supply for each of the aforementioned materials. While the
Company has not experienced significant problems in the delivery of
these materials and considers its relationships with its suppliers to
be strong, a disruption of the supply of material from a principal
supplier could adversely affect the electronic materials segment's
business. Furthermore, substitutes for the aforesaid materials are
not readily available and an inability to obtain essential materials,
if prolonged, could materially adversely affect the business of the
electronic materials segment.
14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
[CAPTION]
<TABLE>
Quarter
First Second Third Fourth
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Fiscal 1996:
Net sales $75,412 $69,937 $81,866 $85,751
Gross profit 17,717 15,209 18,397 18,988
Net earnings 6,024 5,366 6,467 7,041
Earnings per share:
Primary $.51 $.45 $.55 $.59
Fully diluted $.51 $.45 $.55 $.59
Weighted average common and
common equivalent shares
outstanding:
Primary 11,708 11,801 11,857 11,881
Fully diluted 11,708 11,829 11,857 12,002
Fiscal 1995:
Net sales $62,769 $58,795 $64,834 $66,624
Gross profit 13,247 12,520 14,774 15,564
Net earnings 3,670 3,756 4,779 5,140
Earnings per share:
Primary $.39 $.33 $.42 $.45
Fully diluted $.34 $.33 $.41 $.44
Weighted average common and
common equivalent shares
outstanding:
Primary 9,416 11,344 11,374 11,432
Fully diluted 11,464 11,544 11,658 11,610
</TABLE>
Earnings per share is computed separately for each quarter. Therefore, the
sum of such quarterly per share amounts may differ from the total for the
years.
*******
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information called for by this Item (except for information as
to the Company's executive officers, which information appears elsewhere in
this Report) is incorporated by reference to the Company's definitive proxy
statement for the 1996 Annual Meeting of Shareholders to be filed pursuant
to Regulation 14A.
Item 11. Executive Compensation.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1996 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1996 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1996 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Page
Schedules, and Reports on Form 8-K.
(a) Documents filed as a part of this report
(1) Financial Statements:
The following Consolidated Financial
Statements of the Company are
included in Part II, Item 8:
Report of Ernst & Young LLP,
independent auditors 24
Balance sheets 25
Statements of earnings 26
Statements of stockholders' equity 27
Statements of cash flows 28
Notes to consolidated financial
statements (1-14) 29
(2) Financial Statement Schedules:
Schedule II - Valuation and qualifying
accounts 50
All other schedules have been omitted because
they are inapplicable or not required, or the
information is included elsewhere in the
financial statements or notes thereto.
<PAGE>
(3)Exhibits:
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
4.01 Amended and Restated Rights Agreement, dated as of July 12,
1995, between the Company and Registrar and Transfer Company, as
Rights Agent, relating to the Company's Preferred Stock Purchase
Rights. (Reference is made to Exhibit 1 to Amendment No. 1 on
Form 8-A/A to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries;
therefore, in accordance with paragraph (iii) of Item 4 of Item
601(b) of Regulation S-K, the other instruments defining the
rights of holders of long-term debt are not filed herewith.
Registrant hereby agrees to furnish a copy of any such other
instruments to the Securities and Exchange Commission upon
request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease.
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease.
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton.
Exhibit
Number Description
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3,1991, Commission file No. 1-4415, which is incorporated
herein by reference.)
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton (See Exhibit 10.03 hereto)
regarding real property located at 1411 E. Orangethorpe Avenue,
Fullerton, California.
10.04 Lease dated February 15, 1983 regarding real property located at
1130 West Geneva Drive, Tempe, Arizona between Nelco Products,
Inc. and CMD Southwest, Inc.
10.04(a) First Amendment to Lease dated December 10, 1992 regarding real
property located at 1130 West Geneva Drive, Tempe, Arizona
between Nelco Technology, Inc. and CMD Southwest Inc., and
novation substituting Nelco Technology, Inc. for Nelco Products,
Inc. (Reference is made to Exhibit 10.04(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 regarding real property
located at 4 Gul Crescent, Jurong, Singapore between Nelco
Products Pte. Ltd. (lease was originally entered into by Kiln
Technique (Private) Limited, which subsequently assigned this
lease to Nelco Products Pte. Ltd. and the Jurong Town
Corporation. (Reference is made to Exhibit 10.05 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding real property
located at 4 Gul Crescent, Jurong, Singapore. (Reference is
made to Exhibit 10.05(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
Exhibit
Number Description
10.06(b) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amended and Restated Employment Agreement dated February 28,
1994 between Park and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit
10.07(b) hereto) between Park and Jerry Shore. (Reference is
made to Exhibit 10.07(c) of the Company's Annual Report on Form
10-K for the fiscal year ended February 26, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.
This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 Lease dated April 15, 1988 regarding real property located at
172 East Aurora Street, Waterbury, Connecticut between FiberCote
Industries, Inc. (lease was initially entered into by USP
Composites, Inc., which subsequently changed its name to
FiberCote Industries, Inc.) and Geoffrey Etherington, II.
(Reference is made to Exhibit 10.08 of the Company's Annual
Report on form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 regarding real property located at 172 East Aurora
Street, Waterbury, Connecticut between FiberCote Industries,
Inc. and Geoffrey Etherington II. (Reference is made to Exhibit
10.08(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.09 Lease dated March 14, 1988 regarding real property located at
1117 West Fairmont, Tempe, Arizona between Nelco Products, Inc.
and CMD Southwest One. (Reference is made to Exhibit 10.09 of
the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 regarding real property located at 1117 West
Fairmont, Tempe, Arizona between Nelco Technology, Inc. and CMD
Southwest One, and novation substituting Nelco Technology, Inc.
for Nelco Products, Inc. (Reference is made to Exhibit 10.09(a)
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 regarding real
property located at 1117 West Fairmont, Tempe, Arizona between
Nelco Technology, Inc. and CMD Southwest One.
Exhibit
Number Description
10.09(c) Third Amendment to Lease dated January 18, 1996 regarding real
property located at 1117 West Fairmont, Tempe, Arizona between
Nelco Technology, Inc. and CMD Southwest One.
10.10 Lease dated October 1, 1991 regarding real property located at
25 North Park, N.E., Comstock Park, Michigan between Zin-Plas
Corporation and Philip L. Johnson d/b/a Johnson Development
Company. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.11 Lease dated August 31, 1989 regarding real property located at
1104 West Geneva Drive, Tempe, Arizona between Nelco Technology,
Inc. and Cemanudi Associates.
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona between Nelco Technology, Inc. and
Cemanudi Associates. (Reference is made to Exhibit 10.11(a) of
the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated hereby by reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona.
10.12(a) First Amendment to Lease dated January 18, 1996 between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona.
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 13, 1986 to Indenture of Lease
dated November 1, 1984 between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(a) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 between Dielectric Polymers, Inc.
and Holyoke Supply Company, Inc. regarding real property located
at 218 Race Street, Holyoke, Massachusetts. (Reference is made
to Exhibit 10.14(b) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993, Commission File No.
1-4415, which is incorporated herein by reference.)
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14(c) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 27, 1994,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 between Dielectric Polymers, Inc. and Holyoke
Supply Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.16 Lease Assignation, dated April 18, 1991 between New England
Laminates (UK) Limited and Tweedbank Circuit Supplies Limited,
of the Lease Agreement dated October 20, 1986 between Tweedbank
Circuit Supplies Limited and the Scottish Development Agency
regarding real property located at Block 2 and Unit 2 of Block
8, Tweedbank Industrial Estate, Galashiels, Scotland. (Reference
is made to Exhibit 10.16 of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1992, Commission File
No. 1-4415, which exhibit is incorporated herein by reference.)
10.17 Sublease Agreement dated April 27, 1992 between New England
Laminates (U.K.) Limited and Mill Book Company Limited regarding
real property located at Bumpers Farm Industrial Estate, Brunel
Way, Chippenham, England. (Reference is made to Exhibit 10.17
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.18 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.19 Lease Contract dated February 26, 1988 between the New York
State Department of Transportation and the Edgewater Stewart
Company regarding real property located at 15 Governor Drive in
the Stewart International Airport Industrial Park, New Windsor,
New York. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.19(a) Assignment and Assumption of Lease dated February 16, 1995
between New England Laminates Co., Inc. and The Edgewater
Stewart Company regarding the assignment of the Lease Contract
(see Exhibit 10.19 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.19(b) Lease Amendment No. 1 dated February 17, 1995 between New
England Laminates Co., Inc. and the New York State Department of
Transportation regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.20 Employment Agreement, dated March 18, 1996, between Park and E.
Phillip Smoot. (This exhibit is a management contract or
compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
(b) Reports on Form 8-K filed during the fiscal quarter ended
March 3, 1996.
Report on Form 8-K dated January 23, 1996, Commission File No.
1-4415, reporting in Item 5 that on January 23, 1996, the Board
of Directors of Park adopted amendments to its By-Laws, which
among other things, (i) increase from 33 1/3% to 80% the
percentage of the issued and outstanding shares of stock of the
Company required to call special meetings of stockholders, (ii)
eliminate the ability of stockholders to remove directors
without cause, and (iii) require stockholders to provide the
Company with advance notice of their intention to make
nominations of directors or bring new business at annual
meetings of stockholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 29, 1996 PARK ELECTROCHEMICAL CORP.
By:
Jerry Shore,
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
Chairman of the Board
Jerry Shore and Director (principal
executive officer) May 29, 1996
Vice President (principal
Paul R. Shackford financial and accounting
officer) May 29, 1996
Director
E. Phillip Smoot May 29, 1996
Director
Brian E. Shore May 29, 1996
Director
Anthony Chiesa May 29, 1996
Director
Lloyd Frank May 29, 1996
Director
Norman M. Schneider May 29, 1996
<TABLE>
Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Balance at Charged to Other Balance at
Beginning Cost and Accounts Translation End
Description of Period Expenses Written Off Adjustment of Period
(A)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
<S> <C> <C> <C> <C> <C>
53 weeks ended March 3, 1996 $2,490,000 $ (495,000) $ (128,000) $ (10,000) $1,857,000
52 weeks ended February 26, 1995 $2,673,000 $ (44,000) $ (186,000) $ 47,000 $2,490,000
52 weeks ended February 27, 1994 $2,977,000 $ (3,000) $ (317,000) $ 16,000 $2,673,000
<FN>
(A) Uncollectible accounts, net of recoveries.
</TABLE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
EXHIBITS
filed with
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 3, 1996
___________________
PARK ELECTROCHEMICAL CORP.
=================================================
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
4.01 Amended and Restated Rights Agreement, dated as of July 12,
1995, between the Company and Registrar and Transfer Company, as
Rights Agent, relating to the Company's Preferred Stock Purchase
Rights. (Reference is made to Exhibit 1 to Amendment No. 1 on
Form 8-A/A to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries;
therefore, in accordance with paragraph (iii) of Item 4 of Item
601(b) of Regulation S-K, the other instruments defining the
rights of holders of long-term debt are not filed herewith.
Registrant hereby agrees to furnish a copy of any such other
instruments to the Securities and Exchange Commission upon
request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease.
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease.
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton.
Exhibit
Number Description
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3,1991, Commission file No. 1-4415, which is incorporated
herein by reference.)
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton (See Exhibit 10.03 hereto)
regarding real property located at 1411 E. Orangethorpe Avenue,
Fullerton, California.
10.04 Lease dated February 15, 1983 regarding real property located at
1130 West Geneva Drive, Tempe, Arizona between Nelco Products,
Inc. and CMD Southwest, Inc.
10.04(a) First Amendment to Lease dated December 10, 1992 regarding real
property located at 1130 West Geneva Drive, Tempe, Arizona
between Nelco Technology, Inc. and CMD Southwest Inc., and
novation substituting Nelco Technology, Inc. for Nelco Products,
Inc. (Reference is made to Exhibit 10.04(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 regarding real property
located at 4 Gul Crescent, Jurong, Singapore between Nelco
Products Pte. Ltd. (lease was originally entered into by Kiln
Technique (Private) Limited, which subsequently assigned this
lease to Nelco Products Pte. Ltd. and the Jurong Town
Corporation. (Reference is made to Exhibit 10.05 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding real property
located at 4 Gul Crescent, Jurong, Singapore. (Reference is
made to Exhibit 10.05(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
Exhibit
Number Description
10.06(b) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amended and Restated Employment Agreement dated February 28,
1994 between Park and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit
10.07(b) hereto) between Park and Jerry Shore. (Reference is
made to Exhibit 10.07(c) of the Company's Annual Report on Form
10-K for the fiscal year ended February 26, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.
This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 Lease dated April 15, 1988 regarding real property located at
172 East Aurora Street, Waterbury, Connecticut between FiberCote
Industries, Inc. (lease was initially entered into by USP
Composites, Inc., which subsequently changed its name to
FiberCote Industries, Inc.) and Geoffrey Etherington, II.
(Reference is made to Exhibit 10.08 of the Company's Annual
Report on form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 regarding real property located at 172 East Aurora
Street, Waterbury, Connecticut between FiberCote Industries,
Inc. and Geoffrey Etherington II. (Reference is made to Exhibit
10.08(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.09 Lease dated March 14, 1988 regarding real property located at
1117 West Fairmont, Tempe, Arizona between Nelco Products, Inc.
and CMD Southwest One. (Reference is made to Exhibit 10.09 of
the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 regarding real property located at 1117 West
Fairmont, Tempe, Arizona between Nelco Technology, Inc. and CMD
Southwest One, and novation substituting Nelco Technology, Inc.
for Nelco Products, Inc. (Reference is made to Exhibit 10.09(a)
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 regarding real
property located at 1117 West Fairmont, Tempe, Arizona between
Nelco Technology, Inc. and CMD Southwest One.
Exhibit
Number Description
10.09(c) Third Amendment to Lease dated January 18, 1996 regarding real
property located at 1117 West Fairmont, Tempe, Arizona between
Nelco Technology, Inc. and CMD Southwest One.
10.10 Lease dated October 1, 1991 regarding real property located at
25 North Park, N.E., Comstock Park, Michigan between Zin-Plas
Corporation and Philip L. Johnson d/b/a Johnson Development
Company. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.11 Lease dated August 31, 1989 regarding real property located at
1104 West Geneva Drive, Tempe, Arizona between Nelco Technology,
Inc. and Cemanudi Associates.
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona between Nelco Technology, Inc. and
Cemanudi Associates. (Reference is made to Exhibit 10.11(a) of
the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated hereby by reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona.
10.12(a) First Amendment to Lease dated January 18, 1996 between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona.
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 13, 1986 to Indenture of Lease
dated November 1, 1984 between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(a) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 between Dielectric Polymers, Inc.
and Holyoke Supply Company, Inc. regarding real property located
at 218 Race Street, Holyoke, Massachusetts. (Reference is made
to Exhibit 10.14(b) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993, Commission File No.
1-4415, which is incorporated herein by reference.)
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14(c) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 27, 1994,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 between Dielectric Polymers, Inc. and Holyoke
Supply Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.16 Lease Assignation, dated April 18, 1991 between New England
Laminates (UK) Limited and Tweedbank Circuit Supplies Limited,
of the Lease Agreement dated October 20, 1986 between Tweedbank
Circuit Supplies Limited and the Scottish Development Agency
regarding real property located at Block 2 and Unit 2 of Block
8, Tweedbank Industrial Estate, Galashiels, Scotland. (Reference
is made to Exhibit 10.16 of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1992, Commission File
No. 1-4415, which exhibit is incorporated herein by reference.)
10.17 Sublease Agreement dated April 27, 1992 between New England
Laminates (U.K.) Limited and Mill Book Company Limited regarding
real property located at Bumpers Farm Industrial Estate, Brunel
Way, Chippenham, England. (Reference is made to Exhibit 10.17
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.18 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.19 Lease Contract dated February 26, 1988 between the New York
State Department of Transportation and the Edgewater Stewart
Company regarding real property located at 15 Governor Drive in
the Stewart International Airport Industrial Park, New Windsor,
New York. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.19(a) Assignment and Assumption of Lease dated February 16, 1995
between New England Laminates Co., Inc. and The Edgewater
Stewart Company regarding the assignment of the Lease Contract
(see Exhibit 10.19 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.19(b) Lease Amendment No. 1 dated February 17, 1995 between New
England Laminates Co., Inc. and the New York State Department of
Transportation regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.20 Employment Agreement, dated March 18, 1996, between Park and E.
Phillip Smoot. (This exhibit is a management contract or
compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
(b) Reports on Form 8-K filed during the fiscal quarter ended
March 3, 1996.
Report on Form 8-K dated January 23, 1996, Commission File No.
1-4415, reporting in Item 5 that on January 23, 1996, the Board
of Directors of Park adopted amendments to its By-Laws, which
among other things, (i) increase from 33 1/3% to 80% the
percentage of the issued and outstanding shares of stock of the
Company required to call special meetings of stockholders, (ii)
eliminate the ability of stockholders to remove directors
without cause, and (iii) require stockholders to provide the
Company with advance notice of their intention to make
nominations of directors or bring new business at annual
meetings of stockholders.
Exhibit 10.01
STANDARD INDUSTRIAL LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12,
1989, is made by and between James Emmi (herein called "Lessor") and Nelco
Products Inc. (herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from
Lessor for the term, at the rental, and upon all of the conditions set forth
herein, that certain real property situated in the County of Orange, State
of California, commonly known as 1100 East Kimberly Avenue, Anaheim, CA
92801 and described as approximately 12,800 square foot industrial building
on approximately 30,000 square fee of land. Said real property including
the land and all improvements therein, is herein called the "Premises".
3. Term.
3.1 Term. The term of this Lease shall be for 60 months commencing
on June 21, 1990 and ending on June 20, 1995 unless sooner terminated
pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent until possession of the Premises is tendered to
Lessee; provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days from said commencement
date, Lessee may, at Lessee's option, by notice in writing to Lessor within
ten (10) days thereafter, cancel this Lease, in which event the parties
shall be discharged from all obligations hereunder, provided further,
however, that if such written notice of lessee is not received by Lessor
within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminated and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay
rent for such period at the initial monthly rates set forth below.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of $4400.00, in advance, on the 21 day of each month of the term
hereof, as rent for monthly rental rate shall increase or decrease as per
C.P.I. adjustment as defined in addendum (A-1) as well as tax and insurance
adjustments.
Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other person or at such other places as Lessor may
designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $ N/A as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this
Lease, Lessor may use, apply or retain all or any portion of said deposit
for the payment of any rent or other charge in default or for the payment of
any other sum to which Lessor may become obligated by reason of Lessee's
default, or to compensate Lessor for any loss or damage which Lessor may
suffer thereby. If Lessor so uses or applies all of any portion of said
deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to restore said deposit to
the full amount hereinabove stated and Lessee's failure to do so shall be a
material breach of this Lease. If the monthly rent shall, from time to
time, increase during the term of this Lease, Lessee shall thereupon deposit
with Lessor additional security deposit so that the amount of security
deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original monthly
rent set forth in paragraph 4 hereof. Lessor shall not be required to keep
said deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest hereunder) at the
expiration of the term hereof, and after Lessee has vacated the Premises.
No trust relationship is created herein between Lessor and Lessee with
respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for
manufacturing, warehousing and related services or any other use which is
reasonably comparable and for no other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to
the use for which Lessee will use the Premises, does not violate any
covenants or restrictions of record, or any applicable building code,
regulation or ordinance in effect on such Lease term commencement date. In
the event it is determined that this warranty has been violated, then it
shall be the obligation of the Lessor, after written notice from Lessee, to
promptly, at Lessor's sole cost and expense, rectify any such violation. In
the event Lessee does not given to Lessor written notice of the violation of
this warranty within six months from the date that the Lease term commences,
the correction of same shall be the obligation of the Lessee or Lessee's
sole cost. The warranty contained in this paragraph 6.2(a) shall be of no
force or effect if, prior to the date of this Lease, Lessee was the owner or
occupant of the Premises, and, in such event, Lessee shall correct any such
violation effect if, prior to the date of this Lease, Lessee was the owner
or occupant of the Premises, and, in such event, Lessee shall correct any
such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises. Lessee shall not use nor
permit the use of the Premises in any manner that will tend to create waste
or a nuisance or, if there shall be more than one tenant in the building
containing the Premises, shall tend to disturb such other tenants.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and free
of debris on Lease commencement date (unless Lessee is already in
possession) and Lessor further warrants to Lessee that the plumbing,
lighting, air-conditioning, heating, and leading doors in the Premises shall
be in good operating condition on the Lease commencement date. In the event
that it is determined that this warranty has been violated, then it shall be
the obligation of Lessor, after receipt of written notice from Lessee
setting forth with specificity the nature of the violation, to promptly, at
Lessor's sale cost, rectify such violation. Lessee's failure to give such
written notice to Lessor within thirty (30) days after the Lease
commencement date shall cause the conclusive presumption that Lessor has
complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior
to the date of this Lease, Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease
commencement date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable zoning, municipal, county
and state laws, ordinances and regulations governing and regulating the use
of the Premises, and any covenants or restrictions of record, and accepts
this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto. Lessee acknowledges that neither Lessor nor
Lessor's agent has made any representation or warranty as to the present or
future suitability of the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessor's Obligations. Subject to the provisions of Paragraphs
6, 7.2 and 9 and except for damage caused by any negligent or intentional
act or omission of Lessee, Lessee's agents, employees, or invitees in which
event Lessee shall repair the damage, Lessor, at Lessor's expense, shall
keep in good order, condition and repair the foundations, exterior walls and
the exterior roof of the Premises. Lessor shall not, however, be obligated
to paint such exterior, nor shall Lessor be required to maintain the
interior surface of exterior walls, windows, doors or plate glass. Lessor
shall have no obligation to make repairs under this Paragraph 7.1 until a
reasonable time after receipt of written notice of the need for such
repairs, Lessee expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraph 6, 7.1 and 9,
Lessee, at Lessee's expense, shall keep in good order, condition and repair
the Premises and every part thereof (whether or not the damaged portion of
the Premises or the means of repairing the same are reasonably or readily
accessible to Lessee) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, (Lessee shall procure
and maintain, at Lessee's expense, an air conditioning system maintenance
contract) ventilating, electrical and lighting facilities and equipment
within the Premises, fixtures, interior walls and interior surface of
exterior walls, ceilings, windows, doors, plate glass, and skylights,
located within the Premises, and all landscaping, driveways, parking lots,
fences and signs located in the Premises and all sidewalks and parkways
adjacent to the Premises.
(b) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.2 or under any other paragraph of this Lease, Lessor may at
Lessor's option enter upon the Premises after 10 days' prior written notice
to Lessee (except in the case of emergency, in which case no notice shall be
required), perform such obligations on Lessee's behalf and put the Premises
in good order, condition and repair, and the cost thereof together with
interest thereon at the maximum rate then allowable by law shall be due and
payable as additional rent to Lessor together with Lessee's next rental
installment.
(c) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of its trade fixtures, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this Lease,
Lessee shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing and
fencing on the premises in good operating condition.
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent
make any alterations, improvements, additions, or Utility Installations in,
on or about the Premises, except for nonstructural alterations not exceeding
$2,500 in cumulative costs during the term of this Lease. In any event,
whether or not in excess of $2,500 in cumulative cost, Lessee shall make no
change or alteration to the exterior of the Premises nor the exterior of the
building(s) on the Premises without Lessor's prior written consent. As used
in this Paragraph 7.3 the term "Utility Installation" shall mean carpeting,
window coverings, air lines, power panels, electrical distribution systems,
lighting fixtures, space heaters, air conditioning, plumbing and fencing.
Lessor may require that Lessee remove any or all of said alterations,
improvements, additions or Utility Installations at the expiration of the
term, and restore the Premises to their prior condition. Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of the work.
Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of Lessor, Lessor may require that
Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to make and
which requires the consent of the Lessor shall be presented to Lessor in
written form, with proposed detailed plans. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee acquiring a
permit to do so, from appropriate governmental agencies, the furnishing of
a copy thereof to Lessor prior to the commencement of the work and the
compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) (#1) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or
for use in the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days notice prior
to the commencement of any work in the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of
any such lien, claim or demand, then Lessee shall, at its sole expense
defend itself and Lessor against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises, upon the condition that if Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor
in an amount equal to such contested lien claim or demand indemnifying
Lessor against liability for the same and holding the Premises free from the
effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
(d) (#2) Unless Lessor requires their removal, as set forth in
Paragraph 7.3(a), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at
the expiration of the term. Notwithstanding the provisions of this
Paragraph 7.3(d), Lessee's machinery and equipment, other than that which is
affixed to the Premises so that it cannot be removed without material damage
to the Premises, shall remain the property of Lessee and may be removed by
Lessee subject to the provisions of Paragraph 7.2(c).
8. Insurance; Indemnity.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's
expense, obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage insurance insuring
Lessee and Lessor against any liability arising out of the use, occupancy or
maintenance of the Premises and all other areas appurtenant thereto. Such
insurance shall be in an amount not less than $500,000 per occurrence. The
policy shall insure performance by Lessee of the indemnity provisions of
this Paragraph 8. The limits of said insurance shall not, however, limit
the liability of Lessee hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor, but not Lessee,
against any liability arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto in an amount
not less than $500,000 per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering
loss or damage to the Premises, but not Lessee's fixtures, equipment or
tenant improvements in an amount not to exceed the full replacement value
thereof, as the same may exist from time to time, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises) special extended perils
("all risk", as such term is used in the insurance industry) but not plate
glass insurance. In addition, the Lessor shall obtain and keep in force,
during the term of this Lease, a policy or rental value insurance covering
a period of one year, with loss payable to Lessor, which insurance shall
also cover all real estate taxes and insurance costs for said period.
8.4 Payment of Premium Increase.
(a) Lessee shall pay to Lessor, during the term hereof, in
addition to the rent, the amount of any increase in premiums for the
insurance required under Paragraphs 8.2 and 8.3 over and above such premiums
paid during the Base Period, as hereinafter defined, whether such premium
increase shall be the result of the nature of Lessee's occupancy, any act or
omission of Lessee, requirements of the holder of a mortgage or deed of
trust covering the Premises, increased valuation of the Premises, or general
rate increases. IN the event that the Premises have been occupied
previously, the words "Base Period" shall mean the last twelve months of the
prior occupancy. In the event that the Premises have never been previously
occupied, the premiums during the "Base Period" shall be deemed to be the
lowest premiums reasonably obtainable for said insurance assuming the most
nominal use of the Premises. Provided, however, in lieu of the Base Period,
the parties may insert a dollar amount at the end of this sentence which
figure shall be considered as the insurance premium for the Base Period:
$1703.00. In no event, however, shall Lessee be responsible for any portion
of the premium cost attributable to liability insurance coverage in excess
of $1,000,000 procured under paragraph 8.2.
(b) Lessee shall pay any such premium increases to Lessor within
30 days after receipt by Lessee of a copy of the premium statement or other
satisfactory evidence of the amount due. If the insurance policies
maintained hereunder cover other improvements in addition to the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such
increase attributable to the Premises and showing in reasonable detail, the
manner in which such amount was computed. If the term of this Lease shall
not expire concurrently with the expiration of the period covered by such
insurance, Lessee's liability for premium increases shall be prorated on an
annual basis.
(c) If the Premises are part of a larger building, then Lessee
shall not be responsible for paying any increase in the property insurance
premium caused by the acts or omissions of any other tenant of the building
of which the Premises are a part.
8.5. Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or
such other rating as may be required by a lender having a lien on the
Premises, as set forth in the most current issue of "Best's Insurance
Guide". Lessee shall deliver to Lessor copies of policies of liability
insurance required under Paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance. No such policy shall be cancelable
or subject to reduction of coverage or other modification except after
thirty (30) days prior written notice to Lessor. Lessee shall, at least
thirty (30) days prior to the expiration of such policies, furnish Lessor
with renewals or "binders" thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee
upon demand. Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph 8.3.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less
than 50% of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Partial Damage" shall herein mean
damage or destruction to the building of which the Premises are a part to
the extent that the cost of repair, is less than 50% of the fair market
value of such building as a whole immediately prior to such damage or
destruction.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or
more of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Total Destruction" shall herein
mean damage or destruction to the building of which the Premises are a part
to the extent that the cost of repair is 50% or more of the fair market
value of such building as a whole immediately prior to such damage or
destruction.
(c) "Insured Loss" shall herein mean damage or destruction
which was caused by an event required to be covered by the insurance
described in paragraph 8.
9.2 Partial Damage - Insured Loss. Subject to the provisions of
paragraph 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is an Insured Loss and which falls into the
classification of Premises Partial Damage or Premises Building Partial
Damage, then Lessor shall, at Lessor's sole cost, repair such damage, but
not Lessee's fixtures, equipment or tenant improvements, as soon as
reasonably possible and this Lease shall continue in full force and effect.
9.3 (#3) Partial Damage - Uninsured Loss. Subject to the provisions
of Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is not an Insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee's expense), Lessor may at
Lessor's option either (i) repair such damage as soon as reasonably possible
at Lessor's expense, in which event this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30) days
after the date of the occurrence of such damage of Lessor's intention to
cancel and terminate this Lease, as of the date of the occurrence of such
damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written notice
to Lessor of Lessee's intention to repair such damage at Lessee's expense,
without reimbursement from Lessor, in which event this Lease shall continue
in full force and effect, and Lessee shall proceed to make such repairs as
soon as reasonably possible. If Lessee does not give such notice within
such 10-day period this Lease shall be cancelled and terminated as of the
date of the occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction
required by any authorized public authority), which falls into the
classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of such
total destruction.
9.5 Damage Near End of Term.
(a) If at any time during the last six months of the term of
this Lease there is damage, whether or not an Insured Loss, which falls
within the classification of Premises Partial Damage, Lessor may at Lessor's
option cancel and terminate this Lease as of the date of occurrence of such
damage by giving written notice to Lessee of Lessor's election to do so
within 30 days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.59(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than 20 days after the
occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If
Lessee duly exercises such option during said 20 day period, Lessor shall,
at Lessor's expense, repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to
exercise such option during said 20 day period, then Lessor may at Lessor's
option terminate and cancel this Lease as of the expiration of said 20 day
period by giving written notice to Lessee of Lessor's election to do so
within 10 days after the expiration of said 20 day period, notwithstanding
any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3,
and Lessor or Lessee repairs or restores the Premises pursuant to the
provisions of this Paragraph 9, the rent payable hereunder for the period
during which such damage, repair or restoration continues shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired.
Except for abatement of rent, if any, Lessee shall have no claim against
Lessor for any damage suffered by reason of any such damage, destruction,
repair or restoration.
(b) (#4) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within 90 days after such obligations shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by
giving Lessor written notice of Lessee's election to do so at any time prior
to the commencement of such repair or restoration. In such event this Lease
shall terminate as of the date of such notice.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10.1 Payment of Tax Increase. Lessor shall pay the real property
tax, as defined in paragraph 10.3, applicable to the Premises; provided,
however, that Lessee shall pay, in addition to rent, the amount, if any, by
which real property taxes applicable to the Premises increase over the
fiscal real estate tax year 1990-1991. Such payment shall be made by Lessee
within thirty (30) days after receipt of Lessor's written statement setting
forth the amount of such increase and the computation thereof. If the term
of this Lease shall not expire concurrently with the expiration of the tax
fiscal year, Lessee's liability for increased taxes for the last partial
lease year shall be prorated on an annual basis.
10.2 Additional Improvements. Notwithstanding paragraph 10.1 hereof,
Lessee shall pay to Lessor upon demand therefor the entirety of any increase
in real property tax if assessed solely by reason of additional improvements
placed upon the Premises by Lessee or at Lessee's request.
10.3 Definition of "Real Property Tax". As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or in the real property of
which the Premises are a part, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Premises.
The term "real property tax" shall also include any tax, fee levy,
assessment or charge (i) in substitution of, partially or totally, any tax,
fee levy, assessment or charge hereinabove included within the definition of
"real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax", or (iii) which is imposed for
a service or right not charged prior to June 1, 1978, or, if previously
charged, has been increased since June 1, 1978, or (iv) which is imposed as
a result of a transfer, either partial or total, of Lessor's interest in the
Premises or which is added to a tax or charge hereinbefore included within
the definition of real property tax by reason of such transfer, or (v) which
is imposed by reason of this transaction, any modifications or changes
hereto, or any transfers hereof.
10.4 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property
taxes for all of the land and improvements included within the tax parcel
assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information
as may be reasonably available. Lessor's reasonable determination thereof,
in good faith, shall be conclusive.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the
real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable
to Lessee within 10 days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises,
together with any taxes thereon. If any such services are not separately
metered to Lessee, lessee shall pay a reasonable proportion to be determined
by Lessor or all charges jointed metered with other premises.
12. Assignment and Subletting.
12.1 Lessors's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer
or encumber all or any part of Lessee's interest in this Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said
assignee assumes, in full, the obligations of Lessee under this Lease. Any
such assignment shall not, in any way, affect or limit the liability of
Lessee under the terms of this Lease even if after such assignment or
subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or
alter the primary liability of Lessee to pay the rent and to perform all
other obligations to be performed by Lessee hereunder. The acceptance of
rent by Lessor from any other person shall not be deemed to be a waiver by
Lessor of any provision hereof. Consent to one assignment or subletting
shall not be deemed consent to any subsequent assignment or subletting. In
the event of default by any assignee of Lessee or any successor of Lessee,
in the performance of any of the terms hereof, Lessor may proceed directly
against Lessee without the necessity of exhausting remedies against said
assignee. Lessor may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of
Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining its or their consent thereto and such action shall not relieve
Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith, such attorneys fees not to exceed $350.00 for each
such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by
Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) (#5) The failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder, as and when due,
where such failure shall continue for a period of three days after written
notice thereof from Lessor to Lessee. In the event that Lessor serves
Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful
Detainer statues such Notice to Pay Rent or Quit shall also constitute the
notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by Lessee, other than described in paragraph (b) above, where such
failure shall continue for a period of 30 days after written notice thereof
from Lessor to Lessee; provided, however, that if the nature of Lessee's
default is such that more than 30 days are reasonably required for its cure,
then Lessee shall not be deemed to be in default if Lessee commenced such
cure within said 30-day period and thereafter diligently prosecutes such
cure to completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. 101 or any successor statue thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days.
Provided, however, in the event that any provision of this paragraph 13.1(d)
is contrary to any applicable law, such provision shall be of no force or
effect.
(e) The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such material default or breach
by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could
be reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have abandoned
the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the
Premises are located. Unpaid installments of rent and other unpaid monetary
obligations of Lessee under the terms of this Lease shall bear interest from
the date due at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee
to Lessor and to the holder of any first mortgage or deed of trust covering
the Premises whose name and address shall have theretofore been furnished to
Lessee in writing, specifying wherein Lessor has failed to perform such
obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance then
Lessor shall not be in default if Lessor commences performance within such
30-day period and thereafter diligently prosecutes the same to completion.
13.4 Late Charges. (#6) Lessee hereby acknowledges that late payment
by Lessee to Lessor of rent and other sums due hereunder will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within ten (10)
days after such amount shall be due, then, without any requirement for
notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of
such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance or such late charge by Lessor
shall in no event constitute a waiver of Lessee's default with respect to
such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or
any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall
pay to Lessor, if Lessor shall so request, in addition to any other payments
required under this Lease, a monthly advance installment, payable at the
same time as the monthly rent, as estimated by Lessor, for real property tax
and insurance expenses on the Premises which are payable by Lessee under the
terms of this Lease. Such fund shall be established to insure payment when
due before delinquency of any or all such real property taxes and insurance
premiums. If the amounts paid to Lessor by Lessee under the provisions of
this paragraph are insufficient to discharge the obligations of Lessee to
pay such real property taxes and insurance premiums as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums
necessary to pay such obligations. All moneys paid to Lessor under this
paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a default in the obligations of Lessee to perform
under this Lease, then any balance remaining from funds paid to Lessor under
the provisions of this paragraph may, at the option of Lessor, be applied to
the payment of any monetary default of Lessee in lieu of being applied to
the payment of real property tax and insurance premiums.
14. Condemnation. (#7) If the Premises or any portion thereof are
taken under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than
10% of the floor area of the building on the Premises, or more than 25% of
the land area of the Premises which is not occupied by any building, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten 910) days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within ten
(10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in
the proportion that the floor area of the building taken bears to the total
floor area of the building situation on the Premises. (#8) Any award for the
taking of all or any part of the Premises under the power of eminent domain
or any payment made under the threat of the exercise of such power shall be
the property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage
to the Premises caused by such condemnation except to the extent that Lessee
has been reimbursed therefor by the condemning authority. Lessee shall pay
any amount in excess of such severance damages required to complete such
repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall
pay to N/A Licensed real estate broker(s), a fee as set forth in a separate
agreement between lessor and said broker(s), or in the event there is no
separate agreement between Lessor and said broker(s), the sum of $____, for
brokerage services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option
as defined in paragraph 39.1 of this Lease, which is granted to Lessee under
this Lease, or any subsequently granted option which is substantially
similar to an Option granted to Lessee under this Lease, or if Lessee
acquires any rights to the Premises or other premises described in this
Lease which are substantially similar to what Lessee would have acquired had
an Option herein granted to Lessee been exercised, or if Lessee remains in
possession of the Premises after the expiration of the term of this Lease
after having failed to exercise an Option, or if said broker(s) are the
procuring cause of any other lease or safe entered into between the parties
pertaining to the Premises and/or any adjacent property in which Lessor has
an interest, then as to any of said transactions, Lessor shall pay said
broker(s) a fee in accordance with the schedule of said broker(s) in effect
at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor
but also on behalf of any person, corporation, association, or other entity
having an ownership interest in said real property or any part thereof, when
such fee is due hereunder. Any transferee of Lessor's interest in this
Lease, whether such transfer is by agreement or by operation of law, shall
be deemed to have assumed Lessor's obligation under this Paragraph 15. Said
broker shall be a third party beneficiary of the provisions of this
Paragraph 15.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor
a statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the rent and other charges are paid
in advance if any, and (ii) acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder, or
specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a material breach of this Lease or shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification, except as may be presented by Lessor, (ii) that there
are no uncured defaults in Lessor's performance, and (iii) that not more
than one month's rent has been paid in advance or such failure may be
considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee hereby agrees to deliver to any lender
or purchaser designated by Lessor such financial statements of lessee as may
be reasonably required by such lender or purchaser. Such statements shall
include the past three years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or
purchaser in confidence and shall be used only for the purposes herein set
forth.
17. Lessor's Liability. (#9) The term "Lessor" as used herein shall mean
only the owner or owners at the time in question of the fee title or a
lessee's interest in a ground lease of the Premises, and except as expressly
provided in Paragraph 15, in the event of any transfer of such title or
interest. Lessor herein named (and in cases of any subsequent transfers
then the grantor) shall be relieved from and after the date of such transfer
of all liability as respects Lessor's obligations thereafter to be
performed, provided that any funds in the hands of Lessor or the then
grantor at the time of such transfer, in which Lessee has an interest, shall
be delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at
the maximum rate then allowable by law from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease,
provided, however, that interest shall not be payable on late charges
incurred by Lessee nor on any amounts upon which late charges are paid by
Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under
the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein.
No prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise
stated in this Lease, Lessee hereby acknowledges that neither the real
estate broker listed in Paragraph 15 hereof nor any cooperating broker on
this transaction nor the Lessor or any employees or agents of any of said
persons has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the
Occupational Safety Health Act, the legal use and adaptability of the
Premises and the compliance thereof with all applicable laws and regulations
in effect during the term of this Lease except as otherwise specifically
stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail,
and if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or to Lessor at the address noted below the signature of
the respective parties, as the case may be. Either party may by notice to
the other specify a different address for notice purposes except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice purposes. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee
of the same or any other provision. Lessor's consent to, or approval of any
act, shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of
rent hereunder by Lessor shall not be a waiver of any preceding breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
25. Holding Over. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Lessee, but all
options and rights of first refusal, if any granted under the terms of this
Lease shall be deemed terminated and be of no further effect during said
month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of Paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by
the laws of the State wherein the Premises are located.
30. Subordination. (#10)
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation or
security now or hereafter placed upon the real property of which the
Premises are a part and to any and all advances made on the security thereof
and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Lessee's right to
quiet possession of the Premises shall not be disturbed if Lessee is not in
default and so long as Lessee shall pay the rent and observe and perform all
of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgages, trustee or ground lessor shall
elect to have this Lease prior to the lien of its mortgage, deed of trust or
ground lease, and shall given written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust, or ground lease,
whether this Lease is dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to
effectuate an attornment, a subordination or to make this Lease prior to the
lien or any mortgage, deed of trust or ground lease, as the case may be.
Lessee's failure to execute such documents within 10 days after written
demand shall constitute a material default by Lessee hereunder, or, at
Lessor's option, Lessor shall execute such documents on behalf of Lessee as
Lessee's attorney-in-fact. Lessee does hereby make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's
name, place and stead, to execute such documents in accordance with this
paragraph 30(b).
31. Attorney's Fees. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled
to his reasonable attorney's fees to be paid by the losing party as fixed by
the court. The provisions of this paragraph shall inure to the benefit of
the broker named herein who seeks to enforce a right hereunder.
32. Lessor's Access. (#11) Lessor and Lessor's agents shall have the
right to enter the Premises at reasonable times for the purpose of
inspecting the same, showing the same to prospective purchasers, lenders, or
lessees, and making such alterations, repairs, improvements or additions to
the Premises or to the building of which they are a part as Lessor may deem
necessary or desirable. Lessor may at any time place on or about the
Premises and ordinary "For Sale" signs and Lessor may at any time during the
last 120 days of the term hereof place on or about the Premises any ordinary
"For Lease" signs, all without rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without
first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.
34. Signs. (#12) Lessee shall not pace any sign upon the Premises
without Lessor's prior written consent except that Lessee shall have the
right, without the prior permission of Lessor to place ordinary and usual
for rent or sublet signs thereon.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party, such consent
shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants and provisions on Lessee's
part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has
the following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any lease that Lessee has
on other property of Lessor; (2) the option or right of first refusal to
lease the Premises or the right of first offer to lease the Premises or the
right of first refusal to lease other property of Lessor or the right of
first offer to lease other property of Lessor; (3) the right or option to
purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises or the right
or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 Options Personal. Options granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate
as defined in paragraph 12.2 of this Lease. The options herein granted to
Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised
unless the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i)
during the time commencing from the date Lessor gives to Lessee a notice of
default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the
default alleged in said notice of default is cured, or (ii) during the
period of time commencing on the day after a monetary obligation to Lessor
is due from Lessee and unpaid (without any necessity for notice thereof to
Lessee) continuing until the obligation is paid, or (iii) at any time after
an event of default described in paragraphs 13.1(a), 13.1(d), or 13.1(e)
(without any necessity of Lessor to give notice of such default to Lessee),
or (iv) in the event that Lessor has given to Lessee three or more notices
of default under paragraph 13.1(b), where a late charge becomes payable
under paragraph 13.4 for each of such defaults, or paragraph 13.1(c),
whether or not the defaults are cured, during the 12 month period prior to
the time that Lessee intends to exercise the subject option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding
Lessee's due and timely exercise of the Option, if after such exercise and
during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of 30 days after such obligation becomes
due (without any necessity of Lessor to give notice thereof to Lessee), or
(ii) Lessee fails to commence to cure a default specified in paragraph
13.1(c) within 30 days after the date that Lessor gives notice to Lessee of
such default and/or Lessee fails thereafter to diligently prosecute said
cure to completion, or (iii) Lessee commits a default described in paragraph
13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice
of such default to Lessee), or (iv) Lessor gives to Lessee three or more
notices of default under paragraph 13.1(b), where a late charge becomes
payable under paragraph 13.4 for each such default, or paragraph 13.1(c),
whether or not the defaults are cured.
40. Multiple Tenant Building. In the event that the Premises are part of
a larger building or group of buildings ten Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may
make from time to time for the management, safety, care and cleanliness of
the building and grounds, the parking of vehicles and the preservation of
good order therein as well as for the convenience of other occupants and
tenants of the building. The violations of any such rules and regulations
shall be deemed a material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of
Lessee, its agents and invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so
long as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the Use of the Premises by Lessee. Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure
to do so shall constitute a material breach of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protect" and such
payment shall not be regarded as a voluntary payment, and there shall
survive the right on the part of said party to institute suit for recovery
of such sum. If it shall be adjudged that there was no legal obligation on
the part of said party to pay such sum or any part thereof, said party shall
be entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor evidence of such authority satisfactory to
Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Addendum. Attached hereto is an addendum or addenda containing
paragraphs A-1 through A-3 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION
OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO;
THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
The parties hereto have executed this Lease on the dates specified
immediately adjacent to their respective signatures.
Executed at 1411 E. Orangethorpe Ave., Fullerton, CA 92631, by Ron Hart -
President, Nelco Products, Inc.
Address 1009 Dolphin Terrace, Corona del Mar, CA 92625, by James Emmi -
Owner
Modification To Lease
Building Lease between James Emmi, Lessor and
Nelco, Lessee Dated December 12, 1989
1100 E. Kimberly Avenue, Anaheim, CA
#1 - 7.3 (c) Last sentence to read:
In addition, Lessor may require Lessee to pay Lessor's reasonable
attorneys fees and costs in participating in such action if Lessor
shall decide it is to Its best interest to do so.
#2 - 7.3 (d) Last sentence to read:
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's
machinery and equipment, including that which is affixed to the
Premises shall remain the property of Lessee and may be removed by
Lessee subject to the provisions of Paragraph 7.2(c).
#3 - 9.3 First sentence to read:
Subject to the provisions of Paragraphs 9.4. 9.5, and 9.6, if at any
time during the term of this Lease there is damage which is not an
Insured Loss and which falls within the classification of Premises
Partial Damage or Premises Building Partial Damage, unless caused by
negligent or willful act of Lessee (in which event Lessee shall make
the repair at Lessee's expense to the extent caused by the negligence
or willful act of Lessee......
#4 - 9.6 M First sentence to read:
If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not complete such repairs
within 90 days of written notice of such occurrence of damage, then
Lessee may terminate or cancel this lease by written notice to Lessor.
#5 - 13.1 (b) First sentence to read:
The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three business days after
written notice thereof from Lessor to Lessee.
#6 - 13.4 Add to end of paragraph:
To the extent Lesser is entitled to any other recovery for damages,
and late coverage payment which has already been made shall be
credited against the amount of such damages.
#7 - 14 Second sentence to read:
Any of the floor area of the building on the Premises.....
#8 - 14 Delete the sentence:
Delete: No reduction of rent shall occur if the only area taken is
that which does not have a building located thereon.
#9 - 17 Add to end of first sentence:
shall be delivered to grantee conditioned upon the acceptance of the
new owners of the terms and provisions of this lease.
#10 - 30 Change second sentence to read:
Notwithstanding such subordination, Lessee's right to quiet possession
of the Premises shall not be disturbed if Lessee is not in material
default so long as Lessee shall pay the rent and be in substantial
compliance with all provisions of this Lease.......
#11 - 32 Add to first sentence:
Lessor and Lessor's agents shall have the right to enter the Premises
at reasonable times after providing Lessee with 24 hour prior notice
for the purpose of inspecting the same, showing .....
#12 - 34 Add the sentence:
All signs currently in place are deemed to have Lessor's prior
consent.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
ADDENDUM TO
BUILDING LEASE BETWEEN JAMES EMMI, LESSOR
AND NELCO LESSEE DATED DECEMBER 12, 1989
1100 E. KIMBERLY AVENUE, ANAHEIM, CA
A1. CONSUMER PRICE INDEX ADJUSTMENT:
The monthly rental will be increased in the same proportion as the
percentage of increase of the Los Angeles/Long Beach/Anaheim area
C.P.I. as determined by the U.S. Department of Labor Statistics. The
starting base for the C.P.I. index will be the index for the month of
April 1990 which will be stipulated at 133.25. The C.P.I. adjustment
will be made effective on each of the 2nd, 4th, 6th, 8th and 10th
anniversary of the effective starting date of the lease (June 21,
1990). The bi-annual adjustment will be made every two years
thereafter through the lease option periods if exercised. The C.P.I.
index used for each period will be the published index for the month
of April preceding the effective adjustment date. In no case will the
rate increase be more than 10% per annum.
A2. ALTERATIONS
As provided for in Item 7.3, the building's original configuration and
improvements shall be deemed to be the condition of the building when
first occupied by the Lessee under previous leases. Any changes or
modifications having been done subsequent to the original occupancy
shall be subject to change back to original condition before any
termination of lease at the option of Lessor. Normal wear and tear
is excepted.
This building is presently occupied by Lessee and is acceptable as is.
The Lessee is hereby given approval to install a "Treater" similar to
the one in the 1107 E. Kimberly building under the terms and
conditions as specified in the lease.
A3. OPTIONS TO EXTEND LEASE PERIOD.
The Lessee is hereby granted the option to extend this lease for an
additional 5 years, June 21, 1995 to June 20, 2000 under the same
terms and conditions as the first 5 years, providing that the Lessee
has substantially complied with all the obligations of said lease for
the first 5 years. Rental rate will continue to be adjusted as
stipulated by C.P.I. adjustment, and tax and insurance adjustments as
provided for in lease.
The Lessee is hereby granted the option to renew this lease for an
additional 5 year period, June 21, 2000 to June 20, 2005. The rental
rate for this period will be determined by agreement between the
Lessor and Lessee and shall be equal to 90% of the average rental
rates in effect at the time of Lessee's notice of intention to renew.
Average rental rates will be determined by prevailing and available
rental rates in the Fullerton/Anaheim area for a minimum of 6 or more
buildings of comparable size and location.
In order to exercise the option to extend or renew this lease, the
Lessee must notify Lessor of his intention to exercise his option
before January 1, of the year of the start of option period.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
December 29, 1994
Mr. James Emmi
1009 Dolphin Terrace
Corona del Mar, CA 92625
VIA CERTIFIED MAIL
Dear Mr. Emmi,
Writing to you in my dual capacity as Vice President of Nelco Products,
Inc., this letter serves as formal notice on behalf of Nelco Products, Inc.,
of their intention to exercise the June 12, 1995, options to extend the
leases of both 1100 and 1107 E. Kimberly Avenue, Anaheim, CA, in accord with
paragraphs A3 in the Addendums dated December 12 1989, to the Leases also
dated December 12, 1989. The options thus exercised will run until June 20,
2000.
We extend our best wishes for the New Year.
Sincerely,
NELCO, INTERNATIONAL CORPORATION
Lee H. Newton
Vice President Finance
copy: Ron Hart, Nelco Products Inc.
Phil Smoot, Nelco International Corporation
Allen Levine, Park Electrochemical Corp.
Exhibit 10.02
STANDARD INDUSTRIAL LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12,
1989, is made by and between James Emmi (herein called "Lessor") and Nelco
Products Inc. (herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from
Lessor for the term, at the rental, and upon all of the conditions set forth
herein, that certain real property situated in the County of Orange, State
of California, commonly known as 1107 East Kimberly Avenue, Anaheim, CA
92801 and described as approximately 13,200 square foot industrial building
on approximately 30,000 square fee of land. Said real property including
the land and all improvements therein, is herein called the "Premises".
3. Term.
3.1 Term. The term of this Lease shall be for 60 months commencing
on June 21, 1990 and ending on June 20, 1995 unless sooner terminated
pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent until possession of the Premises is tendered to
Lessee; provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days from said commencement
date, Lessee may, at Lessee's option, by notice in writing to Lessor within
ten (10) days thereafter, cancel this Lease, in which event the parties
shall be discharged from all obligations hereunder, provided further,
however, that if such written notice of lessee is not received by Lessor
within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminated and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay
rent for such period at the initial monthly rates set forth below.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of $5600.00, in advance, on the 21 day of each month of the term
hereof, as rent for monthly rental rate shall increase or decrease as per
C.P.I. adjustment as defined in addendum (A-1) as well as tax and insurance
adjustments.
Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other person or at such other places as Lessor may
designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $ N/A as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this
Lease, Lessor may use, apply or retain all or any portion of said deposit
for the payment of any rent or other charge in default or for the payment of
any other sum to which Lessor may become obligated by reason of Lessee's
default, or to compensate Lessor for any loss or damage which Lessor may
suffer thereby. If Lessor so uses or applies all of any portion of said
deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to restore said deposit to
the full amount hereinabove stated and Lessee's failure to do so shall be a
material breach of this Lease. If the monthly rent shall, from time to
time, increase during the term of this Lease, Lessee shall thereupon deposit
with Lessor additional security deposit so that the amount of security
deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original monthly
rent set forth in paragraph 4 hereof. Lessor shall not be required to keep
said deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest hereunder) at the
expiration of the term hereof, and after Lessee has vacated the Premises.
No trust relationship is created herein between Lessor and Lessee with
respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for
manufacturing, warehousing and related services or any other use which is
reasonably comparable and for no other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to
the use for which Lessee will use the Premises, does not violate any
covenants or restrictions of record, or any applicable building code,
regulation or ordinance in effect on such Lease term commencement date. In
the event it is determined that this warranty has been violated, then it
shall be the obligation of the Lessor, after written notice from Lessee, to
promptly, at Lessor's sole cost and expense, rectify any such violation. In
the event Lessee does not given to Lessor written notice of the violation of
this warranty within six months from the date that the Lease term commences,
the correction of same shall be the obligation of the Lessee or Lessee's
sole cost. The warranty contained in this paragraph 6.2(a) shall be of no
force or effect if, prior to the date of this Lease, Lessee was the owner or
occupant of the Premises, and, in such event, Lessee shall correct any such
violation effect if, prior to the date of this Lease, Lessee was the owner
or occupant of the Premises, and, in such event, Lessee shall correct any
such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises. Lessee shall not use nor
permit the use of the Premises in any manner that will tend to create waste
or a nuisance or, if there shall be more than one tenant in the building
containing the Premises, shall tend to disturb such other tenants.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession)
and Lessor further warrants to Lessee that the plumbing, lighting, air-
conditioning, heating, and leading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the event that it is
determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting
forth with specificity the nature of the violation, to promptly, at Lessor's
sale cost, rectify such violation. Lessee's failure to give such written
notice to Lessor within thirty (30) days after the Lease commencement date
shall cause the conclusive presumption that Lessor has complied with all of
Lessor's obligations hereunder. The warranty contained in this paragraph
6.3(a) shall be of no force or effect if prior to the date of this Lease,
Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease
commencement date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable zoning, municipal, county
and state laws, ordinances and regulations governing and regulating the use
of the Premises, and any covenants or restrictions of record, and accepts
this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto. Lessee acknowledges that neither Lessor nor
Lessor's agent has made any representation or warranty as to the present or
future suitability of the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessor's Obligations. Subject to the provisions of
Paragraphs 6, 7.2 and 9 and except for damage caused by any negligent or
intentional act or omission of Lessee, Lessee's agents, employees, or
invitees in which event Lessee shall repair the damage, Lessor, at Lessor's
expense, shall keep in good order, condition and repair the foundations,
exterior walls and the exterior roof of the Premises. Lessor shall not,
however, be obligated to paint such exterior, nor shall Lessor be required
to maintain the interior surface of exterior walls, windows, doors or plate
glass. Lessor shall have no obligation to make repairs under this Paragraph
7.1 until a reasonable time after receipt of written notice of the need for
such repairs, Lessee expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraph 6, 7.1 and 9, Lessee,
at Lessee's expense, shall keep in good order, condition and repair the
Premises and every part thereof (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily
accessible to Lessee) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, (Lessee shall procure
and maintain, at Lessee's expense, an air conditioning system maintenance
contract) ventilating, electrical and lighting facilities and equipment
within the Premises, fixtures, interior walls and interior surface of
exterior walls, ceilings, windows, doors, plate glass, and skylights,
located within the Premises, and all landscaping, driveways, parking lots,
fences and signs located in the Premises and all sidewalks and parkways
adjacent to the Premises.
(b) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.2 or under any other paragraph of this Lease, Lessor may at
Lessor's option enter upon the Premises after 10 days' prior written notice
to Lessee (except in the case of emergency, in which case no notice shall be
required), perform such obligations on Lessee's behalf and put the Premises
in good order, condition and repair, and the cost thereof together with
interest thereon at the maximum rate then allowable by law shall be due and
payable as additional rent to Lessor together with Lessee's next rental
installment.
(c) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of its trade fixtures, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this Lease,
Lessee shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing and
fencing on the premises in good operating condition.
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, or Utility Installations in, on or
about the Premises, except for nonstructural alterations not exceeding
$2,500 in cumulative costs during the term of this Lease. In any event,
whether or not in excess of $2,500 in cumulative cost, Lessee shall make no
change or alteration to the exterior of the Premises nor the exterior of the
building(s) on the Premises without Lessor's prior written consent. As used
in this Paragraph 7.3 the term "Utility Installation" shall mean carpeting,
window coverings, air lines, power panels, electrical distribution systems,
lighting fixtures, space heaters, air conditioning, plumbing and fencing.
Lessor may require that Lessee remove any or all of said alterations,
improvements, additions or Utility Installations at the expiration of the
term, and restore the Premises to their prior condition. Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of the work.
Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of Lessor, Lessor may require that
Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to make and
which requires the consent of the Lessor shall be presented to Lessor in
written form, with proposed detailed plans. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee acquiring a
permit to do so, from appropriate governmental agencies, the furnishing of
a copy thereof to Lessor prior to the commencement of the work and the
compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) (#1) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or
for use in the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days notice prior
to the commencement of any work in the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of
any such lien, claim or demand, then Lessee shall, at its sole expense
defend itself and Lessor against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises, upon the condition that if Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor
in an amount equal to such contested lien claim or demand indemnifying
Lessor against liability for the same and holding the Premises free from the
effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
(d) (#2) Unless Lessor requires their removal, as set forth in
Paragraph 7.3(a), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at
the expiration of the term. Notwithstanding the provisions of this
Paragraph 7.3(d), Lessee's machinery and equipment, other than that which is
affixed to the Premises so that it cannot be removed without material damage
to the Premises, shall remain the property of Lessee and may be removed by
Lessee subject to the provisions of Paragraph 7.2(c).
8. Insurance; Indemnity.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's
expense, obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage insurance insuring
Lessee and Lessor against any liability arising out of the use, occupancy or
maintenance of the Premises and all other areas appurtenant thereto. Such
insurance shall be in an amount not less than $500,000 per occurrence. The
policy shall insure performance by Lessee of the indemnity provisions of
this Paragraph 8. The limits of said insurance shall not, however, limit
the liability of Lessee hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep
in force during the term of this Lease a policy of Combined Single Limit
Bodily Injury and Property Damage Insurance, insuring Lessor, but not
Lessee, against any liability arising out of the ownership, use, occupancy
or maintenance of the Premises and all areas appurtenant thereto in an
amount not less than $500,000 per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering
loss or damage to the Premises, but not Lessee's fixtures, equipment or
tenant improvements in an amount not to exceed the full replacement value
thereof, as the same may exist from time to time, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises) special extended perils
("all risk", as such term is used in the insurance industry) but not plate
glass insurance. In addition, the Lessor shall obtain and keep in force,
during the term of this Lease, a policy or rental value insurance covering
a period of one year, with loss payable to Lessor, which insurance shall
also cover all real estate taxes and insurance costs for said period.
8.4 Payment of Premium Increase.
(a) Lessee shall pay to Lessor, during the term hereof, in
addition to the rent, the amount of any increase in premiums for the
insurance required under Paragraphs 8.2 and 8.3 over and above such premiums
paid during the Base Period, as hereinafter defined, whether such premium
increase shall be the result of the nature of Lessee's occupancy, any act or
omission of Lessee, requirements of the holder of a mortgage or deed of
trust covering the Premises, increased valuation of the Premises, or general
rate increases. IN the event that the Premises have been occupied
previously, the words "Base Period" shall mean the last twelve months of the
prior occupancy. In the event that the Premises have never been previously
occupied, the premiums during the "Base Period" shall be deemed to be the
lowest premiums reasonably obtainable for said insurance assuming the most
nominal use of the Premises. Provided, however, in lieu of the Base Period,
the parties may insert a dollar amount at the end of this sentence which
figure shall be considered as the insurance premium for the Base Period:
$2227.00. In no event, however, shall Lessee be responsible for any portion
of the premium cost attributable to liability insurance coverage in excess
of $1,000,000 procured under paragraph 8.2.
(b) Lessee shall pay any such premium increases to Lessor within
30 days after receipt by Lessee of a copy of the premium statement or other
satisfactory evidence of the amount due. If the insurance policies
maintained hereunder cover other improvements in addition to the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such
increase attributable to the Premises and showing in reasonable detail, the
manner in which such amount was computed. If the term of this Lease shall
not expire concurrently with the expiration of the period covered by such
insurance, Lessee's liability for premium increases shall be prorated on an
annual basis.
(c) If the Premises are part of a larger building, then Lessee
shall not be responsible for paying any increase in the property insurance
premium caused by the acts or omissions of any other tenant of the building
of which the Premises are a part.
8.5. Insurance Policies. Insurance required hereunder shall be
in companies holding a "General Policyholders Rating" of at least B plus, or
such other rating as may be required by a lender having a lien on the
Premises, as set forth in the most current issue of "Best's Insurance
Guide". Lessee shall deliver to Lessor copies of policies of liability
insurance required under Paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance. No such policy shall be cancelable
or subject to reduction of coverage or other modification except after
thirty (30) days prior written notice to Lessor. Lessee shall, at least
thirty (30) days prior to the expiration of such policies, furnish Lessor
with renewals or "binders" thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee
upon demand. Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph 8.3.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less
than 50% of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Partial Damage" shall herein mean
damage or destruction to the building of which the Premises are a part to
the extent that the cost of repair, is less than 50% of the fair market
value of such building as a whole immediately prior to such damage or
destruction.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or
more of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Total Destruction" shall herein
mean damage or destruction to the building of which the Premises are a part
to the extent that the cost of repair is 50% or more of the fair market
value of such building as a whole immediately prior to such damage or
destruction.
(c) "Insured Loss" shall herein mean damage or destruction which
was caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 Partial Damage - Insured Loss. Subject to the provisions of
paragraph 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is an Insured Loss and which falls into the
classification of Premises Partial Damage or Premises Building Partial
Damage, then Lessor shall, at Lessor's sole cost, repair such damage, but
not Lessee's fixtures, equipment or tenant improvements, as soon as
reasonably possible and this Lease shall continue in full force and effect.
9.3 (#3) Partial Damage - Uninsured Loss. Subject to the
provisions of Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of
this Lease there is damage which is not an Insured Loss and which falls
within the classification of Premises Partial Damage or Premises Building
Partial Damage, unless caused by a negligent or willful act of Lessee (in
which event Lessee shall make the repairs at Lessee's expense), Lessor may
at Lessor's option either (i) repair such damage as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in
full force and effect, or (ii) give written notice to Lessee within thirty
(30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease, as of the date of the
occurrence of such damage. In the event Lessor elects to give such notice
of Lessor's intention to cancel and terminate this Lease, Lessee shall have
the right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's intention to repair such damage at
Lessee's expense, without reimbursement from Lessor, in which event this
Lease shall continue in full force and effect, and Lessee shall proceed to
make such repairs as soon as reasonably possible. If Lessee does not give
such notice within such 10-day period this Lease shall be cancelled and
terminated as of the date of the occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this
Lease there is damage, whether or not an Insured Loss, (including
destruction required by any authorized public authority), which falls into
the classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of such
total destruction.
9.5 Damage Near End of Term.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an Insured Loss, which falls within
the classification of Premises Partial Damage, Lessor may at Lessor's option
cancel and terminate this Lease as of the date of occurrence of such damage
by giving written notice to Lessee of Lessor's election to do so within 30
days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.59(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than 20 days after the
occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If
Lessee duly exercises such option during said 20 day period, Lessor shall,
at Lessor's expense, repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to
exercise such option during said 20 day period, then Lessor may at Lessor's
option terminate and cancel this Lease as of the expiration of said 20 day
period by giving written notice to Lessee of Lessor's election to do so
within 10 days after the expiration of said 20 day period, notwithstanding
any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3,
and Lessor or Lessee repairs or restores the Premises pursuant to the
provisions of this Paragraph 9, the rent payable hereunder for the period
during which such damage, repair or restoration continues shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired.
Except for abatement of rent, if any, Lessee shall have no claim against
Lessor for any damage suffered by reason of any such damage, destruction,
repair or restoration.
(b) (#4) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within 90 days after such obligations shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by
giving Lessor written notice of Lessee's election to do so at any time prior
to the commencement of such repair or restoration. In such event this Lease
shall terminate as of the date of such notice.
9.7 Termination - Advance Payments. Upon termination of this
Lease pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any
statutes which relate to termination of leases when leased property is
destroyed and agree that such event shall be governed by the terms of this
Lease.
10. Real Property Taxes.
10.1 Payment of Tax Increase. Lessor shall pay the real property
tax, as defined in paragraph 10.3, applicable to the Premises; provided,
however, that Lessee shall pay, in addition to rent, the amount, if any, by
which real property taxes applicable to the Premises increase over the
fiscal real estate tax year 1990-1991. Such payment shall be made by Lessee
within thirty (30) days after receipt of Lessor's written statement setting
forth the amount of such increase and the computation thereof. If the term
of this Lease shall not expire concurrently with the expiration of the tax
fiscal year, Lessee's liability for increased taxes for the last partial
lease year shall be prorated on an annual basis.
10.2 Additional Improvements. Notwithstanding paragraph 10.1
hereof, Lessee shall pay to Lessor upon demand therefor the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 Definition of "Real Property Tax". As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or in the real property of
which the Premises are a part, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Premises.
The term "real property tax" shall also include any tax, fee levy,
assessment or charge (i) in substitution of, partially or totally, any tax,
fee levy, assessment or charge hereinabove included within the definition of
"real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax", or (iii) which is imposed for
a service or right not charged prior to June 1, 1978, or, if previously
charged, has been increased since June 1, 1978, or (iv) which is imposed as
a result of a transfer, either partial or total, of Lessor's interest in the
Premises or which is added to a tax or charge hereinbefore included within
the definition of real property tax by reason of such transfer, or (v) which
is imposed by reason of this transaction, any modifications or changes
hereto, or any transfers hereof.
10.4 Joint Assessment. If the Premises are not separately
assessed, Lessee's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the
real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable
to Lessee within 10 days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises,
together with any taxes thereon. If any such services are not separately
metered to Lessee, lessee shall pay a reasonable proportion to be determined
by Lessor or all charges jointed metered with other premises.
12. Assignment and Subletting.
12.1 Lessors's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer
or encumber all or any part of Lessee's interest in this Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said
assignee assumes, in full, the obligations of Lessee under this Lease. Any
such assignment shall not, in any way, affect or limit the liability of
Lessee under the terms of this Lease even if after such assignment or
subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or
alter the primary liability of Lessee to pay the rent and to perform all
other obligations to be performed by Lessee hereunder. The acceptance of
rent by Lessor from any other person shall not be deemed to be a waiver by
Lessor of any provision hereof. Consent to one assignment or subletting
shall not be deemed consent to any subsequent assignment or subletting. In
the event of default by any assignee of Lessee or any successor of Lessee,
in the performance of any of the terms hereof, Lessor may proceed directly
against Lessee without the necessity of exhausting remedies against said
assignee. Lessor may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of
Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining its or their consent thereto and such action shall not relieve
Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith, such attorneys fees not to exceed $350.00 for each
such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by
Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) (#5) The failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder, as and when due,
where such failure shall continue for a period of three days after written
notice thereof from Lessor to Lessee. In the event that Lessor serves
Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful
Detainer statues such Notice to Pay Rent or Quit shall also constitute the
notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by Lessee, other than described in paragraph (b) above, where such
failure shall continue for a period of 30 days after written notice thereof
from Lessor to Lessee; provided, however, that if the nature of Lessee's
default is such that more than 30 days are reasonably required for its cure,
then Lessee shall not be deemed to be in default if Lessee commenced such
cure within said 30-day period and thereafter diligently prosecutes such
cure to completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. 101 or any successor statue thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days.
Provided, however, in the event that any provision of this paragraph 13.1(d)
is contrary to any applicable law, such provision shall be of no force or
effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such material default or breach
by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could
be reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have abandoned
the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations
of Lessee under the terms of this Lease shall bear interest from the date
due at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee
to Lessor and to the holder of any first mortgage or deed of trust covering
the Premises whose name and address shall have theretofore been furnished to
Lessee in writing, specifying wherein Lessor has failed to perform such
obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance then
Lessor shall not be in default if Lessor commences performance within such
30-day period and thereafter diligently prosecutes the same to completion.
13.4 Late Charges. (#6) Lessee hereby acknowledges that late payment
by Lessee to Lessor of rent and other sums due hereunder will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within ten (10)
days after such amount shall be due, then, without any requirement for
notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of
such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance or such late charge by Lessor
shall in no event constitute a waiver of Lessee's default with respect to
such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or
any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall
pay to Lessor, if Lessor shall so request, in addition to any other payments
required under this Lease, a monthly advance installment, payable at the
same time as the monthly rent, as estimated by Lessor, for real property tax
and insurance expenses on the Premises which are payable by Lessee under the
terms of this Lease. Such fund shall be established to insure payment when
due before delinquency of any or all such real property taxes and insurance
premiums. If the amounts paid to Lessor by Lessee under the provisions of
this paragraph are insufficient to discharge the obligations of Lessee to
pay such real property taxes and insurance premiums as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums
necessary to pay such obligations. All moneys paid to Lessor under this
paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a default in the obligations of Lessee to perform
under this Lease, then any balance remaining from funds paid to Lessor under
the provisions of this paragraph may, at the option of Lessor, be applied to
the payment of any monetary default of Lessee in lieu of being applied to
the payment of real property tax and insurance premiums.
14. Condemnation. (#7) If the Premises or any portion thereof are taken
under the power of eminent domain, or sold under the threat of the exercise
of said power (all of which are herein called "condemnation"), this Lease
shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than
10% of the floor area of the building on the Premises, or more than 25% of
the land area of the Premises which is not occupied by any building, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten 910) days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within ten
(10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in
the proportion that the floor area of the building taken bears to the total
floor area of the building situation on the Premises. (#8) Any award for the
taking of all or any part of the Premises under the power of eminent domain
or any payment made under the threat of the exercise of such power shall be
the property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage
to the Premises caused by such condemnation except to the extent that Lessee
has been reimbursed therefor by the condemning authority. Lessee shall pay
any amount in excess of such severance damages required to complete such
repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall
pay to N/A Licensed real estate broker(s), a fee as set forth in a separate
agreement between lessor and said broker(s), or in the event there is no
separate agreement between Lessor and said broker(s), the sum of $____, for
brokerage services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under
this Lease, or any subsequently granted option which is substantially
similar to an Option granted to Lessee under this Lease, or if Lessee
acquires any rights to the Premises or other premises described in this
Lease which are substantially similar to what Lessee would have acquired had
an Option herein granted to Lessee been exercised, or if Lessee remains in
possession of the Premises after the expiration of the term of this Lease
after having failed to exercise an Option, or if said broker(s) are the
procuring cause of any other lease or safe entered into between the parties
pertaining to the Premises and/or any adjacent property in which Lessor has
an interest, then as to any of said transactions, Lessor shall pay said
broker(s) a fee in accordance with the schedule of said broker(s) in effect
at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor
but also on behalf of any person, corporation, association, or other entity
having an ownership interest in said real property or any part thereof, when
such fee is due hereunder. Any transferee of Lessor's interest in this
Lease, whether such transfer is by agreement or by operation of law, shall
be deemed to have assumed Lessor's obligation under this Paragraph 15. Said
broker shall be a third party beneficiary of the provisions of this
Paragraph 15.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor
a statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the rent and other charges are paid
in advance if any, and (ii) acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder, or
specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a material breach of this Lease or shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification, except as may be presented by Lessor, (ii) that there
are no uncured defaults in Lessor's performance, and (iii) that not more
than one month's rent has been paid in advance or such failure may be
considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee hereby agrees to deliver to any lender
or purchaser designated by Lessor such financial statements of lessee as may
be reasonably required by such lender or purchaser. Such statements shall
include the past three years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or
purchaser in confidence and shall be used only for the purposes herein set
forth.
17. Lessor's Liability. (#9) The term "Lessor" as used herein shall mean
only the owner or owners at the time in question of the fee title or a
lessee's interest in a ground lease of the Premises, and except as expressly
provided in Paragraph 15, in the event of any transfer of such title or
interest. Lessor herein named (and in cases of any subsequent transfers
then the grantor) shall be relieved from and after the date of such transfer
of all liability as respects Lessor's obligations thereafter to be
performed, provided that any funds in the hands of Lessor or the then
grantor at the time of such transfer, in which Lessee has an interest, shall
be delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at
the maximum rate then allowable by law from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease,
provided, however, that interest shall not be payable on late charges
incurred by Lessee nor on any amounts upon which late charges are paid by
Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under
the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein.
No prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise
stated in this Lease, Lessee hereby acknowledges that neither the real
estate broker listed in Paragraph 15 hereof nor any cooperating broker on
this transaction nor the Lessor or any employees or agents of any of said
persons has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the
Occupational Safety Health Act, the legal use and adaptability of the
Premises and the compliance thereof with all applicable laws and regulations
in effect during the term of this Lease except as otherwise specifically
stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail,
and if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or to Lessor at the address noted below the signature of
the respective parties, as the case may be. Either party may by notice to
the other specify a different address for notice purposes except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice purposes. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee
of the same or any other provision. Lessor's consent to, or approval of any
act, shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of
rent hereunder by Lessor shall not be a waiver of any preceding breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
25. Holding Over. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Lessee, but all
options and rights of first refusal, if any granted under the terms of this
Lease shall be deemed terminated and be of no further effect during said
month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable
by Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of Paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by
the laws of the State wherein the Premises are located.
30. Subordination. (#10)
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation or
security now or hereafter placed upon the real property of which the
Premises are a part and to any and all advances made on the security thereof
and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Lessee's right to
quiet possession of the Premises shall not be disturbed if Lessee is not in
default and so long as Lessee shall pay the rent and observe and perform all
of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgages, trustee or ground lessor shall
elect to have this Lease prior to the lien of its mortgage, deed of trust or
ground lease, and shall given written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust, or ground lease,
whether this Lease is dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate
an attornment, a subordination or to make this Lease prior to the lien or
any mortgage, deed of trust or ground lease, as the case may be. Lessee's
failure to execute such documents within 10 days after written demand shall
constitute a material default by Lessee hereunder, or, at Lessor's option,
Lessor shall execute such documents on behalf of Lessee as Lessee's
attorney-in-fact. Lessee does hereby make, constitute and irrevocably
appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place and
stead, to execute such documents in accordance with this paragraph 30(b).
31. Attorney's Fees. If either party or the broker named herein brings
an action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled
to his reasonable attorney's fees to be paid by the losing party as fixed by
the court. The provisions of this paragraph shall inure to the benefit of
the broker named herein who seeks to enforce a right hereunder.
32. Lessor's Access. (#11) Lessor and Lessor's agents shall have the
right to enter the Premises at reasonable times for the purpose of
inspecting the same, showing the same to prospective purchasers, lenders, or
lessees, and making such alterations, repairs, improvements or additions to
the Premises or to the building of which they are a part as Lessor may deem
necessary or desirable. Lessor may at any time place on or about the
Premises and ordinary "For Sale" signs and Lessor may at any time during the
last 120 days of the term hereof place on or about the Premises any ordinary
"For Lease" signs, all without rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without
first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.
34. Signs. (#12) Lessee shall not pace any sign upon the Premises
without Lessor's prior written consent except that Lessee shall have the
right, without the prior permission of Lessor to place ordinary and usual
for rent or sublet signs thereon.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party, such consent
shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants and provisions on Lessee's
part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has
the following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any lease that Lessee has
on other property of Lessor; (2) the option or right of first refusal to
lease the Premises or the right of first offer to lease the Premises or the
right of first refusal to lease other property of Lessor or the right of
first offer to lease other property of Lessor; (3) the right or option to
purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises or the right
or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 Options Personal. Options granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate
as defined in paragraph 12.2 of this Lease. The options herein granted to
Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised
unless the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i)
during the time commencing from the date Lessor gives to Lessee a notice of
default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the
default alleged in said notice of default is cured, or (ii) during the
period of time commencing on the day after a monetary obligation to Lessor
is due from Lessee and unpaid (without any necessity for notice thereof to
Lessee) continuing until the obligation is paid, or (iii) at any time after
an event of default described in paragraphs 13.1(a), 13.1(d), or 13.1(e)
(without any necessity of Lessor to give notice of such default to Lessee),
or (iv) in the event that Lessor has given to Lessee three or more notices
of default under paragraph 13.1(b), where a late charge becomes payable
under paragraph 13.4 for each of such defaults, or paragraph 13.1(c),
whether or not the defaults are cured, during the 12 month period prior to
the time that Lessee intends to exercise the subject option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation
of Lessee for a period of 30 days after such obligation becomes due (without
any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee
fails to commence to cure a default specified in paragraph 13.1(c) within 30
days after the date that Lessor gives notice to Lessee of such default
and/or Lessee fails thereafter to diligently prosecute said cure to
completion, or (iii) Lessee commits a default described in paragraph
13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice
of such default to Lessee), or (iv) Lessor gives to Lessee three or more
notices of default under paragraph 13.1(b), where a late charge becomes
payable under paragraph 13.4 for each such default, or paragraph 13.1(c),
whether or not the defaults are cured.
40. Multiple Tenant Building. In the event that the Premises are part of
a larger building or group of buildings ten Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may
make from time to time for the management, safety, care and cleanliness of
the building and grounds, the parking of vehicles and the preservation of
good order therein as well as for the convenience of other occupants and
tenants of the building. The violations of any such rules and regulations
shall be deemed a material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of
Lessee, its agents and invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time,
to grant such easements, rights and dedications that Lessor deems necessary
or desirable, and to cause the recordation of Parcel Maps and restrictions,
so long as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the Use of the Premises by Lessee. Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure
to do so shall constitute a material breach of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protect" and such
payment shall not be regarded as a voluntary payment, and there shall
survive the right on the part of said party to institute suit for recovery
of such sum. If it shall be adjudged that there was no legal obligation on
the part of said party to pay such sum or any part thereof, said party shall
be entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor evidence of such authority satisfactory to
Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Addendum. Attached hereto is an addendum or addenda containing
paragraphs A-1 through A-3 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER
OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES
OF THIS LEASE.
The parties hereto have executed this Lease on the dates specified
immediately adjacent to their respective signatures.
Executed at 1411 E. Orangethorpe Ave., Fullerton, CA 92631, by Ron Hart -
President, Nelco Products, Inc.
Address 1009 Dolphin Terrace, Corona del Mar, CA 92625, by James Emmi -
Owner
Modification To Lease
Building Lease between James Emmi, Lessor and
Nelco, Lessee Dated December 12, 1989
1100 E. Kimberly Avenue, Anaheim, CA
#1 - 7.3 (c) Last sentence to read:
In addition, Lessor may require Lessee to pay Lessor's reasonable
attorneys fees and costs in participating in such action if Lessor
shall decide it is to Its best interest to do so.
#2 - 7.3 (d) Last sentence to read:
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's
machinery and equipment, including that which is affixed to the
Premises shall remain the property of Lessee and may be removed by
Lessee subject to the provisions of Paragraph 7.2(c).
#3 - 9.3 First sentence to read:
Subject to the provisions of Paragraphs 9.4. 9.5, and 9.6, if at any
time during the term of this Lease there is damage which is not an
Insured Loss and which falls within the classification of Premises
Partial Damage or Premises Building Partial Damage, unless caused by
negligent or willful act of Lessee (in which event Lessee shall make
the repair at Lessee's expense to the extent caused by the negligence
or willful act of Lessee......
#4 - 9.6 M First sentence to read:
If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not complete such repairs
within 90 days of written notice of such occurrence of damage, then
Lessee may terminate or cancel this lease by written notice to Lessor.
#5 - 13.1 (b) First sentence to read:
The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three business days after
written notice thereof from Lessor to Lessee.
#6 - 13.4 Add to end of paragraph:
To the extent Lesser is entitled to any other recovery for damages,
and late coverage payment which has already been made shall be
credited against the amount of such damages.
#7 - 14 Second sentence to read:
Any of the floor area of the building on the Premises.....
#8 - 14 Delete the sentence:
Delete: No reduction of rent shall occur if the only area taken is
that which does not have a building located thereon.
#9 - 17 Add to end of first sentence:
shall be delivered to grantee conditioned upon the acceptance of the
new owners of the terms and provisions of this lease.
#10 - 30 Change second sentence to read:
Notwithstanding such subordination, Lessee's right to quiet possession
of the Premises shall not be disturbed if Lessee is not in material
default so long as Lessee shall pay the rent and be in substantial
compliance with all provisions of this Lease.......
#11 - 32 Add to first sentence:
Lessor and Lessor's agents shall have the right to enter the Premises
at reasonable times after providing Lessee with 24 hour prior notice
for the purpose of inspecting the same, showing .....
#12 - 34 Add the sentence:
All signs currently in place are deemed to have Lessor's prior
consent.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
ADDENDUM TO
BUILDING LEASE BETWEEN JAMES EMMI, LESSOR
AND NELCO LESSEE DATED DECEMBER 12, 1989
1100 E. KIMBERLY AVENUE, ANAHEIM, CA
A1. CONSUMER PRICE INDEX ADJUSTMENT:
The monthly rental will be increased in the same proportion as the
percentage of increase of the Los Angeles/Long Beach/Anaheim area
C.P.I. as determined by the U.S. Department of Labor Statistics. The
starting base for the C.P.I. index will be the index for the month of
April 1990 which will be stipulated at 133.25. The C.P.I. adjustment
will be made effective on each of the 2nd, 4th, 6th, 8th and 10th
anniversary of the effective starting date of the lease (June 21,
1990). The bi-annual adjustment will be made every two years
thereafter through the lease option periods if exercised. The C.P.I.
index used for each period will be the published index for the month
of April preceding the effective adjustment date. In no case will the
rate increase be more than 10% per annum.
A2. ALTERATIONS
As provided for in Item 7.3, the building's original configuration and
improvements shall be deemed to be the condition of the building when
first occupied by the Lessee under previous leases. Any changes or
modifications having been done subsequent to the original occupancy
shall be subject to change back to original condition before any
termination of lease at the option of Lessor. Normal wear and tear
is excepted.
This building is presently occupied by Lessee and is acceptable as is.
A3. OPTIONS TO EXTEND LEASE PERIOD.
The Lessee is hereby granted the option to extend this lease for an
additional 5 years, June 21, 1995 to June 20, 2000 under the same
terms and conditions as the first 5 years, providing that the Lessee
has substantially complied with all the obligations of said lease for
the first 5 years. Rental rate will continue to be adjusted as
stipulated by C.P.I. adjustment, and tax and insurance adjustments as
provided for in lease.
The Lessee is hereby granted the option to renew this lease for an
additional 5 year period, June 21, 2000 to June 20, 2005. The rental
rate for this period will be determined by agreement between the
Lessor and Lessee and shall be equal to 90% of the average rental
rates in effect at the time of Lessee's notice of intention to renew.
Average rental rates will be determined by prevailing and available
rental rates in the Fullerton/Anaheim area for a minimum of 6 or more
buildings of comparable size and location.
In order to exercise the option to extend or renew this lease, the
Lessee must notify Lessor of his intention to exercise his option
before January 1, of the year of the start of option period.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
December 29, 1994
Mr. James Emmi
1009 Dolphin Terrace
Corona del Mar, CA 92625
VIA CERTIFIED MAIL
Dear Mr. Emmi,
Writing to you in my dual capacity as Vice President of Nelco Products,
Inc., this letter serves as formal notice on behalf of Nelco Products, Inc.,
of their intention to exercise the June 12, 1995, options to extend the
leases of both 1100 and 1107 E. Kimberly Avenue, Anaheim, CA, in accord with
paragraphs A3 in the Addendums dated December 12 1989, to the Leases also
dated December 12, 1989. The options thus exercised will run until June 20,
2000.
We extend our best wishes for the New Year.
Sincerely,
NELCO, INTERNATIONAL CORPORATION
Lee H. Newton
Vice President Finance
copy: Ron Hart, Nelco Products Inc.
Phil Smoot, Nelco International Corporation
Allen Levine, Park Electrochemical Corp.
Exhibit 10.03
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between
TCLW/Fullerton, a general partnership, hereinafter referred to as
"Landlord," and Nelco Products, Inc., a Delaware Corporation, hereinafter
referred to as "Tenant":
WITNESSETH:
1. Premises and Term. In consideration of the obligation of Tenant
to pay rent as herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to
Tenant, and Tenant hereby takes from Landlord, certain premises consisting
of space within a building described as follows:
Approximately 36,462 square feet at 1411 Orangethorpe, Fullerton,
California within the County of Orange, State of California, and more
particularly described on Exhibit "A" attached hereto and incorporated
herein by this reference (hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the same for a term commencing on the
"commencement date" (as hereinafter defined) and ending 59 months thereafter
(provided, however, that in the event the commencement date other than the
first day of a calendar month, said term shall extend for said number of
months in addition to the remainder of the calendar month following the
commencement date), unless earlier terminated in accordance with the
provisions of this lease.
A. The "commencement date" shall be November 1, 1993. Tenant
acknowledges that it has inspected and accepts the premises, and
specifically the buildings and improvements comprising the same, in their
present condition as suitable for the purpose for which the premises are
leased. Taking of possession by Tenant shall be deemed conclusively to
establish that said buildings and other improvements are in good and
satisfactory condition as of when possession was taken. Tenant hereby
waives the benefit of California Civil Code 1941. Tenant further
acknowledges that no representations as to the repair of the premises, nor
premises to alter, remodel or improve the premises have been made by
Landlord, unless such are expressly set forth in this lease.
2. Base Rent and Security Deposit.
A. Tenant agrees to pay as rental for the premises to Landlord or
order, without deduction or set off, for the entire term hereof, Twelve
Thousand Three Hundred Ninety Seven and 00/100 dollars ($12,397.00) per
month. One such monthly installment shall be due and payable on the date
hereof and a like monthly installment shall be due and payable without
demand on or before the first day of each calendar month succeeding the
commencement date recited above during the hereby demised term, except that
the rental payment for any fractional calendar month at the commencement or
end of the lease term shall be prorated. All costs and expenses which are
the responsibility of Tenant also constitute "rent." In the event Tenant
fails to pay any installment of rent hereunder (1), to help defray the
additional cost to Landlord for processing such late payments. Tenant shall
pay to Landlord on demand a late charge in an amount equal to (2) of such
installment. The provision for such late charge shall be in addition to all
of Landlord's other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Landlord's remedies in any
manner.
B. In addition, Tenant agrees to deposit with Landlord on the
date hereof the sum of Twenty Four Thousand Seven Hundred Ninety Four and
00/100 dollars ($24,794.00), which sum shall be held by Landlord, (3) for
interest, as security for the performance of Tenant's covenants and
obligations under this lease, it being expressly understood and agreed that
such deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default. Upon the occurrence of any event of
default by Tenant, Landlord may, from time to time, without prejudice to any
other remedy provided herein or provided by law, use such funds to the
extent necessary to make good any arrears of rent or other payments due
Landlord hereunder, and any other damage, injury, expense or liability
caused by such event of default; and Tenant shall pay to Landlord on demand
the amount so applied in order to restore the security deposit to its
original amount. Although the security deposit shall be deemed the property
of Landlord, any remaining balance of such deposit shall be returned by
Landlord to Tenant at such time after termination or expiration of this
lease that all of Tenant's obligations under this lease have been fulfilled
(4).
3. Use. The demised premises shall be used only for the purpose of
(5) receiving, storing, shipping and selling (other than retail) for
interest, materials and merchandise made and/or distributed by Tenant and
for such other lawful purposes as may be incidental thereto. Under no
circumstances shall the premises be used for gambling or the retail sale of
alcoholic beverages, whether or not those uses may be lawful. Outside
storage is prohibited without Landlord's prior written consent. Tenant
shall at its own cost and expense obtain any and all licenses and permits
necessary for any such use. Tenant shall comply with all governmental laws,
ordinances and regulations applicable to the premises or use thereof, and
shall promptly comply with all governmental orders and directives for the
correction, prevention and abatement of nuisances in or upon, or connected
with, the premises, all at (6). Without limiting the generality of the
foregoing, and subject to paragraph 6, Tenant shall at its own cost and
expense install and construct all physical improvements to the premises,
interior and exterior, required by any Federal, State or local building code
or other law or regulation enacted after the date on which this lease is
executed by Tenant, or after said date determined retroactively to apply to
the premises, (7) made necessary by the nature of Tenant's use of the
premises. Tenant shall not permit any objectionable or unpleasant odors,
smoke, dust, gas, noise or vibrations to emanate from the premises, nor take
any other action which would constitute a nuisance or would disturb or
endanger any other tenants of the building in which the premises are
situated or unreasonably interfere with their use of their respective
premises. Tenant shall not place a load upon the floor of the premises
which exceeds the load per square foot which such floor was designed to
carry and which is allowed by law. Without Landlord's prior written
consent, Tenant shall not receive, store or otherwise handle any product,
material or merchandise which is explosive or highly inflammable. Tenant
will not permit the premises to be used for any purpose which would render
the insurance thereon void or the insurance risk more hazardous. If at any
time during the term of this lease the State Board of Insurance or other
insurance authority disallows any of Landlord's sprinkler credits or imposes
an additional penalty or surcharge in Landlord's insurance premiums because
of Tenant's original or subsequent placement or use of storage racks or
binds, Tenant's method of storage, the nature of Tenant's inventory or any
other act of Tenant, Tenant agrees to pay, as additional rental, the
increase (between fire walls) in Landlords insurance premiums, and, upon
demand by Landlord, to correct at Tenant's expense the cause of such
disallowance, penalty or surcharge to the satisfaction of the particular
insurance authority. Additionally, Tenant shall pay to any other tenants in
the building in which the premises are situated, upon demand, any increases
in such other tenant's insurance premiums or charges caused by the acts of
Tenant.
4. Taxes.
A. Tenant agrees to pay before they become delinquent all general
and special, ad valorem and specific taxes, excises, assessments, and
governmental charges of any kind and nature whatsoever (hereinafter
collectively referred to as the "taxes") lawfully levied or assessed against
the land, building, grounds, parking areas, driveways, sidewalks and/or
alleys on or around the premises. Tenant shall furnish to Landlord, not
later than twenty (20) days before the date any such taxes becoming
delinquent, official receipts of the appropriate taxing authority or other
evidence satisfactory to Landlord evidencing payment thereof. If Tenant
should fail to pay any taxes, assessments, or governmental charges required
to be paid by Tenant hereunder, in addition to any other remedies provided
herein, Landlord may, if it so elects, pay such taxes, assessments, and
governmental charges. Any sums so paid by Landlord shall be deemed to be
additional rent due and payable on demand by Landlord.
B. In the event the premises constitute a portion of a multiple
occupancy building, Tenant agrees to pay to Landlord, as additional rent,
(8), the amount of Tenant's "proportionate share" of the "taxes" referred to
in subparagraph A, above. Tenant's "proportionate share," as used in this
lease, shall mean a fraction, the numerator of which is the square footage
of the premises and the denominator or which is the square footage of the
building containing the premises.
C. If at any time during the term of this lease there shall be
levied, assessed or imposed on Landlord, by any governmental entity, any
general or special, ad valorem or specific, capital levy, excise or other
tax, assessment, levy or charge directly on the rental received under this
lease, and/or any license fee, excise or franchise tax, assessment, levy or
charge measured by or based, in whole or in part, upon such rentals, and/or
any transfer, transaction, or similar tax, assessment, levy or charge based
directly or indirectly upon the transaction represented by this lease,
and/or any occupancy, use, per capita or other tax, assessment, levy or
charge based directly or indirectly upon the use or occupancy of the
premises, then all such taxes, assessments, levies and charges shall be
deemed to be included within the term "taxes" for the purposes of this
paragraph 4 (9).
D. Tenant may, alone or along with any other tenants of said
building, at its or their sole cost and expense, in its or their own name(s)
and/or in the name of Landlord, dispute and contest and "taxes" by
appropriate proceedings diligently conducted in good faith, but only after
Tenant and all other tenants, if any, joining with Tenant in such contest,
have deposited with Landlord the amount so contested and unpaid, or their
proportionate shares thereof, as the case may be, which shall be held by
Landlord without obligation for interest until the termination of the
proceedings, at which time the amount(s) deposited shall be applied by
Landlord toward the payment of the items held valid (plus any court costs,
interest, penalties and other liabilities associated with the proceedings),
and Tenant's share of any excess shall be returned to Tenant. Tenant
further agrees to pay to Landlord, upon demand, Tenant's share (as among all
tenants who participated in the contest) of all court costs, interest,
penalties, and other liabilities relating to such proceedings. Tenant
hereby indemnifies and agrees to hold Landlord harmless from and against any
cost, damage or expense (including attorneys' fees) in connection with any
such proceedings.
E. Any payment to be made pursuant to this paragraph 4 with
respect to the tax year in which this lease commences or terminates shall
bear the same ratio to the payment which would be required to be made for
the full tax year as that part of such tax year covered by the term of this
lease bears to a full tax year. (10)
5. Repairs and Maintenance.
A. Tenant shall, at its own cost and expense keep and maintain
the premises in good condition, promptly making all necessary repairs and
replacements, interior and exterior, non-structural, ordinary and
extraordinary, including but not limited to, windows, glass and plate glass,
doors, any special office entry, walls and finish work, floors and floor
covering, roof, foundation, downspouts, gutters heating and air conditioning
systems, dock boards, truck doors, dock bumpers, ramps, paving, plumbing
work and fixtures, termite and pst extermination, regular removal of trash
and debris, regular mowing of any grass, caring for shrubs, trimming, weed
removal and general landscape maintenance, including rail spur areas,
maintaining the parking areas, driveways, alleys, sidewalks, and the whole
of the premises in a clean and sanitary condition, maintaining any spur
track serving the premises (Tenant agrees to sign a joint maintenance
agreement with the railroad company servicing the premises, if requested by
the railroad company), and providing guard and alarm service. Tenant shall,
at its own cost and expense, repaint the exterior walls, overhead doors,
canopies, entries, headrails, gutters and other exposed parts of the
building which reasonably require periodic repainting to prevent
deterioration or to maintain aesthetic standards. Tenant shall maintain
trash receptacles within the building on the premises.
B. The cost of maintenance and repair or any common party wall
(any wall, divider, partition or any other structure separating the premises
from any adjacent premises occupied by other tenants) shall be shared
equally by Tenant and the tenant occupying adjacent premises. Tenant shall
not damage any party wall or disturb the integrity and support provided by
any party wall and shall, at its sole cost and expense, promptly repair any
damage or injury to any party wall caused by Tenant or its employees, agents
or invitees.
C. In the event the premises constitute a portion of a multiple
occupancy building, Tenant and its employees, customers and invitees shall
have the nonexclusive right to use, in common with the other parties
occupying said building, the parking areas, driveways and alleys adjacent to
said building, subject to such reasonable rules and regulations as Landlord
may from time to time prescribe. Further, in such event, Landlord (11) to
perform the paving and landscape maintenance, exterior painting and common
sewage line plumbing and any other responsibilities which are otherwise
Tenant's obligations under subparagraph A above, and Tenant shall, in lieu
of the obligations set forth under subparagraph A above with respect to such
items, be liable for its proportionate share (as defined in subparagraph 4B,
above) of the cost and expense of the care for the grounds around the
building, including but not limited to, exterior repainting and common
sewage line plumbing; provided, however, that Landlord shall have the right
to require Tenant to pay such other reasonable proportion of said costs as
may be determined by Landlord in its sole discretion; and further provided
that if Tenant or any other particular tenant of the building can be clearly
identified as being responsible for obstruction or stoppage of the common
sanitary sewage line, then Tenant, if Tenant is responsible, or such other
responsible tenant, shall pay the entire cost thereof, upon demand, as
additional rent. Tenant shall at Landlord's option either (i) pay when due
(but not more frequently than monthly) its share, determined as aforesaid,
of such costs and expenses along with the other tenants of the building
directly to the persons performing such work, or (ii) reimburse Landlord
upon demand (but not more frequently than monthly), as additional rent, for
the amounts of its share as aforesaid of such costs and expenses in the
event Landlord elects to perform or cause to be performed such work.
D. N/A.
E. Tenant shall, at its own cost and expense, enter into a
regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all heating and air conditioning
systems and equipment within the premises. The maintenance contractor must
be approved by Landlord. The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance
manual and must become effective within thirty (30) days of the date Tenant
takes possessio of the premises. All guarantees/warranties provided with
the heating and air conditioning systems will be recognized within this
program.
(12)
6. Alterations.
A. Tenant shall not make any alterations, additions or
improvements to the premises including but not limited to roof and wall
penetrations without the prior written consent of Landlord (13). Tenant
may, without the consent of Landlord, but at its own cost and expense and in
a good workmanlike manner make such minor alterations, additions or
improvements or erect, remove or alter such partitions, or erect such
shelves, bins, machinery and trade fixtures as it may deem advisable,
without altering the basic character of the building or improvements and
without overloading or damaging such building or improvements, and in each
case complying with all applicable governmental laws, ordinances,
regulations and other requirements. All alterations, additions,
improvements and partitions erected by Tenant shall be and remain the
property of Tenant during the term of this lease and Tenant shall, unless
Landlord otherwise elects as hereinafter provided, remove all alterations,
additions, improvements and partitions erected by Tenant and restore the
premises to their original condition by the date of termination or
expiration of this lease; provided, however, that if Landlord so elects
prior to termination or expiration of this lease, such alterations,
additions, improvements and partitions shall become the property of Landlord
as of the date of termination or expiration of this lease and shall be
delivered up to the Landlord with the premises. All shelves bins, machinery
and trade fixtures installed by Tenant may be removed by Tenant prior to the
termination or expiration of this lease if Tenant so elects, and shall be
removed if required by Landlord; upon any such removal Tenant shall restore
the premises to their original condition. All such removals and restoration
shall be accomplished in a good and workmanlike manner so as not to damage
the primary structure or structural qualities of the buildings and other
improvements situated on the premises. (14)
B. Before commencing any work relating to alterations, additions
and improvements affecting the premises, Tenant shall notify Landlord in
writing of the expected date of commencement thereof. Landlord shall then
have the right at any time and rom time to time to post and maintain on the
premises such notices as Landlord deems necessary to protect the premises
and Landlord from mechanics' liens, materialmen's liens or any other liens.
At any time Tenant either desires or is required to make any repairs,
alterations, additions, improvements or utility installations pertaining to
the premises, Landlord may require Tenant, at Tenant's sole cost and
expense, to obtain and provide to Landlord a lien and completion bond in a
form and by a surety acceptable to Landlord in an amount equal to the
estimate cost of (15) such improvements, to insure Landlord against
liability for mechanics' and materialmen's liens and to insure completion of
the work.
7. Signs. (16) Tenant shall have the right to install signs upon the
exterior of said buildings (17) and subject to any applicable governmental
laws, ordinances, regulations and other requirements. Tenant shall remove
all such signs by the termination or expiration of this lease. Such
installations and removals shall be made in such manner as to avoid injury
or defacement of the building and other improvements, and Tenant shall
repair any injury or defacement, including without limitation discoloration,
caused by such installation and/or removal.
8. Inspection. Landlord and Landlord's agents and representatives
shall have the right to enter and inspect the premises at any reasonably
time during business hours, for the purpose of ascertaining the condition of
the premises or in order to make such repairs as may be required or
permitted to be made by Landlord under the terms of this lease. During the
period that is six (6) months prior to the end of the term hereof, Landlord
and Landlord's agents and representatives shall have the right to enter the
premises at any reasonable time during business hours for the purpose of
showing the premises and shall have the right to erect on the premises a
suitable sign indicating the premises are available. (18) shall arrange to
meet with (19) for a joint inspection of the premises at the time of
vacating.
9. Utilities. Tenant shall pay for all water, gas, heat, light,
telephone, sewer, sprinkler charges and other utilities and services used on
or from the premises, together with any taxes, penalties, surcharges or the
like pertaining thereto and any maintenance charges for utilities and shall
furnish all electric light bulbs and tubes. If any such services are not
separately metered to Tenant, Tenant shall pay a reasonable proportion as
determined by Landlord of all charges jointly metered with other premises.
Landlord shall in no event be liable for any interruption or failure of
utility services on the premises.
10. Assignment and Subletting.
A. Tenant shall not have the right to assign this lease or to
sublet the whole or any part of the premises, or allow, for valuable
consideration, the occupancy of all or any part of the premises by another,
without the prior written consent of Landlord (20). Notwithstanding any
permitted assignment or subletting, Tenant shall at all times remain
directly, primarily and fully responsible and liable for the payment of the
rent herein specified and for compliance with all of its other obligations
under the terms, provisions and covenants of this lease. Upon the
occurrence of an "event of default" as hereinafter defined, if the premises
or any part thereof are then assigned or sublet, Landlord, in addition to
any other remedies herein provided, or provided by law, may at its option
collect directly from such assignee or subtenant all rents becoming due to
Tenant under such assignment or sublease and apply such rent against any
sums due to Landlord from Tenant hereunder, and no such collection shall be
construed to constitute a novation or release of Tenant from the further
performance of Tenant's obligations hereunder.
B. In the event Tenant desires to sublet the premises, or any
portion thereof, or assign this lease, Tenant shall give written notice
thereof to Landlord setting forth the name of the proposed subtenant or
assignee, the term, use, rental rate and other particulars of the proposed
subletting or assignment, including without limitation (21) satisfactory to
Landlord that the proposed subtenant or assignee will immediately occupy and
thereafter use the entire premises (or any sublet portion thereof) for the
remaining term of this lease (or for the entire term of the sublease, if
shorter). In addition to Landlord's approval right pursuant to subparagraph
10A above, Landlord shall have the option, i the event of any proposed
assignment or subletting (22) to cancel this lease as of the date the
subletting or assignment described in Tenant's notice is to be effective.
The option shall be exercised, if at all, by Landlord giving Tenant written
notice thereof within sixty (60) days following Landlord's receipt of
Tenant's written request. Upon any such cancellation Tenant shall pay to
Landlord all amounts, as estimated by Landlord, payable by Tenant to such
termination date, with respect to taxes, insurance, repairs, maintenance,
restoration and other obligations, costs or charges which are the
responsibility of Tenant hereunder. Further, upon any such cancellation
Landlord and Tenant shall have no further obligations or liabilities to each
other under this lease, except with respect to obligations or liabilities
which accrue hereunder as of such cancellation date (in the same manner as
if such cancellation date were the date originally fixed for the expiration
of the term hereof). Without limitation, Landlord may lease the premises to
the prospective subtenant or assignee, without liability to the Tenant.
Landlord's failure to exercise said cancellation right as herein provided
shall not be construed as Landlord's consent to the proposed subletting or
assignment.
C. Landlord shall have the right to assign any of its rights and
obligations under this lease. (23)
11. Fire and Casualty Damage.
A. Landlord agrees to maintain standard fire and extended
coverage insurance covering the building of which the premises are a part in
an amount not less than 80% (or such greater percentage as may be necessary
to comply with the provisions of any co-insurance clauses of the policy) of
the "replacement cost" thereof as such term is defined in the Replacement
Cost Endorsement to be attached thereto, insuring against the perils of
Fire, (24), Lightning, Extended Coverage, Vandalism and Malicious Mischief,
extended by Special Extended Coverage Endorsements to insure against all
other Risks of Direct Physical Loss, and Earthquake and Flood, such
coverages and endorsements to be as defined, provided and limited in the
standard bureau forms prescribed by the insurance regulatory authority for
the state in which the premises are situated for use by insurance companies
admitted in such state for the writing of such insurance on risks located
within such state. Subject to the provisions of subparagraphs 11B and 11E,
below, such insurance shall be for the sole benefit of Landlord and under
its sole control. Tenant agrees to pay to Landlord, as additional rent,
Landlord's cost of maintaining such insurance on said building (or in the
event the premises constitute a portion of a multiple occupancy building,
Tenant's full proportionate share [as defined in subparagraph 4B above] of
such cost). Said payments shall be made to Landlord within ten (10) days
after presentation to Tenant of Landlord's statement setting forth the
amount due. Any payment to be made pursuant to this subparagraph A with
respect to the year in which this lease commences or terminates shall bear
the same ratio to the payment which would be required to be made for the
full year as the part of such year covered by the term of this lease bears
to a full year. (25)
B. If the buildings situated upon the premises should be damaged
or destroyed by any peril covered by the insurance to be provided by
Landlord under subparagraph 11A above, Tenant shall give immediate notice
thereof to Landlord and Landlord shall at its sole cost and expense
thereupon proceed with reasonable diligence to rebuild and repair such
buildings to substantially the condition in which they existed prior to such
damage or destruction, except that Landlord shall not be required to
rebuild, repair or replace any part of the partitions, fixtures, additional
and other improvements which may have been placed in, on or about the
premises by Tenant and except that Tenant shall pay to Landlord, upon
demand, any applicable deductible amount specified under Landlord's
insurance. The rent payable hereunder shall in no event abate by reason of
any damage or destruction. (26)
C. (27)
D. Tenant covenants and agrees to maintain insurance on all
alterations, additions, partitions and improvements erected by or on behalf
of Tenant in, on or about the premises in an amount not less than 80% (or
such greater percentage as may be necessary to comply with the provisions of
any co-insurance clause of the policy) of the "replacement cost" thereof, as
such term is defined in the Replacement cost Endorsement to be attached
thereto. Such insurance shall insure against the perils and be in form,
including stipulated endorsements, as provided in subparagraph 11A hereof.
Such insurance shall be for the sole benefit of Tenant and under its sole
control. All such policies shall b procured by Tenant from responsible
insurance companies satisfactory to Landlord. Certified copies of policies
of such insurance, together with receipt evidencing payment of the premiums
therefor, shall be delivered to Landlord prior to the commencement date of
this lease. Not less than fifteen (15) days prior to the expiration date of
any such policies, certified copies of renewals thereof (bearing notations
evidencing the payment of renewal premiums) shall be delivered to Landlord.
Such policies shall further provide that no less than thirty (30) days
written notice shall be given to Landlord before such policy may be
cancelled or changed to reduce insurance provided thereby.
E. Notwithstanding anything herein to the contrary, in the event
the holder of any indebtedness secured by a mortgage or deed of trust
covering the Landlord's interest in the premises requires that the insurance
proceeds be applied to such indebtedness, then Landlord shall have the right
to terminate this lease by delivering written notice of termination to
Tenant within fifteen (15) days after such requirement is made by any such
holder, whereupon all rights and obligations hereunder shall cease and
terminate. (28)
F. Landlord and Tenant hereby each release the other from any and
all liability or responsibility to the other or anyone claiming through or
under them by way of subrogation or otherwise for any loss or damage to
property caused by fire or any other perils insured in policies of insurance
covering such property, even if such loss or damage shall have been caused
by the fault or negligence of the other party, or anyone for whom such party
may be responsible; provided, however, that this release shall be applicable
and in force and effect only with respect to loss or damage occurring during
such times as the releasor's policies shall contain a clause or endorsement
to the effect that any such release shall not adversely affect or impair
said policies or prejudice the right of the releasor to recover thereunder
and then only to the extent of the insurance proceeds payable under such
policies. Each of Landlord and Tenant agrees that it will request its
insurance carriers to include in its policies such a clause or endorsement.
If extra cost shall be charged therefor, each party shall advise the other
thereof and of the amount of the extra cost, and the other party, at its
election, may pay the same, but shall not be obligated to do so.
12. Liability. Tenant does hereby indemnify and agree to
forever save and hold harmless Landlord from and against any and all
damages, claims, losses, demands, costs, expenses (including reasonable
attorneys' fees and costs), obligations, liens, liabilities, actions and
causes of action, threatened or actual, which Landlord may suffer or incur
arising out of or in connection with Tenant's obligations under this lease,
including without limitation, Tenant's use of the premises, the conduct of
Tenant's business, any activity, work or things done, permitted or suffered
by Tenant in or about the premises. Tenant's nonobservance or
nonperformance of any law, ordinance or regulations, or any negligence of
the Tenant or any of Tenant's agents, contractors employees, guests
licensees and invitees. Tenant further agrees that in case of any claim,
demand, action or proceeding against Landlord, Tenant, upon notice from
Landlord shall defend Landlord at Tenant's expense. In the event Tenant
does not provide a defense against any and all such claims, demands, liens,
liabilities, actions or causes of action, threatened or actual, then Tenant
will, in addition to the above, pay Landlord the attorneys' fees, legal
expenses and costs incurred by Landlord in providing or preparing such
defense and Tenant agrees to cooperate with Landlord in such defense,
including, but not limited to, the providing of affidavits and testimony
upon request of Landlord.
Tenant shall obtain at its cost and keep in full force during the term
of the lease a policy of Combined Single Limit Bodily Injury and Property
Damage Insurance insuring Landlord and Tenant against any liability arising
out of the use, occupancy or maintenance of the premises and all areas
appurtenant thereto by Tenant. Such insurance shall be in an amount not
less than (29). The policy shall contain cross liability endorsements and
shall insure performance by Tenant of the foregoing indemnity provisions of
this lease. The limits of said insurance shall not, however, limit the
liability of Tenant hereunder.
13. Condemnation.
A. If the whole or any substantial part of the premises should be
taken for any public or quasi-public use under governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the use
of the premises for the purpose for which they are then being used, this
lease shall terminate (30) and the rent shall be abated during the unexpired
portion of this lease, effective when the physical taking of such premises
shall occur (31).
B. If part of the premises shall be taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this
lease is not terminated as provided in subparagraph A, above, this lease
shall not terminate but the rent payable hereunder during the unexpired
portion of this lease shall be reduced in the same ratio as the square
footage of the premises taken bears to the total square footage of the
premises.
C. This paragraph 13 shall be Tenant's sole and exclusive remedy
in the event of any such taking or purchase in lieu thereof. Landlord shall
be entitled to any and all compensation, damages, income, rents, awards
(except for an award specified by the condemning authority for Tenant's
unamortized portion of its improvements (32) if any) or any interest therein
whatsoever which may be paid or made in connection therewith, and Tenant
shall have no claim against Landlord for the value of any unexpired term of
this lease. Tenant hereby waives the benefits of California Code of Civil
Procedure 1265.130.
14. Holding Over. Tenant will, at the termination or expiration
of this lease by lapse of time or otherwise, yield up immediate possession
to Landlord. In the event of any holding over by Tenant after the
expiration or termination of this lease, unless the parties hereto otherwise
agree in writing, the hold over tenancy shall be subject to termination by
Landlord at any time upon not less than seven (7) days advance written
notice, and all of the other terms and provisions of this lease shall be
applicable during that period, except that Tenant shall pay Landlord from
time to time upon demand, as rental for the period of any hold over, an
amount equal to one and one-half (1 1/2) the rental which would have been
payable by Tenant had the hold over period been a part of the original term
of this lease, computed on a daily basis for each day during which such
possession is withheld. In the event of any such hold over, Tenant agrees
to vacate and deliver the premises to Landlord within seven (7) days after
Tenant's receipt of notice from Landlord to vacate. No holder over by
Tenant whether with or without consent of Landlord, shall operate to extend
this lease except as otherwise expressly provided.
15. Quiet Enjoyment. Landlord covenants that it now has, or
will acquire before Tenant takes possession of the premises, good title to
the premises, excepting the lien for current taxes not yet due, such
mortgages or deeds of trust as are permitted by the terms of this lease,
zoning ordinances and other building and fire ordinances and governmental
regulations relating to the use of such property, and easements,
restrictions and other matters of record. Landlord represents and warrants
that it has full right and authority to enter into this lease and that
Tenant, upon paying the rental herein set forth and performing its other
covenants and agreements herein set forth, shall peaceable and quietly have,
hold and enjoy the premises for the term hereof without hindrance or
molestation from Landlord, subject to the terms and provisions of this
lease. Landlord agrees to make reasonable efforts to protect Tenant from
interference or disturbance by other tenants or third persons, however,
Landlord shall not be liable for any such interference or disturbance, nor
shall Tenant be released from any of the obligations of this lease because
of such interference or disturbance.
16. Events of Default. The following events shall be deemed to
be "events of default" by Tenant under this lease:
(a) Tenant shall fail to pay any installment of the rent herein
reserved when due, or any payment with respect to taxes hereunder when due,
or any other payment or reimbursement to Landlord required herein when due,
and such failure shall continue for a period of (33) from the date such
payment was due.
(b) Tenant shall become insolvent, or shall make a transfer in
fraud of creditors, or shall make an assignment for the benefit of
creditors.
(c) Tenant shall file a petition under any section or chapter of
the National Bankruptcy Act, as amended or under any similar law or statute
of the United State or any state thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant.
(e) Tenant shall desert any substantial portion of the premises.
(f) Tenant shall fail to comply with any term, provision or
covenant of this lease (other than the foregoing in this paragraph 16), and
shall not cure such failure within (34).
17. Remedies. If any event of default occurs, Landlord may at
any time thereafter, with or without notice or demand, except as stated
hereafter, and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such event of default;
(a) Enter upon and take possession of the premises. IN such
event, Landlord shall have the right to remove all persons and property from
the premises and store such property in a public warehouse or elsewhere at
the cost and risk of and for the account of Tenant, and all such persons
shall quit and surrender possession of the premises to Landlord, Tenant
hereby waives all claims for damages which may be caused by the entry of
Landlord and taking possession of the premises or removing and storing the
furniture and property and hereby agrees to indemnify and save Landlord
harmless from any loss, costs, damages or liability occasioned thereby, and
no such entry shall be considered or construed to be a forcible entry.
Should Landlord elect to enter, as herein provided, or should Landlord take
possession pursuant to legal proceedings or pursuant to any notice provided
by law, Landlord may terminate this lease pursuant to paragraph (b) hereof.
(b) Terminate Tenant's right to possession of the premises at any
time. Acts of maintenance, efforts to relet the premises, or the
appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this lease shall not constitute a termination of Tenant's
right to possession. On termination, Landlord may recover from Tenant (i)
the worth at the time of the award of the unpaid rent that had been earned
at the time of termination of Tenant's right to possession of the premises;
(ii) the worth at the time of the award of the amount by which the unpaid
rent that would have been earned after the date of termination of Tenant's
right to possession until the time of award exceeds the amount of the loss
of rent for the same period that Tenant proves could have been reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of the loss of rent for the same period that Tenant proves could have
been reasonably avoided; and (iv) any other amount, and court costs,
necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. "The worth at the time of the award," as used in (i) and
(ii) of this paragraph, is to be computed by allowing interest at the rate
of ten percent (10%) per annum. "The worth at the time of the award" as
referred to in (iii) of this paragraph is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of the award, plus 1%.
(c) Continue this lease in full force and effect, and this lease
will continue in effect as long as Landlord does not terminate Tenant's
right to possession, and Landlord shall have the right to collect rent when
due.
(d) Cure the default at Tenant's cost. If Landlord at any time,
by any reason of Tenant's default, pays any sum or does any act that
requires the payment of any sum, the sum paid by Landlord shall be due
immediately from Tenant to Landlord upon demand by Landlord. The sum,
together with late charges, as provided in paragraph 2, above, of this
lease, shall be additional rent.
(e) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the State of California.
19. Mortgages. (35)
20. Landlord's Default.
A. In the event Landlord should become in default in any payments
due and payable on any such mortgage described in paragraph 19 hereof,
Tenant is authorized and empowered after giving Landlord five (5) days prior
written notice of such default and Landlord's failure to cure such default,
to pay any such delinquent items for and on behalf of Landlord, and the
amount of any item so paid by Tenant for or on behalf of Landlord, together
with any interest or penalty required to be paid in connection therewith,
shall be payable on demand by Landlord to Tenant; provided, however, that
Tenant shall not be authorized and empowered to make any payment under the
terms of this paragraph 20 unless the item paid shall be superior to
Tenant's interest hereunder, in the event Tenant pays any mortgage debt in
full, in accordance with this paragraph, it shall, at its election, be
entitled to the mortgage security by assignment or subrogation.
21. Tenant's Remedies. Except as otherwise specifically
provided in this lease, Tenant hereby waives and relinquishes any right
which Tenant may have to terminate this lease or withhold rent on account of
any damage, condemnation, destruction or state of disrepair of the premises
(including, without limiting the generality of the foregoing, those rights
under California Civil Code 1932(2), 1933(4), 1941 and 1942).
22. Mechanic's Liens. Tenant shall have no authority, express
or implied, to create or place any lien or encumbrance of any kind or nature
whatsoever upon, or in any manner to bind, the interest of Landlord in the
premises, or to charge the rentals payable hereunder for any claim in favor
of any person dealing with Tenant, including those who may furnish materials
or perform labor for any construction or repairs, and each such claim shall
affect and each such lien shall attach to, if at all, only the leasehold
interest granted to Tenant by this instrument. Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it
on account of any labor performed or materials furnished in connection with
any work performed on the premises on which any lien is or can be validly
and legally asserted against its leasehold interest in the premises or the
improvements thereon and that it will save and hold Landlord harmless from
any and all loss, cost or expense based on or arising out of asserted claims
or liens against the leasehold estate or against the right, title and
interest of the Landlord in the premises or under the terms of this lease.
Tenant will not permit any mechanics' lien or liens to be placed upon the
premises or any building or improvement thereon during the term hereof, and
in case of the filing of any such lien Tenant will promptly pay same. If
any such lien shall remain in force and effect for twenty (20) days after
written notice thereof from Landlord to Tenant, Landlord shall have the
right and privilege at Landlord's option of paying and discharging the same
or any portion thereof without inquiry as to the validity thereof, and any
amounts so paid, including expenses and applicable late charge, shall be so
additional rent hereunder due from Tenant to Landlord and shall be repaid to
Landlord immediately on rendition of bill therefor. Notwithstanding the
foregoing, Tenant shall have the right to contest any such lien in good
faith and with all due diligence so long as any such contest, or action
taken in connection therewith, protects the interest of Landlord and
Landlord's mortgagee in the premises and Landlord and any such mortgagee
are, by the expiration of said twenty (20) days period, furnished proof of
such protection, and indemnification by Tenant against any loss, cost or
expense related to any such lien and the contest thereof, satisfactory to
Landlord and any such mortgagee.
23. Sale by Landlord. In the event the original Landlord
hereunder, or any successor owner of the premises, shall sell or convey the
premises, Tenant agrees to attorn to such new owner. In the event of such
sale, Landlord shall transfer to the new owner the balance of any security
deposit remaining after lawful deductions and, after notice to Tenant (36)
shall be relieved of all future liability with respect to such security
deposit.
24. Attorneys' Fees. If either Landlord or Tenant commences or
engages in, or threatens to commence or engage in, an action by or against
the other party arising out of or in connection with this lease or the
premises, including but not limited to any action for recovered of rental
due and unpaid (37) to recover possession or for damages for breach of this
lease, the prevailing party shall be entitled to have and recover from the
losing party reasonable attorneys' fees and other costs incurred in
connection with the action and in preparation for said action. (38)
25. Further Documents. Upon Landlord's request, Tenant agrees
to modify this lease to meet the requirements of a lender selected by
Landlord who demands such modification as a condition precedent to granting
a loan and placing a deed of trust upon the building or land of which the
premises is a part, provided such modification does not (1) increase the
minimum rent or percentage rent; (2) alter the term of lease or any extended
term; or (3) materially adversely affect Tenant's estate or right under this
lease.
26. Waiver. The waiver by (39) of any term, covenant, agreement
or condition herein contained shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant, agreement or
condition herein contained, nor shall any custom or practice which may grow
up between the parties in the administration of this lease be construed to
waive or to lessen the right of (40) to insist upon the performance by (41)
in strict accordance with all of the provisions of this lease. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to
be a waiver or any preceding breach by Tenant of any provisions, covenant,
agreement or condition of this lease, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent.
27. Notices. Each provision of this instrument or of any
applicable governmental laws, ordinances, regulations and other requirements
with reference to the sending, mailing or delivery of any notice or the
making of any payment by Landlord to Tenant or with reference to the
sending, mailing or delivery of any notice or the making of any payment by
Tenant to Landlord shall be deemed to be complied with when and if the
following steps are taken:
(a) All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address hereinbelow set forth or
at such other address as Landlord may specify from time to time by written
notice delivered in accordance herewith.
(b) All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address hereinbelow set forth,
or at such other address within the continental United States as Tenant may
specify from time to time by written notice delivered in accordance
herewith.
(c) Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not
(42) deposited in the United States Mail, postage prepaid, Certified or
Registered Mail, addressed to the parties hereto at the respective addresses
set out below, or at such other address as they have theretofore specified
by written notice delivered in accordance herewith:
LANDLORD: TENANT:
TCLW/Fullerton Nelco Products, Inc.
a general partnership a Delaware Corporation
17941 Fitch 1411 Orangethorpe
Irvine, California Fullerton, California
(43)
If and when included within the term "Landlord," as used in this instrument,
there are more than one person, firm or corporation, all shall jointly
arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address (44) for the receipt of
notices and payments to Landlord; if and when included within the term
"Tenant," as used in this instrument, there are more than one person, firm
or corporation, all shall jointly arrange among themselves for their joint
execution of such a notice specifying some individual at some specific
address within the continental United States for the receipt of notices and
payments to Tenant. All parties included within the terms "Landlord" and
"Tenant," respectively, shall be bound by notices given in accordance with
the provisions of this paragraph to the same effect as if each had received
such notice.
28. Entire Agreement. This lease contains the entire agreement
between the parties respecting the lease of the premises to Tenant.
29. Time of the Essence. Time is of the essence of this lease.
30. Miscellaneous.
A. Words of any gender used in this lease shall be held and
construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise requires.
B. The terms, provisions and covenants and conditions contained
in this lease shall apply to, inure to the benefit of, and be binding upon,
the parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein expressly
provided. Each party agrees to furnish to the other, promptly upon demand,
a corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due amortization of such party to
enter into this lease.
C. The captions inserted in this lease are for convenience only
and in no way define, limit or otherwise describe the scope or intent of
this lease, or any provision hereof, or in any way affect the interpretation
of this lease.
D. (45)
E. This lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
F. All obligations of Tenant (46) hereunder not fully performed
as of the expiration or earlier termination of the term of this lease shall
survive the expiration or earlier termination of the term hereof, including
without limitation all payment obligations with respect to taxes and
insurance and all obligations concerning the condition of the premises.
Upon the expiration or earlier termination of the term hereof, and prior to
Tenant vacating the premises. Landlord and Tenant shall jointly inspect the
premises and Tenant shall pay to Landlord any amount estimated by Landlord
as necessary to put the premises, including without limitation all heating
and air conditioning systems and equipment therein, in good (47). Tenant
shall also, prior to vacating the premises, pay to Landlord the amount, as
estimated by Landlord, of Tenant's obligation hereunder for real estate
taxes and insurance premiums for the year in which the lease expires or
terminates. All such amounts shall be used and held by Landlord for payment
of such obligations of Tenant hereunder, with Tenant being liable for any
additional costs therefor upon demand by Landlord, or with any excess to be
returned to Tenant after all such obligations have been determined and
satisfied, as the case may be (48). Any security deposit held by Landlord
shall be credited against the amount payable by Tenant under this paragraph
30F.
G. If any clause or provision of this lease is illegal, invalid
or unenforceable under present or future laws effective during the term of
this lease, then and in that event, it is the intention of the parties
hereto that the remainder of this lease shall not be affected thereby, and
it is also the intention of the parties to this lease that in lieu of each
clause of provision of this lease that is illegal, invalid or unenforceable,
there be added as a part of this lease contract a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause or
provisions as may be possible and be legal, valid and enforceable.
H. Because the premises are on the open market and are presently
being shown, this lease shall be treated as an offer with the premises being
subject to prior lease and such offer subject to withdrawal or non-
acceptance by Landlord or to other use of the premises without notice, and
this lease shall not be valid or binding unless and until the lease is
accepted by Landlord in writing and a fully executed copy is delivered to
both parties hereto.
I. Paragraph I and Exhibit "A" of this lease notwithstanding, the
"premises," and Tenant's estate under this lease, do not include any right,
title or interest in water, oil, gas or other hydrocarbons, or other mineral
rights, all of which are excepted and reserved to Landlord with the sole and
exclusive right in Landlord to sell, lease, assign or otherwise transfer the
same, but without any right of Landlord or any such transferee to enter upon
the surface of the property described in said Exhibit "A" during the term of
this lease except as otherwise expressly provided elsewhere in this lease.
J. All references in this lease to "the date hereof" or similar
references shall be deemed to refer to the last date, i point of time, on
which all parties hereto have executed this lease.
31. Additional Provisions.
Those additional provisions set forth in Exhibit "C" attached
hereto are hereby incorporated by this reference as if fully set forth
herein. (49-54)
IN WITNESS WHEREOF, this lease is, EXECUTED BY LANDLORD, this 16th day
of August, 1983.
TCLW/Fullerton
Crow Fullerton
By: Clifton K. Chang
General Partner
Executed by Tenant, this 22nd day of August, 1983.
NELCO PRODUCTS, INC.
By: E.P. Smoot
President
EXHIBIT "C" TO LEASE-DATED AUGUST 16, 1983 BETWEEN NELCO PRODUCTS, INC., AS
("TENANT") AND TCLW/FULLERTON, AS("LANDLORD"):
1. before the end of the ten (10) day grace period in paragraph 16 (a)
of the Lease.
2. five percent (5%)
3. in an interest bearing account
4. Provided Tenant is not in default of the Lease, $12,397.00 of the
security deposit plus interest thereon shall be released to Tenant
on September,30, 1984
5. manufacturing,
6. Provided that such required improvements are not necessary by nature
of Tenant's use of the premises, then:
1) If the costs are less than $10,000.00, Landlord and Tenant shall
each bear one-half the cost of such improvements.
2) If the costs exceed $10,000.00, then Landlord shall have the
option of paying the cost or terminating the Lease.
3) If the Landlord elects to terminate the Lease, Tenant shall have
the choice of paying the cost of improvements or terminating the
Lease.
4) In the event neither Landlord or Tenant elects to pay the cost,
then Lease shall terminate when the appropriate government
authority forces Tenant to move out of the facility.
5) In the event Tenant and Landlord mutually agree to contest the
installation of such improvements, then the cost of contesting
the governmental regulation shall be split up to $10,000.00.
7. provided such improvements are
8. not earlier than fifteen (15) nor later than five (5) days before each
semi-annual delinquency date.
9. Notwithstanding the foregoing, Tenant shall not be liable for the
payment of any federal, state, county or municipal income or franchise
taxes or an taxes or license fees imposed on the collection of rent or
measured by the amount of rent, unless such taxes or fees are a
substitution in whole or in part for real estate taxes.
10. Tenant shall bear the cost of tax increases due to improvements within
its space, and Tenant shall not bear the cost of tax increases from
improvements for other tenants in the building. To the extent taxes
increase due to ownership changes, then Landlord shall bear the cost of
such tax increases to the end of the current least term or option
period, after which the increases shall be Tenant's responsibility in
the next lease option period.
11. assumes the duty
12. Notwithstanding anything to the contrary contained in subparagraph 1A
and this paragraph 5, Landlord shall repair or cause to be repaired all
structural portions of the building during the lease term, and during
the first two years of the lease term (a) the common sewage line and
the common water line and, (b) the roof of the building, unless the
need for any of the foregoing repairs is caused by Tenant, in which
event Tenant shall be solely responsible for such repairs.
13. , Landlord's consent not to be unreasonably withheld, and such consent
or dissent to be provided within five (5) working days of delivery of
plans and specifications for such improvements.
14. Landlord shall elect in writing at time of approval tenant improvements
need to be removed by Tenant upon expiration or termination of the
lease.
15. labor and materials of
16. Landlord shall establish and enforce a uniform sign criteria for all
occupants of the building.
17. in accordance with Landlord's uniform sign criteria.
18. Landlord
19. Tenant
20. Such consent is not to be unreasonably withheld and shall be given or
denied fifteen (15) days after receipt of all documentation relating to
such consent. Tenant shall have the right, without Landlord's consent,
to assign this lease a ("Permitted Assignment") to a corporation with
which it may merge, to any parent of Tenant or any subsidiary of
Tenant's parent, or to a purchaser of substantially all of Tenant's
assets or stock, provided that such parent or purchaser has a net worth
at the effective date of the assignment that is equal to or greater
than the net worth of Park Electrochemical Corporation on the date
hereof, and provided that Tenant notifies Landlord of the assignment
before the effective date thereof, and the assignee assumes in writing
Tenant's obligations hereunder."
21. evidence.
22. other than to a "Permitted Assignee" or subletting of seventy percent
(70%) or more of the premises
23. but Landlord shall remain liable for all obligations to be performed by
Landlord before the effective date of the assignment.
24. Rental Insurance
25. Landlord's policy shall name Tenant and the holder of any indebtedness
secured by Landlord's interest in the building, as their interests may
appear, as additional insureds, but all losses shall be adjusted by and
proceeds payable to Landlord. In addition to a statement for the
amount due, Landlord shall deliver to Tenant for photocopies of the
insurance policy or certificate of insurance and premium notice covered
by the statement.
26. except that the rent shall be abated by the prorata portion of the
premises destroyed.
27. If the buildings situated upon the premises should be damaged or
destroyed by a casualty other than a peril covered by the insurance to
be provided by Landlord under subparagraph 11A above, either party
("terminating party") may elect to terminate this Lease by so notifying
the other party ("non-terminating party") within sixty (60) days after
the date of damage or destruction, and this Lease shall be terminated
on the date that Tenant vacates the premises which shall be within
thirty (30) days after notice, unless the non-terminating party
notifies terminating party within thirty (30) days after delivery of
the notice of termination that the non-terminating party elects to
rebuild, repair and replace the buildings. Should the non-terminating
party so elect, it shall proceed in accordance with the requirements of
subparagraph 11B.
28. Landlord shall not exercise any right to apply the insurance proceeds
to the indebtedness unless required to do so by the Lender or agreed to
by Tenant.
29. $3,000,000.00
30. at the option of either party
31. "Substantial part" shall be deemed to be twenty five percent (25%) or
more of the premises.
32. trade fixtures, removal and location costs, and goodwill,
33. ten (10)
34. thirty (30) days after written notice thereof to Tenant of such longer
period as may be reasonably required to cure such default so long as
Tenant proceeds at all times with due diligence to complete the cure
35. Tenant agrees upon the request of Landlord to subordinate this Lease
and its rights hereunder to any first or second mortgage or first or
second deed of trust (hereinafter for convenience called "loan") and to
execute at any time and from time to time such documents as may be
required to effectuate such subordination; provided that (i) such
documents do not require Tenant to waive or modify any of its material
rights under this Lease and (ii) contain provisions that reasonably
assure Tenant that Tenant's possession will not be disturbed so long as
Tenant is not in default under this Lease, including a provision that
the owner, holder or beneficiary of the loan and its successors and
assigns, including a purchaser at foreclosure sale or sale in lieu of
foreclosure, and Tenant's successors and assigns, each will accept the
attornment of Tenant and recognize this Lease, and that Tenant's quiet
enjoyment and peaceful possession of the premises and rights and
privileges appertaining thereto shall not be disturbed.
36. and the written assumption of Landlord's obligations by the new owner.
37. for declaratory relief,
38. If either party ('secondary party') becomes involved in any action,
threatened or actual, by or against anyone not a party to this Lease
but arising by reason or related to any act or omission of the other
party ('primary party') or its representatives, agents, employees,
licensees or invitees, the primary party agrees to pay the secondary
party's reasonable attorney's fees and other costs incurred in
connection with the action and in preparation for the action.
39. either Landlord or Tenant ("Waiver")
40. Waiver
41. the other party
42. seventy two hours after
43. (d) Copies of notices to Tenant shall be sent concurrently to Park
Electrochemical, 475 Northern Boulevard, Great Neck, New York 11021,
Attention: President.
44. within the continental United States.
45. At any time and from time to time within fifteen (15) days after
request by either party, the other party shall execute and deliver to
the requesting party, or to such other recipient as the notice shall
direct, a statement certifying that this Lease is unmodified and in
full force and effect, or, if there have been modifications, that it is
in full force and effect as modified in the manner specified in the
statement, that there are no defenses or offsets claimed by the party
making such statement other than those specified therein, and any other
such matters reasonable requested. The statement shall also state the
dates to which the rent and any other charges have been paid in
advance. The statement shall also state the dates to which the rent
and any other charges have been paid in advance. The statement shall
be such that it can be relied on by any person specified in the
request.
46. and Landlord
47. good, clean and leasable condition
48. Provided that Tenant is not then in default hereunder, Landlord shall
refund to Tenant at the expiration or earlier termination of this lease
all sums received by Landlord from Tenant which are allocable to the
period following the expiration or termination date.
49. Tenant Improvements
Landlord shall provide:
a) 800 Amp 480/277 Volt Power with 110 Volt transformer.
b) One (1) grade level door sufficiently wide to accommodate two (2)
trucks.
c) One (1) truck well sufficiently wide enough to accommodate two (2)
trucks.
d) $95,731 tenant improvement allowance to be used for 4,000 square
feet of build-to-suit offices. Tenant improvement reimbursement
shall be made thirty (30) days after delivery of paid invoice for
approved tenant improvements. Tenant may take possession of the
premises rent free for purposes of installing tenant improvements,
subject to all provisions of this lease except paragraphs 2 and 4.
e) Two (2") waterline
f) Four (4") sewerline
50. Rental Adjustments
a) Each option period shall be subject to an adjustment based upon a
Consumer Price Index with a ceiling factor:
Base Adjustment Ceiling Base
Date Date Factor Rent(NNN)
10-1-83 10-1-88 1.40 $12,178.00
10-1-83 4-1-91 1.60 $12,178.00
10-1-93 4-1-96 1.20 10-1-93 Rent
10-1-93 10-1-98 1.40 10-1-93 Rent
10-1-93 4-1-03 1.60 10-1-93 Rent
The ceiling factor multiplied by the base rent shall be the maximum
adjusted rent for that period.
b) The adjusted rent shall be calculated as follows:
i) At the Adjustment date. the base rent shall be multiplied by
a fraction, the numerator of which is the "Index" on the
Adjustment Date and the denominator of which is the "Basic
Index". The sum so derived shall be the monthly rental payable
during the following thirty (30) month period unless the Lease
terminates earlier.
ii) As used in the foregoing, "Index" shall mean the average of the
following two indexes published by the Bureau of Labor
Statistics, United States Department of Labor (1967:100): (i)
the Consumer Price Index for Urban Wage Earners and Clerical
Workers for the Los Angeles-Long Beach-Anaheim Metropolitan
Area (known as "CPI-W" and (ii) the Consumer Price Index for
all Urban Consumers for the Los Angeles-Long Beach-Anaheim
Metropolitan Area (known as "CPI-U"). "Basic Index" shall mean
the Index most recently published prior to the Base Date. If
the Index as now constituted, compiled, and published, shall
be revised or cease to be compiled and published during the
term hereof, then the Bureau of Labor Statistics shall be
requested to furnish a statement converting the Basic Index to
a figure that would be comparable in another Index published
by the Bureau of Labor Statistics and such other Index shall
be used in computing the adjustment in Rent provided herein.
Should the parties not be able to secure such appropriate
conversion or adjustment, they shall agree on some other Index
serving the same purpose to adjust the Rent as provided herein.
51. Option to Extend
While this lease is in full force and effect provided that Tenant is
not in default of any of the terms, covenants and conditions thereof,
Tenant shall have the right or option to extend the original term of
this Lease for three (3) further terms of sixty (60) months. Such
extension or renewal of the original term shall be on the same terms,
covenants and conditions as provided for in the original term except
that:
a) The initial monthly rental during the first option period shall be
based upon the Index as described in Paragraph 50 of the Exhibit C
with a ceiling.
b) The initial monthly rental during the second option period shall be
based upon the fair market rental value of equivalent properties,
of equivalent size, in equivalent areas.
c) The initial monthly rental during the third option period shall be
based upon the Index described in paragraph 2 of the Addendum.
d) No further renewal options shall apply.
e) A rental escalation shall apply in the period beginning month thirty
one (31) of each option period. The escalation shall be described
in paragraph 50 of Exhibit C.
Notice of Tenant's intention to exercise the option must be given to
Landlord in writing at least one hundred eighty (180) days prior to the
expiration of the original or then existing term of this Lease. This
option is not assignable except to a permitted assignee as defined in
paragraph 10 A of the Lease.
In the event Landlord and Tenant do not agree in writing on a fair
market rate within fifteen (15) days after exercise of the option for
the second option period or do not agree in writing on a single
appraiser within twenty five (25) days after such exercise, then:
a) Each shall appoint an Appraiser within thirty five (35) days after
the exercise of option.
b) In the event the two Appraisers are unable to agree on a fair market
rate within forty five (45) days after exercise of the option, then
the two Appraisers, shall jointly appoint a third Appraiser by the
forty fifth (45th) day after the exercise of option.
c) The average of the two closest appraisals shall be deemed to be the
fair market rental value which shall be determined by the seventieth
(70th) day after the exercise of option.
d) Subject to paragraph (g), Landlord and Tenant shall each pay the
costs of its selected Appraiser and one-half the cost of the third
rental appraiser.
e) Tenant shall either:
(i) Accept the fair market determination and execute and deliver
a lease amendment within ninety (90) days after the exercise
of option or,
(ii) Decline the determination of fair market and cancel the option
to lease, in which case Tenant shall pay all fees of
Appraisal, including Landlord's and that of the neutral
Appraiser. Failure to deliver an executed lease amendment
shall mean Tenant has elected alternative (ii) herein.
In no event, however, will the monthly rent payable under this Lease as
adjusted in the above described method ever be less than the monthly
rent payable in the period prior to the adjustment.
52. Consent
Except when provided to the contrary in this Lease, whenever one
party's consent, approval or permission is required or desired by the
other party in connection with this Lease, such consent, approval or
permission shall not be unreasonably withheld or delayed.
53. Parking
Landlord shall designate sixty one (61) parking spaces for Tenant's
exclusive use in that portion of the common area that is marked in
yellow on Exhibit A.
54. Adjacent Space
If Landlord decides to offer space contiguous to Tenant's premises for
lease during the lease term, Landlord shall first offer such space to
Tenant for lease, and Tenant shall have the right to lease such space
on rental rates and terms that are mutually satisfactory within ten
days next following Tenant's receipt of such offer.
If terms that are mutually satisfactory cannot be agreed upon within
such ten day period, Landlord shall then be free to offer for lease or
lease such space to any other party on terms acceptable to Landlord.
Exhibit 10.03(c)
FIFTH ADDENDUM TO LEASE
This Fifth Addendum to Lease is to be attached to and forms a part of the
lease (which together with any amendments, modifications and extensions
thereof is hereinafter called the Lease), made on the 16th day of August,
1983, by and between TCLW/Fullerton, a California general partnership
("Landlord") and Nelco Products, Inc., a Delaware corporation ("Tenant")
covering the premises known as 141 1 (including 1421, 143 1, and the
Appleton Space as later defined in this Addendum) E. Orangethorpe Avenue,
Fullerton, California. Where provisions of this Fifth Addendum conflict
with those of the Lease or prior Addenda, those of this Fifth Addendum shall
supersede:
1. Extension Term: The Lease is hereby extended for a further term of nine
(9) years to commence on the I st day of October, 1994 and to end on the
30th day of September, 2003, on the condition that Landlord and Tenant
comply with all the provisions of the covenants and agreements contained in
the Lease.
2. Expansion: Tenant presently occupies a 71,862 square foot portion of the
Premises under the existing lease dated August 16, 1983, as amended.
Adjacent to the space presently occupied by Tenant under the existing lease
is a space of 22,840 square feet occupied by Appleton Electric Company (the
Appleton Space). Appleton's lease is scheduled to expire on October 31,
1994, but may hold over for a limited period of time. The Appleton Space
together with the space presently occupied by Tenant shall comprise the
Premises covered by the Lease as amended, with a total of 94,702 square feet
(the entire building). Landlord will begin construction of the tenant
improvements as soon as possible, and will use its best efforts to deliver
the Appleton space to Tenant not later than July 15, 1995. Landlord will at
Landlord's expense install the tenant improvements described in Exhibit A.
The work shall be done in a diligent manner.
3. Rent: Base Rent for the period from October 1, 1994 until the delivery
of the Appleton Space to Tenant shall be $31,835 per month. On the later of
August 1, 1995 or the date on which the Appleton Space is delivered to
Tenant, the Base Rent shall increase to $41,952 per month, except that Base
Rent with respect to the Appleton Space ($10,118.12 per month) shall be
abated for the first 60 days beginning on the later of August 1, 1995 or the
date on which the Appleton Space is delivered to Tenant. Base Rent shall
increase to $45,741 per month on October 1, 1998. On October 1, 2001, Base
Rent shall increase (but not decrease) to 95% of "Market Rental Value", ,-
calculated in accordance with the following:
(a) On October 1, 2001 the Base Rent shall be adjusted to 95% of the
"Market Rental Value" of the property as follows:
1) Four months prior to the Market Rental Value (MRV) Adjustment
Date described above, Landlord and Tenant shall meet to establish an agreed
upon new MRV for the specified term. If agreement cannot be reached, then:
I) Landlord and Tenant shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30
days. Any associated costs will be split equally between the parties, or
ii) Both Landlord and Tenant shall each immediately select and pay
the appraiser or broker of their choice to establish a MRV within the next
30 days. If, for any reason, either one of the appraisals is not completed
within the next 30 days, as stipulated, then the appraisal that is completed
at that time shall automatically become the new MRV. If both appraisals are
completed and the two appraisers/brokers cannot agree on a reasonable
average MRV then they shall immediately select a third mutually acceptable
appraiser/broker to establish a third MRV within the next 30 days. The
average of the two appraisals closest in value shall then become the new
MRV. The costs of the third appraisal will be split equally between the
parties.
2) In any event, the new MRV shall not be less than $45,741.00, the
rent payable for September, 2001.
(b) Upon the establishment of each New Market Rental Value as
described in paragraph 3 (a) :
1) the monthly rental sum so calculated for each term as specified in
paragraph 3 (a) will become the new Base Rent for the purpose of calculating
any further Market Rental Value Adjustment or Cost of Living Adjustments,
pursuant to paragraph 4 below.
4. Option To Extend: Landlord hereby grants to Tenant the option to extend
the term of this Lease for one additional 60 month period commencing when
the prior term expires upon each and all of the following terms and
conditions:
(a) Tenant gives to Landlord, and Landlord actually receives on
a date which is prior to the date that the option period would commence (if
exercised) by at least 6 and not more than 9 months, a written notice of the
exercise of the option to extend this Lease for said additional term, time
being of essence. If said notification of the exercise of said option is
not so given and received, the option shall automatically expire; said
option may only be exercised if:
(1) There is no default by Tenant of any provision in the Lease:
(2) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply;
(b) Market Rental Value Adjustment (MRV)
(1) If the option to extend is exercised and becomes
effective, then on October 1, 2003 the Base Rent shall be adjusted to 95% of
the "Market Rental Value" in accordance with the format set forth in
Paragraph 3 of this Fifth Addendum to Lease but not less than the rent
payable during September of 2003. This "Market Rental Value" shall become
the new base rent for purposes of Paragraph 4 (c) (1) below.
The Base Rent during the option period shall be adjusted using the
method indicated below:
(1) Cost of Living Adjustment (COL)
(I) On April 1, 2006 the Base Rent shall be adjusted by the
change, if any, from the Base Month specified below, in the Consumer Price
Index of the Bureau of Labor Statistics of the U.S. Department of Labor for
CPIU (All Urban Consumers), for Los Angeles, Anaheim and Riverside. All
items (1982-1984 = 100), herein referred to as C.P.I."
(ii) The Base Rent payable shall be calculated as follows: the Base
Rent payable on March 1, 2006, shall be multiplied by a fraction the
numerator of which shall be the C.P.I. of the calendar month 2 (two) months
prior to the month (s) specified in this paragraph 4 during which the
adjustment is to take effect, and the denominator of which shall be the
C.P.I. of the calendar month which is two (2) months prior to October 1,
2003. The sum so calculated shall constitute the new Base Rent hereunder,
but in no event, shall any such new Base Rent be less than 103% or more than
107% of the rent payable for the month immediately preceding the date for
rent adjustment.
(iii) In the event the compilation and/or publication of the C.P.I.
shall be transferred to any other governmental department or bureau or
agency or shall be discontinued, then the index most nearly the same as the
C.P.I, shall be used to make such calculation. In the event that Landlord
and Tenant cannot agree on such alternative index, then the matter shall be
submitted for decision to the American Arbitration Association in accordance
with the then rules transferred to any other governmental department or
bureau or agency or shall be discontinued, then the index most nearly the
same as the C.P.I., shall be used to make such calculation. In the event
that Landlord and Tenant cannot agree on such alternative index, then the
matter shall be submitted for decision to the American Arbitration
Association in accordance with the then rules of said association and the
decision of the arbitrators shall be binding upon the parties. The cost of
said Arbitrators shall be paid equally by Landlord and Tenant.
(d) All other options provided for in previous lease documents are
superseded.
5. Security Deposit: The Security Deposit shall continue unchanged as set
forth in the Lease and prior addenda.
6. Parking. Tenant shall have the use of 152 parking spaces.
7. Tenant's Proportionate Share: Tenant's Proportionate Share as
referenced in Paragraph 60 of the Lease shall be increased to 100%.
8. Hazardous Substances: The following excerpt from the American
Industrial Real Estate Association Standard Industrial/Commercial Single-
Tenant Lease-Net form (1990)("AIR Lease Form") shall become part of the
lease documents; the term "Lessor" shall mean Landlord and
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term *by Lessee "Hazardous
Substance" as used in this Lease shall mean any product, substance,
chemical, material or waste whose presence, nature, quantity and/or
intensity of existence, use, manufacture, disposal, transportation, spill,
release or effect, either by itself or in combination with other materials
expected to be on the Premises, is either: (i) potentially injurious to the
public health, safety or welfare the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substance shall include,
but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any
products, by-products or fractions thereof. Lessee shall not engage in any
activity in, on or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances without the express prior
written consent of Lessor and compliance in a timely manner (at Lessee's
sole cost and expense) with all Applicable Law (as defined in Paragraph
6.3). "Reportable Use" shall mean (i) the installation or use of any above
or below ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business
plan is required to be filed with, any governmental authority. Reportable
Use shall also include Lessee's being responsible for the presence in, on or
about the Premises of a Hazardous Substance with respect to which any
Applicable Law requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but in compliance
with all Applicable Law, use any ordinary and customary materials reasonably
required to be used by Lessee in the normal course of Lessee's business
permitted on the Premises, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability therefor.
In addition, Lessor may (but without any obligation to do so) condition its
consent to the use or presence of any Hazardous Substance, activity or
storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to
protect itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefrom or therefor, including,
but not limited to, the installation (and removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the
deposit of an additional Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. Lessee shall also
immediately give Lessor a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action or
proceeding give * to, or received * from, any governmental authority or
private party, or persons entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any Hazardous
Substance or contamination in, on, or about the Premises, including but not
limited to all such documents as may be involved in any Reportable Uses
involving the Premises.
(c) Indemnification. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees and lenders and ground lessor, if any,
and the Premises, harmless from and against any and all loss of rents and/or
damages, liabilities, judgments, costs, claims, liens, expenses, penalties,
permits and attorney's and consultant's fees arising out of or involving any
Hazardous Substance or storage tank brought onto the Premises by or for
Lessee or under Lessee's control. Lessee's obligations under this Paragraph
6 shall include, but not be limited to, the effects of any contamination or
injury to person, property or the environment created or suffered by Lessee,
and the cost of investigation (including consultant's and attorney's fees
and testing), removal, remediation, restoration and/or abatement thereof, or
of any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances or storage
tanks, unless specifically so agreed by Lessor in writing at the time of
such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "Applicable Law," which term is used
in this Lease to include all laws, rules, regulations, ordinances,
directives, covenants, easements and restrictions or record, permits, the
requirements of any applicable fire insurance underwriter or rating bureau,
and the recommendations of Lessor's engineers and/or consultants, relating
in any manner to the Premises (including but not limited to matters
pertaining to (i) industrial hygiene, (ii) environmental conditions on, in,
under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation,
maintenance, removal, transportation, storage, spill or release of any
Hazardous Substance or storage tank), now in effect or which may hereafter
come into effect, and whether or not reflecting a change in policy from any
previously existing policy. Lessee shall, within five (5) days after
receipt of Lessor's written request, provide Lessor with copies of all
documents and information, including, but not limited to, permits,
registrations, manifests, applications, reports and certificates, evidencing
Lessee's compliance with any Applicable Law specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or
the Premises to comply with any Applicable Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as
defined in the Lease(a)) shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable Laws (as defined in
Paragraph 6.3), and to employ experts and/or consultants in connection
therewith and/or to advise Lessor with respect to Lessee's activities,
including but not limited to the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage tank on or
from the Premises. The costs and expenses of any such inspections shall be
paid by the party requesting same, unless a Default or Breach of this Lease,
violation of Applicable Law, or a contamination, caused or materially
contributed to by Lessee is found to exist or be imminent, or unless the
inspection is requested or ordered by a governmental authority as the result
of any such existing or imminent violation or contamination. In any such
case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the
case may be, for the costs and expenses of such inspections.
9. Maintenance and Repairs: The following excerpt from the AIR
Lease Form shall become part of the lease documents; the term
"Lessor" shall mean Landlord and "Lessee" shall mean Tenant.
7. Maintenance; Repairs.
7.1 Lessee's Obligations. **Lessee shall, at Lessee's sole cost
and expenses and at all times, keep the Premises and every part thereof in
good order, condition and repair, and non-structural (whether or not such
portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, without
limiting the generality of the foregoing, all equipment or facilities
serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or unfired
pressure vessels, fire sprinkler and/or standpipe and hose or other
automatic fire extinguishing system, including fire alarm and/or smoke
detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, about, or adjacent to
the Premises. Lessee shall not cause or permit any Hazardous Substance to
be spilled or released in, on, under or about the Premises (including
through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of
any contamination of, and for the maintenance, security and/or monitoring of
the Premises, the elements surrounding same, or neighboring properties, that
was caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance and/or storage tank brought onto the
Premises by or for Lessee or under its control. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform
good maintenance practices. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises
and all improvements thereon or a part thereof in good order, condition and
state of repair. If Lessee occupies the Premises for seven (7) years or
more Lessor may require Lessee to repaint the exterior of the buildings on
the Premises as reasonably required, but not more frequently than once every
seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire
sprinkler and/or standpipe and hose or other automatic fire extinguishing
systems, including fire alarm and/or smoke detection, (iv) landscaping and
irrigation systems, (v) roof covering and drain maintenance and (vi) asphalt
and parking lot maintenance.***
**(a) Subject to the provisions of Paragraph 12 of Exhibit C to Lease dated
8-16-83 and paragraphs 11 (fire and casualty damage) and 13 (condemnation),
*** Notwithstanding the preceding, Lessor shall continue providing the same
services that it has provided prior to this Fifth Addendum, such services to
be handled in accordance with the same billing procedure.
The Parties hereto have signed this extension agreement this 5th day of July
1995.
LANDLORD:
TCLW/Fullerton, a By: Fullerton Industrial Properties, II
California general partnership Managing General Partner
By: Laskey-Weil II, general partner
By: Laskey-Weil Co., general Partner
By: Martin H. Weil
Trustee of Weil Family Trust
Its: General Partner
Date: 7/5/95
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By: Ron Hart
Its: President
Date: 6/30/95
Exhibit 10.04
LEASE
THIS INDENTURE, made this 15 day of February, A.D. 1983, by and between
CMD SOUTHWEST, INC., an Arizona corporation, (hereinafter, for convenience,
referred to as the "Lessor"), party of the first part and NELCO PRODUCTS,
INC., a corporation organized and existing by and pursuant to the laws of
the state of Delaware and will promptly qualify to do business in the State
of Arizona, (hereinafter, for convenience, referred to as the "Lessee"),
party of the second part;
WITNESSETH:
ARTICLE I
THE LEASED PREMISES,
FIXTURES AND EQUIPMENT:
SEC. 101 THE LEASED PREMISES. That the Lessor, for and in consideration
of TEN DOLLARS ($10.00), to it in hand paid by the Lessee, the receipt
whereof is hereby acknowledged; and in consideration of the agreements,
conditions, covenants and obligations to be kept, fulfilled, observed or
performed by the Lessee, does hereby demise and lease, and the Lessee does
hereby take and rent from the Lessor, in "As Is" condition (except as is
otherwise set forth herein), and upon the terms herein set forth,
approximately Fifty-one Thousand Nine Hundred Eighty-one (51,981) square
feet of land, more specifically described on Exhibit "All attached hereto,
which Exhibit is by this reference expressly made a part hereof, together
with a building located thereon containing approximately Twenty-two Thousand
Three Hundred Thirty-eight (22,338) square feet respectively and including
all easements, improvements, tenements, appurtenances, hereditaments,
fixtures, rights and privileges thereto belonging, or in any way
appertaining and subject to any, restrictions. easements and encroachments
as described herein and to any zoning ordinances, laws, rules or regulations
of any Public Authority, now or hereafter in effect, relating to or
affecting the Demised Premises; including, without limitation, all those
indicated on Exhibit "A" and Schedule "6".
The Demised Premises are commonly known as 1130 W. Geneva Drive, Tempe,
Arizona 85282.
SEC. 102:1. BUILDING FIXTURES AND EQUIPMENT. All fixtures, machinery
and equipment which are necessary to the general operation and maintenance
of the Demised Premises and which are now in the Demised Premises, shall be
the property of the Lessor, whether owned by Lessor at the commencement of
the term, subsequently purchased by Lessor, or required to be purchased by
Lessee in accordance with the provisions of this Lease. Without in any way
limiting the generality of the aforegoing, all electric power panels,
lighting fixtures, plumbing, heating and air-conditioning equipment
presently located in the Demised Premises shall be considered necessary to
the general operation and maintenance of the Demised Premises.
SEC. 102:2. TRADE FIXTURES. All trade fixtures, machinery, non-
structural partitions and other equipment and items which are supplied,
installed and used by Lessee in the conduct of its business, including
process machinery and equipment, process piping and process electric switch
gear (other than replacement of building equipment referred to above), which
may hereafter be installed therein, shall be the property of Lessee and may
be removed by Lessee at any time prior to or upon termination of the Lease,
whether by lapse of time or otherwise; provided the Lessee is not, at any
such time, in default of any of the terms or conditions of this Lease.
Lessee shall remove, on demand by Lessor and at Lessee's expense, any and
all such items at the termination of the Lease term, whether by lapse of
time or otherwise, and repair any damage caused by such removal, restoring
the Demised Premises to their condition prior to the installation of all
such items or any of them.
SEC. 103. "DEMISED PREMISES" and "IMPROVEMENTS" DEFINED. "Demised
Premises" shall mean the premises described in Exhibit "A" and shall include
any and all Improvements, now or hereafter, located or constructed thereon.
"Improvements" shall mean all Buildings and other Improvements, now or
hereafter located or constructed on the Demised Premises, including the
Building, fixtures and equipment on such premises which are the property of
Lessor as above described.
ARTICLE 2
TERM POSSESSION:
SEC. 201. TERM. The term of this Lease shall be for a period of Five
(5) years, commencing upon March 1, 1983, and ending February 29, 1988,
subject however to Lessee's options to extend the term as provided in
Schedule 4.
SEC. 202. HOLD-OVER TENANCY. In the event the Lessee remains in
possession of the Demised Premises after the expiration of the term of this
Lease, or any extension hereof, without written consent of Lessor, the
Lessee shall then be obligated to pay double the rate of the then current
annual rent as set forth herein, in equal installments on the first day of
each calendar month, for so long as the Lessor is willfully kept out of
possession of the Demised Premises. No such payment, nor the acceptance
thereof, shall in any way constitute a waiver of the rights of Lessor to
dispossess the Lessee and, recover possession of the Demised Premises and
the just and former estate of the Lessor and to bring any action for damages
suffered by Lessor on account of Lessee's failure to vacate the Premises.
Notwithstanding the foregoing, in the event there is a dispute as to the
"Market Rental", as such term is hereinafter defined, or if such "Market
Rental" has not been determined prior to the time within which Lessee must
exercise its second option to extend, as provided in Schedule 4, Lessee may
elect to extend the then term of this Lease one (1) additional month on the
Same terms and conditions and at the same rental as Lessee is then paying,
by notifying Lessor of such election not less than sixty (60) days prior to
the expiration of this Lease.
ARTICLE 3
RENTAL:
SEC. 301. RENTAL. The Lessee hereby covenants and agrees with the
Lessor, as follows:
To take and accept said demise and lease of the Demised Premises on the
terms as herein set forth and to pay as Annual Net Basic Rent for said
Demised Premises during the first three (3) years of the term of this Lease,
the sum of Sixty-eight Thousand Three Hundred Fifty-four Dollars and Twenty-
eight Cents ($68,354.28). Thereafter, the Annual Net Basic Rent to be paid
for the Demised Premises during the next two (2) successive three (3) year
periods and during the tenth (10th) year of the Lease, for so long as this
Lease continues in full force and effect, shall be the greater of the
following:
(a) Sixty-eight Thousand Three Hundred Fifty-f our Dollars and
Twenty-eight Cents ($68,354.28); or
(b) An amount equal to the product of W the Annual Net Basic Rent
payable with respect to the thirty-six (36) month period
immediately preceding the March I as of which the adjustment is
being made and (h) a fraction which has as its denominator the
All Item Revised Consumer Price Index for All Urban Consumers -
United States City Average (1967-100), issued by the Bureau of
Labor Statistics, U.S. Department of Labor, published for the
March thirty-six (36) months prior to the March as of which the
adjustment is being made and, as its numerator, the sum of (A)
said Index published for the March thirty-six (36) months prior
to the March as of which the adjustment is being made and (B)
fifty percent (50%) of the difference between (aa) said Index
published for the March as of which the adjustment is being made
and (bb) said Index published for the March thirty-six (36)
months prior to the March as of which the adjustment is being
made. Each adjustment as of a March 1 of a given year shall be
applicable for the next succeeding thirty-six (36) months of the
term of this Lease, except the adjustment for the period
commencing March 1, 1992, shall be effective for the next
succeeding twelve (12) months.
The Annual Net Basic Rent due to be paid to Lessor for said Demised Premises
during the eleventh (1lth) through the fifteenth (15th) years of the term of
this Lease, shall be the "Market Rental", as that term is hereinafter
defined. The Market Rental will be equal to the product of 22,338
multiplied by the market rate of rent per square foot for comparable
warehouse/office space for a comparable lease term on the commencement date
of the option term (hereinafter referred to as "Market Rate"). The Market
Rate will be determined as hereinafter set forth without regard to (a) the
rate of rent Lessee is then paying for the Demised Premises, and (b) the
value of Lessee's improvements and trade fixtures. In the event Lessee
desires to consider exercising its second option to extend as set forth in
Schedule 4, Lessee shall submit to Lessor nine (9) months prior to the
expiration of the then existing lease term, a written statement setting
forth the Lessee's proposed Market Rate, which statement shall include the
method used and assumptions made in arriving at such a rate. Lessor shall
within twenty (20) days of receipt of the statement accept or reject the
same or submit a revised statement of Market Rate which statement shall
include the method used and assumptions made in arriving at such a rate. If
Lessor accepts Lessee's statement of Market Rate, Market Rate shall be
determined as set forth therein and Lessee shall, in the event it exercises
its option to extend, pay to Lessor during the eleventh (11th) through the
fifteenth (15th) years of the term of this Lease, Annual Net Basic Rent
equal to the product of Market Rate times 22,338 square feet. If Lessor
elects to submit a revised statement, Lessee shall within ten (10) days of
receipt thereof either accept or reject the same. If Lessee accepts
Lessor's revised statement of Market Rate, Market Rate shall be determined
as set forth therein and Lessee shall, in the event it exercises its option
to extend, pay to Lessor Annual Net Basic Rent determined as set forth above
in this paragraph. If, however, Lessor rejects Lessee's statement of Market
Rate or Lessee rejects Lessor's revised statement of Market Rate, the
rejecting party shall name and appoint an independent M.A.I. appraiser and
give written notice thereof to the non-rejecting party within five (5) days
of the date of such rejection. The non-rejecting party shall, within five
(5) days of the receipt of said notice of rejection, name and appoint
another appraiser and give the rejecting party written notice thereof.
Thereafter, said appraisers shall select a third appraiser. If said
appraisers are unable to agree on the selection of a third appraiser within
five (5) days, they shall jointly petition the Superior Court of the County
of Maricopa, Arizona, for the appointment of a third appraiser. Thereupon,
the said appraisers shall independently determine the market rate for
leasing the Demised Premises. Their respective written reports of Market
Rate shall be submitted to Lessor and Lessee not later than seven (7) months
prior to the expiration of the then term or on such later date as Lessor and
Lessee may mutually agree. Upon delivery of the aforesaid written reports
of value, the Market Rate shall be computed as follows: (a) average the
three appraisals and disregard the appraisal which deviates the greatest
from the average; and (b) average the two remaining appraisals. The average
of the two remaining appraisals shall constitute the Market Rate and shall
be binding upon the Lessor and Lessee. In the event Lessee then exercises
its option to extend, the exercise of which shall take place six (6) months
prior to the expiration of the then existing lease term, Lessee shall pay to
Lessor as provided herein Annual Net Basic Rent during the eleventh (11th)
through the fifteenth (15th) years of the term of this Lease equal to the
product of Market Rate times 22,338 square feet. The Lessor and Lessee
shall each bear the fees, cost and expense of the appraiser selected by it,
and the fees, costs and expenses of the appraiser appointed by the parties'
appraisers shall be shared equally by Lessor and Lessee. Either party's
failure to fully comply in a timely fashion with the provisions regarding
determination of Market Rate shall be deemed an abandonment of this method
of determining rental, and the Market Rate shall be determined solely by the
nondefaulting party's appraiser. Thereafter, the Annual Net Basic Rent to
be paid for the Demised Premises during the sixteenth (16th) through the
twentieth (20th) years of the Lease shall be the greater of the following:
(a) The Market Rental (as determined hereinabove); or
(b) An amount equal to the product of the Market Rental multiplied
by a fraction which has as its denominator the All Item Revised
Consumer Price Index for All Urban Consumers -- United States
City Average (1967--100), issued by the Bureau of Labor
Statistics, U.S. Department of Labor, published for the month of
March, 1993, and as its numerator, said Index published for the
month of March, 1998.
In the event that the Price Index hereinabove referred to ceases to
incorporate a significant number of items contained therein in the Index
last published prior to March 1, 1983, or if a substantial change is made in
the method of establishing such Index, then the Index shall be adjusted to
the figure that would have resulted had no change occurred in the manner of
computing such Index. In the event that such Index (or a successor or
substitute Index) is not available, a reliable governmental or other non-
partisan publication evaluating the information theretofore used in
determining the Index, shall be used in lieu of such Index.
All such rental required herein shall be paid in then lawful money of
the United States of America in equal monthly installments; one installment
to be paid upon the first day of each and every calendar month during the
term hereof to the Lessor at such place as may, from time to time, be
designated by them; and in the absence of such designation, at the last
known office of the Lessor in Tempe, Arizona.
Notwithstanding anything herein to the contrary, it is the intent of the
parties that Lessee may use and occupy the Demised Premises during March and
April, 1983, without the payment of Annual Net Basic Rent, subject however
to all other terms and conditions of this Lease, including without
limitation, the obligation to pay taxes, insurance and maintenance as set
forth herein.
It is intended that the rent provided for in this Lease shall be an
absolutely net return to Lessor for the term of this Lease, and any renewals
or extensions thereof, free of any and all expenses or charges with respect
to the Demised Premises including, without limitation, any taxes and
assessments, now or hereafter imposed upon or related to the Demised
Premises, commonly known as real estate taxes, general or special or
improvement assessments, and any taxes and assessments, whether by way of an
income tax or otherwise which may be levied, assessed or imposed by the
State in which the Demised Premises are located, or by any political or
taxing subdivision thereof, upon the income arising from the rents provided
herein in lieu of or as a substitute for taxes or assessments imposed upon
or related to the Demised Premises and commonly known as real estate taxes;
and that Lessee, and not Lessor, shall be required to, and shall pay, such
taxes and assessments, but not to pay any other income tax, or franchise,
gift, estate or transfer tax which may be levied against the Lessor, or any
of Lessor's interest or mortgage payments, Lessor's expenses in negotiating
this Lease, or management fees, if any, paid by Lessor to third parties.
ARTICLE 4
TAXES, ASSESSMENTS, UTILITY CHARGES,
INSPECTION FEES AND LIENS:
SEC. 401. TAXES, ASSESSMENTS. The Lessee shall pay as additional
rent, during the full term hereof, all taxes; including, without limitation,
ad valorem general real estate taxes, installments of assessments, general
and special, and all other public charges levied upon or assessed against
and properly attributable to the Demised Premises, or any part thereof, or
arising by reason of the existence, occupancy, use or possession of the
Demised Premises, or the business carried on therein, including, without
limitation, the Arizona Rental Income Tax, all of which are hereinafter,
collectively referred to as "Taxes"; but not to pay any other income tax, or
franchise, gift, estate or transfer tax which may be levied against the
Lessor.
The Lessee shall pay to Lessor, contemporaneously with the monthly rent
payments One Twelfth (1-12th) of the estimated annual Taxes, such estimate
to be made by Lessor. Upon receipt of the real estate tax bills each year
the Lessor will make payment thereof and promptly provide Lessee with a copy
of the receipted tax bill.
Adjustments of amounts (credit or debit) shall be made between the
parties within thirty (30) days of the receipt by Lessor, of any such bill.
All Taxes shall be prorated for the first and last years of the term hereof
and any extension or renewal thereof. Proration with respect to the Taxes
for the last year of the term shall be made on the basis of the last
available tax bill, provided, however, that upon receipt of the tax bill an
appropriate adjustment shall be made.
SEC. 402. UTILITY CHARGES. Lessee shall secure service and pay all
charges for water, electricity, gas, telephone and any and all other utility
services furnished to the Demised Premises.
The Lessor, the Public Authorities and the Utilities servicing or
located on the Demised Premises shall, at all reasonable hours, by its or
their agents or employees, have the right to install, repair and replace the
utility conduits, meters and other facilities located on the Demised
Premises; it being understood and agreed, however, that the Lessor shall not
be liable for the care, upkeep or maintenance of such facilities.
SEC. 403. LICENSES, PERMITS AND FEES. All licenses, permits and fees
of any kind or character whatsoever, imposed by the City, County, State or
Federal Government, or any other governmental unit or Public Authority which
are necessary for Lessee to conduct or operate its business or for
inspection of the Demised Premises, or any part thereof during the term
hereof, shall be paid promptly by Lessee prior to delinquency.
SEC. 404. MECHANIC'S LIENS. Lessee shall not permit any liens to stand
against the Demised Premises for any labor or material in connection with
work of any character performed or claimed to have been performed on the
Demised Premises at the direction or sufferance of Lessee (except work done
by or at the direction of Lessor), whether such work was performed or
furnished prior to, or subsequent to the commencement of the term of this
Lease.
In the event of any such lien attaching to the Demised Premises, Lessee
will promptly notify Lessor of such event promptly upon Lessee's receipt of
notice of same, and Lessee will pay off the same and have such lien released
of record or shall bond over same within Thirty (30) days of Lessee's
receipt of notice of the filing of such lien of record.
SEC. 405. PAYMENT BY LESSOR. If at any time, any tax, assessment,
charge, rate, fee or inspection fee, generally or specifically charged or
assessed against and properly attributable to said Demised Premises shall
become due or payable and the Lessee shall not pay the same or have paid
same to Lessor;, or, in the event any lien for labor or material shall not
be released of record or bonded over by Lessee as required by SEC. 404, the
Lessor may, at its option, pay the same at any time thereafter without
inquiring into the validity thereof, and the amount of any and all such
payments so made by the Lessor (with interest thereon at Eighteen Percent
(18%) per annum from and after the date paid by Lessor) shall be and hereby
is declared to be so much additional and further rent for the Demised
Premises, due from and payable by the Lessee with the next installment of
rent and may be collected in the same manner as other rents due hereunder;
provided, however, that subject to the further provisions hereinafter set
forth, Lessee shall have the right, at Lessee's expense, to contest in good
faith the validity of any Taxes, assessments, charges, liens, rates or fees
so specifically charged or assessed against the Demised Premises; provided,
however, that Lessee notifies Lessor in writing of Lessee's intention to so
contest within Thirty (30) days in advance of the date such Taxes,
assessments, charges, liens, rates or fees against the Premises were due and
payable; and further provided that such contest is commenced within Thirty
(30) days of the date of such notice.
SEC. 406. CONTEST. In the event Lessee desires to contest any Taxes,
assessments, charges, liens, rates or fees herein provided, it shall do so
by paying the amounts under protest, or shall provide for the payment
thereof, together with all penalties, interest, costs and expenses, by the
deposit of a sufficient sum of money to be held in escrow by Lessor or, at
the option of Lessor, by a good and sufficient undertaking as may be
required or permitted by law, all to the end that no delinquency or
proceedings based upon delinquency shall in anyway affect the title or
interest of Lessor in the Demised Premises.
Lessee agrees that it will prosecute any such contest with due diligence
and in the event any such contest be adjudicated adversely to Lessee, that
Lessee will, within Thirty (30) days after final determination, or within
the time provided for in such adjudication, whichever is sooner thereof, pay
the full amount of any such Taxes, assessments, charges, liens, rates or
fees, or other obligations (not paid by Lessee to Lessor) which may have
been the subject of such contest as so determined, together with all
interest and penalties, costs and charges which may be payable in connection
therewith and satisfy and cause the release of the same of record.
Lessee shall keep the Lessor notified, from time to time throughout the
period of its pendency, as to the progress and status of any such contest.
If a final determination is not had within Three (3) years from the date of
instituting any such contest, or in the event of any default of the Lessee,
pursuant to the terms of this Lease, which is not cured within the
applicable cure period provided in SEC. 1101, Lessor, at its option, may pay
out of any funds held in escrow any such Taxes, assessments, charges, liens,
rates or fees which may be under contest, together with all penalties,
interest charges and other expenses whatever in connection with such
contest.
In the event the funds so held are insufficient to pay and satisfy the
same, Lessor, at its option, may pay any deficiency and any amount so paid
will be reimbursed by Lessee as additional rent due hereunder, promptly upon
demand, notwithstanding any previous termination of the term of this Lease
by lapse of time or otherwise, with interest at Eighteen Percent (18%) per
annum from date of expenditure by Lessor.
Nothing contained in this agreement shall be construed to authorize
Lessee to create or incur on behalf of Lessor any liability, indebtedness or
obligation whatsoever. Anything herein to the contrary, notwithstanding,
Lessee shall defend, completely indemnify and hold Lessor forever harmless
from any and all consequences of any such Taxes, assessments, charges,
liens, rates or fees, or any contest thereof which were the obligations of
Lessee to pay hereunder.
ARTICLE 5
INSURANCE:
SEC. 501. PROPERTY INSURANCE. The Lessee covenants and agrees that
immediately upon the commencement of the term hereof, Lessee will cause, at
Lessee expense, the Building and Improvements placed on the Demised Premises
by the Lessor, including any and all additions thereto, to be insured for
full replacement cost against loss or damage by fire, lightning and other
casualty covered by the provisions of endorsements for Extended Coverage and
Special Extended Coverage, to include the peril of collapse, vandalism and
malicious mischief, replacement cost, and will keep insurance to the full
replacement value, as reasonably determined by Lessor from time to time, of
the Building and Improvements placed on said Demised Premises by Lessor,
including any and all additions thereto, in full force and effect during the
term hereof so long as this Lease is in effect, including all extensions
hereof.
No such policy of insurance shall include either the contents of the
Building located on the Demised Premises or any other property of the Lessee
or any third party except as a separate stated item of insurance, separate
and in addition to the coverage which shall apply exclusively to Lessor's
Building and other Improvements owned by Lessor. All such policies shall
provide that Lessor and any Mortgagee(s) shall be the insureds as their
interests appear, and shall further provide that any loss shall be payable
to Lessor and any Mortgagee(s) notwithstanding any act or omission of Lessee
which might otherwise result in a forfeiture or reduction of said insurance.
In addition, Lessee shall maintain steam boiler insurance in such
amounts as Lessor may from time to time reasonably require on all steam
boilers, pressure boilers or such apparatus as Lessor may deem necessary to
be covered by such insurance, if any.
The Lessee will not place, nor permit to be placed, any other policies
of insurance upon the Building or other Improvements placed upon Demised
Premises by Lessor without advance written permission of Lessor and without
Lessor and Lessor's Mortgagee(s) as a named insured, provided, however, that
nothing herein shall be construed as limiting in any way the manner in which
Lessee insures its property placed within the Demised Premises.
SEC. 502. PUBLIC LIABILITY INSURANCE. Lessee, at Lessee's expense, and
for mutual benefit of the Lessor and the Lessee, shall maintain
Comprehensive Public Liability Insurance, covering the Demised Premises in
an amount not less than ONE MILLION DOLLARS ($1,000,000). Such insurance
shall include the following coverages: premises/operations, independent
contractors, personal injury, broad form property damage and contractual
liability.
SEC. 503. INSURANCE GENERALLY. All insurance policies shall be with
companies reasonably satisfactory to Lessor and shall provide for at least
Thirty (30) days mandatory advance written notice to Lessor before
cancellation, reduction or other amendment and the property policies shall,
upon request of Lessor, contain a standard mortgage clause. Certificates
evidencing such insurance shall be delivered by Lessee to Lessor at the
commencement of the term of this Lease and all subsequent amendments and
endorsements shall be promptly delivered to Lessor. Statements for premiums
on such policies shall be sent to and paid by Lessee.
In the event Lessee shall refuse or fail to provide the insurance
coverage herein required or to provide evidence of such coverage as herein
described, the Lessor may, at its election, but with no obligation so to do,
procure and, from time to time, renew such insurance and all amounts
expended therefor with interest thereon at Eighteen Percent (18%) per annum
from the respective dates of such expenditures shall be so much additional
rent hereunder due from the Lessee on demand.
Lessee agrees to indemnify the Lessor for any loss suffered as the
result of the exercise of any deductible feature that may be incorporated in
the insurance contract and Lessor hereby reserves the right to disapprove
the amount and provisions of any such deductible feature. Lessee agrees to
be a self insurer as to such deductible amounts and further agrees to pay
such amounts to Lessor in the same manner as though such insurance policies
did not contain deductible provisions.
ARTICLE 6
USE AND CONDITION OF
THE DEMISED PREMISES:
SEC. 601. DEMISED PREMISES. Lessee shall not breach or suffer the
breach of any of the conditions, agreements and restrictions affecting the
Demised Premises and described herein, and shall defend, completely
indemnify and hold Lessor forever harmless from all consequences of any such
breach.
Lessee may use and occupy the Demised Premises for light manufacturing,
(including mass lamination, manufacturing of copper clad boards, printing
and etching of copper clad laminated boards and the manufacturing of pre-
preg), storage, assembly, distribution and for offices in connection
therewith; provided, however, that Lessee shall strictly comply with all
present and future laws, ordinances and regulations of Public Authorities,
as well as all insurance underwriting and inspection and rating
requirements, now or hereafter in any manner affecting the use of the
Demised Premises, the sidewalks, alleys, driveways and parkways adjacent
thereto, if any, or any building thereon, or the use thereof. Lessee shall
not permit any unlawful occupation, business, trade or nuisance to be
conducted on the Demised Premises, or any use to be made thereof contrary to
any law, ordinance or regulation. Without in any way limiting the
generality of the aforegoing, Lessee will not, at any time, store any
material or equipment of any kind or character outside the buildings located
on the Demised Premises except in strict compliance with all applicable
ordinances, laws or regulations of any governmental unit or Public Authority
having jurisdiction.
Lessee, at the sole cost and expense of Lessee, shall have the right to
contest the validity of any such rules, laws, ordinances or regulations
affecting the use of the Demised Premises; provided, however, in any event,
that Lessee shall defend, completely indemnify and hold the Lessor forever
harmless from all consequences of any such contest and the violation of any
such rule, law, ordinance or regulation.
Lessee will not use or permit to be used upon or in said Demised
Premises or any building thereon anything that will invalidate any policy of
insurance at any time insuring the Demised Premises, or any building(s) or
improvements thereon, nor shall Lessee permit any dangerous condition to
exist on the Demised Premises for which appropriate and sufficient
safeguards have not been taken.
Lessee shall not cause or suffer any signs to be erected upon the
Demised Premises, nor upon any building(s) or improvements located thereon
without the prior written approval of Lessor, which shall not be
unreasonably withheld.
Anything herein to the contrary, notwithstanding, Lessee shall not at
any time overload any structural member (including, by way of illustration
and not limitation, all roofs, columns, walls, beams, trusses and floors) of
the building located on the Demised Premises; nor shall Lessee cause or
suffer the demolition of the building(s) or improvements, or any part(s)
thereof (except as provided in SEC. 603) without the prior written approval
of Lessor.
The Lessee further covenants and agrees that the entry into occupancy
of the Demised Premises by the Lessee shall constitute an acknowledgment
that the same and the buildings) and improvements thereon have been received
by the Lessee in first-class condition and repair, subject to the warranties
set forth herein.
Lessor warrants and guarantees that the following shall be free from
defects in material and workmanship to and including the periods set forth:
Roof: June 8, 1984;
Structural (foundation and exterior bearing walls) and mechanical and
electrical systems (HVAC): June 8, 1983;
Plumbing: June 8, 1983, provided however that drains are guaranteed
to be free and clear flowing only at time of occupancy.
SEC. 602. MAINTENANCE. During the term of this Lease and any
extensions thereof, the Lessee shall maintain and preserve the Demised
Premises and improvements thereon; including, without limitation, the
interior and exterior of all Buildings thereon in first-class condition
making all repairs, replacements and restorations necessary for such
maintenance and preservation: including, without limitation, tuckpointing,
painting, glass replacement, glazing caulking and the repair, replacement
and restoration of the roof covering, docks, landscaping and parking areas.
All repairs, replacements and restorations shall be in quality at least
equal to the original construction.
At the termination of this Lease, by lapse of time or otherwise, Lessee
shall deliver the Demised Premises to the Lessor in first-class condition
and repair as obtained therein at the commencement of the term of this Lease
subject, however, to the loss or damage due to any casualty to the extent
actually covered by then valid, in force, insurance policies to be obtained
by Lessee as herein set forth, and normal wear and tear. Lessee shall be
liable for any detoxification or other corrections which may be required by
the Environmental Protection Agency or any other applicable public
authority. Anything herein to the contrary, notwithstanding, Lessee will
not suffer any waste to occur on the Demised Premises and will make every
reasonable effort to prevent the Demised Premises from falling into
disrepair; including, without limitation, the prompt performance of all
repair, replacement and restoration obligations of Lessee as herein set
forth.
SEC. 603. ALTERATIONS. Lessee shall make no material alterations to
the Demised Premises without prior written approval of Lessor, which shall
not be unreasonably withheld. Lessor acknowledges that Lessee intends to
penetrate the floor, may make changes in the elevation of portions of the
floor and may penetrate the roof for lighting, ventilation, the construction
of a treater tower and the heating and cooling of the Building within the
Demised Premises in connection with Lessee's improving the Building within
the Demised Premises and that such changes are acceptable provided they are
properly engineered. Lessee shall remove, on demand by Lessor and at
Lessee's expense, any and all alterations at the termination of this Lease,
whether by lapse of time or otherwise, and shall repair any damage caused by
such removal, restoring the Demised Premises to their condition prior to the
making of any such alterations, or any of them.
Any and all alterations, additions and improvements made to or placed
upon the Demised Premises by the Lessee, or suffered by Lessee to be made to
or placed upon the Demised Premises, as well as all fixtures and articles of
personal property attached to or made a part of the Demised Premises, which
Lessee has not removed or been required to remove by Lessor, shall
immediately become the property of the Lessor at the termination of this
Lease and shall be surrendered to the Lessor.
Subject to the provisions hereinabove set forth, the Lessee may expend
such additional sums of money upon the Demised Premises, the Building and
Improvements on said Demised Premises as the Lessee may desire, with the
full understanding that such additional sums so paid shall not be deducted
from or set off against any rents or other payments due hereunder.
SEC. 604. LESSOR'S RIGHT TO INSPECT AND REPAIR. Lessor, its agents and
employees shall have the right, at any reasonable time, after notice to
Lessee, to enter upon the Demised Premises to inspect the same, in the
presence of an agent of Lessee. In the event Lessee fails to commence such
repairs, replacements or restorations as are necessary to maintain the
Demised Premises in first-class condition, within Thirty (30) days after
notice from Lessor or fails to diligently prosecute the same to completion,
the Lessor, at its option, but without any obligation so to do, may make
such repairs, replacements, or restorations, and amounts expended for such
work by the Lessor shall be reimbursed by the Lessee as additional rent due
hereunder, promptly on demand, together with interest at Eighteen Percent
(18%) per annum from date of expenditure.
Anything herein to the contrary, notwithstanding, Lessor shall have the
right, at any time, to enter upon the Demised Premises, but without any
obligation so to do, in order to effect any repair, replacement or
restoration of an emergency nature and Lessee shall reimburse Lessor as
additional rent due hereunder, promptly upon demand, for expenditures
incurred for such work and if Lessee knowingly denies Lessor such access,
Lessee agrees to defend, indemnify And hold forever harmless the Lessor from
and against any and all liability, fines, suits, claims, demands, actions,
causes of action, losses, costs, damages, judgments and expenses of any kind
or character, name or nature due to or arising directly or indirectly out of
such emergency, which result from such denial of access.
ARTICLE 7
INDEMNIFICATION AND HOLDING
HARMLESS OF LESSOR:
SEC. 701. INDEMNIFICATION. To the extent permitted by law, Lessee
shall defend, completely indemnify and hold forever harmless the Lessor from
and against any and all liability, fines, suits, claims, demands, actions,
causes of action, losses, costs, damages, judgments and expenses of any kind
or character, name or nature, due to or arising out of:
(a) Any breach, violation or non-performance of any covenant,
obligation, condition or agreement in this Lease set forth and
contained on the part of the Lessee to be fulfilled, kept,
observed or performed; and/or
(b) any damage to, loss or destruction of any property arising
directly or indirectly out of Lessee's use and occupancy of the
Demised Premises; and/or
(c) any injury to any person(s), including death, resulting at any
time therefrom, occurring in or about the Demised Premises and/or
the sidewalks, drive and alleyways, parkways, if any, and any and
all other appurtenances thereunto appertaining.
In the event the Lessor is made a party to any action or proceeding
which Lessee is required to defend pursuant to the provisions of this Lease,
the Lessor shall have the right to appear and to take part in any such
action or proceeding by legal counsel of Lessor's choice at Lessor's cost
and expense.
Lessee and Lessor hereby agree to completely indemnify the prevailing
party as to all costs and expenses incurred to enforce any of the terms,
provisions, conditions or covenants of this Lease; including, but not
limited to, attorney's fees.
Nothing herein shall be construed as obligating the Lessee to indemnify
or hold harmless any party from and against the consequences of intentional
or negligent act or omission of the party to be indemnified.
SEC. 702. LOSS OF PROPERTY. Lessee agrees that under no circumstances
shall Lessor be liable to Lessee or any third party for any loss of,
destruction of, damage to or shortage of any property on the Demised
Premises; including, by way of illustration and not limitation, equipment,
goods or merchandise placed on the Demised Premises or suffered to be placed
thereon by Lessee, it being the intention of the parties hereto that the
risk of any and all such loss, destruction, damage or shortage shall be
borne by Lessee and Lessee agrees to defend, completely indemnify and hold
Lessor forever harmless from and against any and all liability, suits,
claims, demands, actions causes of action, losses, costs, damages, judgments
and expenses arising out of such loss, destruction, damage or shortage.
ARTICLE 8
DAMAGE OR DESTRUCTION
OF BUILDINGS:
SEC. 801. DAMAGE OR DESTRUCTION OF BUILDINGS. If any Building or
Improvements placed by Lessor on the Demised Premises shall be injured or
destroyed by fire or other casualty insured against pursuant to the terms of
this Lease, the Lessor will, with due diligence and dispatch, proceed to
collect the insurance thereon and if the Lessor elects to repair or restore
such Building, the Lessor will apply the insurance monies derived from said
polices to such repair and restoration.
In the event that the monies realized from the insurance policies shall
not be sufficient to restore such Building and/or Improvements to their
condition immediately prior to such fire or other such casualty, the Lessor
may, at the option of Lessor, advance the additional funds necessary
therefor, and to the extent that the insufficiency of the insurance proceeds
was due to the failure of Lessee to comply with the provisions of this Lease
and to the extent of any deductible feature in the insurance coverage to be
provided by the Lessee, the Lessee covenants and agrees to repay any such
advance to the Lessor as additional rent due hereunder, promptly upon
demand, with interest at the rate of Eighteen Percent (18%) per annum from
the date of such expenditure.
In the event Lessor does not elect to repair or restore such Building
and/or Improvements within Thirty (30) days after such a casualty, such
election to be evidenced by written notice to Lessee within said time period
or if the repair or restoration cannot reasonably be accomplished within a
period of one hundred twenty (120) days after such casualty, then in either
of such events this Lease and the term hereof, may be terminated and
cancelled at the election of either party hereto, provided written notice is
given to the other party within Ten (10) days after the expiration of the
last aforementioned such Thirty (30) day period. Absent such timely notice
this Lease shall remain in full force and effect.
ARTICLE 9
RENT ABATEMENT
BECAUSE OF DAMAGE:
SEC. 901. RENT ABATEMENT BECAUSE OF DAMAGE. In the event the Building
and/or improvements on the Demised Premises shall be damaged by fire or
other casualty covered by the provisions of the insurance policies then in
effect as provided for herein, the Lessee shall not be required to pay rent
on any untenantable portion of said Building and the rental reserved
hereunder shall be reduced to the proportion that the square foot area of
the Building remaining tenantable bears to the square foot area of the
original Building. Such rental shall be increased pro rata, from time to
time, if and when additional areas of the Building are returned to
tenantable condition.
ARTICLE 10
CONDEMNATION:
SEC. 1001. AWARD. In the event the Demised Premises, or any part
thereof, shall be condemned or taken for a public or a quasi-public use, or
is sold by Lessor under threat of condemnation, any award made or sales
price paid to compensate for the value of the Demised Premises, Building(s)
and improvements thereon, or for damages to the remainder thereof shall be
paid to the Lessor and Lessee shall have no claim thereto and the Lessee
hereby irrevocably assigns and transfers to the Lessor any right to any such
compensation or damage awards, providing, however, that Lessee shall have
the right to prove in the proceeding and to receive any award which may be
made for damages for or condemnation of Lessee's personal property,
including trade fixtures and equipment, and relocation costs.
In the event any or all of the Demised Premises shall be so condemned or
taken, the Lessee shall execute and deliver to Lessor, promptly on demand,
all documents necessary and proper to evidence the termination of the
interest of the Lessee in and to the Demised Premises and this Lease,
including, without limitation, a recordable release and cancellation of this
Lease and a Quit Claim Deed. The failure of the Lessee to so execute and
deliver such documents shall in no way affect such termination of this Lease
and the interest of the Lessee in and to the Demised Premises.
SEC. 1002. REMAINDER SUSCEPTIBLE OF OCCUPANCY. In the event a part of
the Demised Premises remains which is susceptible of occupation for the uses
set forth herein, this Lease shall, as to the part so taken, terminate as of
the date Title shall vest in the condemning authority and the rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for
the remainder of the term only such fractional portion of such rent as the
area of the part of the Building located on the Demised Premises remaining
after condemnation bears to the area of said Building as of the date of
condemnation; and in such event, this Lease shall remain in force and effect
and the Lessor shall promptly commence and diligently prosecute to
completion the restoration of the Building so that it shall again constitute
a complete architectural unit but the Lessee shall be required to pay only
that fractional portion of the rent as is provided for hereinabove in this
SEC. 1002.
SEC. 1003. REMAINDER NOT SUSCEPTIBLE OF OCCUPANCY. In the event all of
the Demised Premises, or such party thereof be taken or condemned so that
there does not remain a portion susceptible for occupancy for the uses set
forth herein, this Lease shall terminate upon the date the Title to the part
taken vests in the condemning authority and Lessee's obligation to pay rent
or to discharge any other obligation hereunder, other than the payment of
money then due and damages arising out of any breach of the covenants,
conditions or terms hereof by the Lessee, shall cease.
Notwithstanding anything herein to the contrary, the Demised Premises
shall not be deemed "susceptible for occupancy" in the event more than
twenty-five percent (25%) of the area of the Building located on the Demised
Premises is taken or condemned.
ARTICLE II
DEFAULT, BANKRUPTCY
SEC. 1101. DEFAULT, BANKRUPTCY. It is mutually agreed and understood
by and between the parties hereto that in the event during the term of this
Lease, regardless of the pendency of any bankruptcy, insolvency,
receivership or reorganization proceedings, in law, equity or before any
administrative tribunal, or any other governmental entity which has
prevented or which might prevent compliance by Lessee with the terms or
provisions of this Lease:
(1) Lessee shall default in the payment of any installment of rent or
other payment required to be made by Lessee pursuant to the
provisions of this lease and such default shall continue for Ten
(10) days after notice of such default from Lessor to Lessee; or
(2) Lessee shall make default in the provisions of any of the
agreements, conditions, covenants or obligations hereunder to be
kept, fulfilled, observed or performed by the Lessee and such
default shall not be cured within Thirty (30) days after notice of
such default from Lessor to Lessee.
Anything hereinabove to the contrary, notwithstanding, as to any
such default except the payment of any rent or other monies
reserved herein, in the event the Lessee shall, within said Thirty
(30) day period, commence the cure of such default and thereafter
diligently pursue to completion any such cure as soon as
reasonably practicable, the Lessor may not declare the term ended
and this Agreement terminated and cancelled; or
(3) if any voluntary petition or similar pleading under any bankruptcy
act or any federal or state law seeking reorganization or
arrangement with creditors or adjustment of debts is filed by
Lessee, or if any such petition or pleadings is involuntary and
Lessee is not discharged thereof within Thirty (30) days after the
date of its filing; or
(4) if Lessee admits its inability to pay its debts or if a receiver,
trustee or other appointee of a court, administrative tribunal or
other Public Authority is appointed for all or a substantial part
of Lessee's property and if such appointment is not vacated within
Thirty (30) days after being made; or
(5) if the leasehold interest of Lessee is levied upon or attached by
process of law, and such levy or attachment is not released of
record within Thirty (30) days; or
(6) if Lessee makes an assignment for the benefit of creditors, or if
any proceedings are filed by or against Lessee to declare Lessee
insolvent or unable to meet its debts and such proceedings are not
discharged within Thirty (30) days after the date of their filing;
or
(7) if a receiver or similar type of appointment or court appointee or
nominee of any name or character is made for all or a substantial
part of Lessee's property and if such receiver is not discharged
within Thirty (30) days after appointment;
then, in any such event, Lessor shall have the right, at any time thereafter
(but prior to any cure), with or without notice and at Lessor's election, to
re-enter and take complete possession of the Demised Premises and any and
all improvements then forming part of the Demised Premises and to declare
the term of this Lease ended, whereupon this Lease and all the right, title
and interest of Lessee hereunder and all of those claiming under Lessee,
shall terminate and be of no further force or effect; or, without prejudice
to Lessor's rights to re-enter and terminate, to take any action available
to Lessor, all without such termination or action affecting Lessor's right
of recovery of past due or future rents or other obligations of Lessee
hereunder; including, but not limited to, damages arising out of any default
on the part of the Lessee.
Anything herein to the contrary, notwithstanding any payment of rent or
any other payment to be made by the Lessee to Lessor, pursuant to the
provisions of this Lease, shall bear interest at the rate of Eighteen
Percent (18%) per annum from the date payment was due.
In the event the right, title and interest of Lessee in and to the
Demised Premises and this Lease is terminated, whether by lapse of time or
otherwise, the Lessee shall execute and deliver to Lessor, promptly on
demand, all documents reasonably requested by Lessor to evidence such
termination: including, without limitation, a recordable release and
cancellation of this Lease and a Quit Claim Deed. The failure of Lessee to
so execute and deliver such documents shall in no way affect the termination
of this Lease and the interest of the Lessee in and to the Demised Premises.
SEC. 1102. NO WAIVER. No waiver by Lessor of any default by the Lessee
of any of the obligations, agreements, conditions or covenants on the part
of the Lessee to be fulfilled, kept, observed or performed hereunder shall
be a waiver of any subsequent default or of any other obligation, agreement,
condition or covenant, nor shall any forbearance by Lessor to seek a remedy
for any default by Lessee be a waiver by Lessor of any of the rights and
remedies available to Lessor hereunder or by law granted or permitted, with
respect to such or any subsequent default.
ARTICLE 12
TRANSFER, ASSIGNMENT, SUBLEASE
SEC. 1201. TRANSFER, ASSIGNMENT, SUBLEASE. The Lessee may not assign,
transfer, mortgage or pledge this Lease or the interest of the Lessee herein
or hereunder or sublet Demised Premises or any portion thereof; without, in
each case, the prior written consent of the Lessor which shall not be
unreasonably withheld. Any purported assignment, mortgage, transfer, pledge
or sublease without the prior written consent of Lessor shall be absolutely
null and void and of no legal force or effect.
SEC. 1202. INCREASED RENT TO LESSOR. As a condition precedent to the
approval of any sublease, assignment or any other type of transfer by the
Lessee to any third party of all or a portion of its interest in and to the
Demised Premises pursuant to the provisions of this Lease, Lessee agrees
that it will pay to the Lessor, contemporaneously with the rental payments
due hereunder, Fifty Percent (50%) of any increased economic benefit
received by Lessee, including, without limitation, rent in excess of the
rent reserved herein and in the event less than all of the Demised Premises
are so subleased, assigned or transferred in any way, the Lessee shall pay
to the Lessor Fifty Percent (50%) of any increase in the square foot rate of
rent paid to Lessee by any third party.
The rent that Lessee pays to the Lessor for the purpose of this Section
shall be calculated by dividing the monthly rent reserved herein by the
square foot area of the building located on the Demised Premises as stated
hereinabove.
SEC. 1203. LESSOR MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Lessor shall
have the right to sell, mortgage, pledge, hypothecate or in any other manner
transfer or assign the interest of the Lessor in the Demised Premises and/or
in the Lease, subject to all of the covenants and conditions of and Lessee's
rights under this Lease. The term "Lessor", as used in this Lease, means
only the owner for the time being of the Demised Premises and in the event
of any sale, conveyance or other transfer of the Demised Premises, or the
interest of Lessor in the premises of this Lease, the Lessor shall, upon
purchaser's assumption, be entirely freed of all covenants and obligations
of Lessor hereunder arising after the date of such sale, transfer assignment
or conveyance. This Lease shall not be affected by any such sale and Lessee
agrees to attorn to the purchaser or assignee.
SEC. 1204. SUBORDINATION. This Lease shall be subject and subordinate
to the lien of any mortgage or mortgages which at any time may be placed
upon the Demised Premises by Lessor, its successors or assigns, and to any
replacements, renewals or extensions thereof, provided that the holder of
the encumbrance agrees to recognize for himself and its successors and
assigns, Lessee's rights hereunder notwithstanding any foreclosure. Lessee
agrees, at any time hereafter, on demand, to execute and deliver ) any
instruments, releases or other documents that may be required for the
purpose of subjecting and subordinating this Lease to the lien of any such
mortgage or mortgages, subject to the provisions set forth above.
SEC. 1205. LESSEE'S ESTOPPEL LETTER. Lessee agrees at any time and
from time to time upon not less than Ten (10) days prior written request by
Lessor to execute, acknowledge and deliver to Lessor a statement in writing
certifying whether this Lease is unmodified and in full force and effect
(and if there have been modifications, stating the modifications), and the
dates to which the basic rent and other charges have been paid in advance,
if any, it being intended that any such statement delivered pursuant to this
Section may be relied upon by any prospective purchaser of the fee or
mortgagee or assignee of any mortgage upon the fee of the Demised Premises.
ARTICLE 13
MISCELLANEOUS:
SEC. 1301. NOTICES. Any notice provided for herein shall be given by
registered or certified mail addressed, if to Lessor, as follows:
CMD SOUTHWEST, INC.
3225 S. Hardy Drive, Suite 105
Tempe, Arizona 85282
with a copy to:
CMD SOUTHWEST, INC.
One First National Plaza
Chicago, Illinois 60603
Attention: Law Department
and if to Lessee, as follows:
NELCO PRODUCTS, INC.
1100 East Kimberly Avenue
Anaheim, California 92801
Attention: E. P. Smoot, President
with a copy to:
PARK ELECTROCHEMICAL CORPORATION
475 Northern Boulevard
Great Neck, New York 11021
Attention: Allen Levine, Corporate Controller
SEC. 1302. CHANGE OF ADDRESS. The person and places to which notices
or payments are to be mailed may be changed, from time to time, by Lessor or
Lessee upon written notice to the other.
SEC. 1303. MODIFICATION. This Lease may be modified only by written
agreement signed by Lessor and Lessee.
SEC. 1304. DESCRIPTIVE HEADINGS. The descriptive headings and index of
this Agreement are inserted for convenience in reference only and do not
constitute a part of this Agreement.
SEC. 1305. SUCCESSORS AND ASSIGNS. This Lease and the covenants,
terms, conditions and provisions hereof, shall be binding upon the
respective parties hereto and upon their respective successors, assigns and
personal representatives and shall inure to the benefit of said respective
parties hereto and their said respective successors, assigns and personal
representatives.
Wherever in this Lease a reference to any of the parties hereto is made,
such reference shall be deemed to include, wherever applicable and even
though not expressly stated, also a reference to the successors, assigns and
personal representatives of such party, as the case may be, the same as if
in every case expressly stated.
The phrase "successors and assigns" is used in this Lease in its
broadest possible meaning and includes, in addition to administrators,
trustees and conservators; every person, firm, corporation or other entity
succeeding to the interest in or to this Lease, or any part thereof, or in
or to any real estate, or any part or portion thereof, described or referred
to herein or any part hereto, or of any of the successors or assigns of any
such party, whether such succession results from the act of a party in
interest, occurs by operation of law or is the effect of the operation of
law together with any act(s) of any such party or parties.
SEC. 1306. ENTRY TO SHOW PREMISES. Lessor, its agents or assigns may,
from time to time, during the term of this Lease, and each and every
extension hereof, enter the Demised Premises at reasonable times, after
notice to, and in the company of Lessee, to show the same to prospective
buyers or tenants.
During the last Six (6) months of the term of this Lease or after the
occurrence of any default on the part of the Lessee hereunder (and prior to
the curing of such default), the Lessor hereby reserves the right to enter
the Demised Premises, after notice to and in the company of Lessee, and to
place, on the outer walls or roof of any building(s) located thereon and
upon any part of the Demised Premises, outside such buildings), "For Sale"
and/or "For Rent" signs of a type similar to those used in the area. Lessee
agrees not to remove, interfere with, or obstruct the view of any such
sign(s).
SEC. 1307. TIME OF ESSENCE. Time is of the essence of this Lease and
in all of the conditions, obligations, agreements, provisions, terms and
covenants hereof.
SEC. 1308. RESOLUTIONS. Lessee and Lessor shall, contemporaneously
with the execution and delivery of this Lease, deliver to the other party a
copy of a Resolution of each party's Board of Directors, specifically
authorizing those officers whose names are subscribed hereto to enter into
this Lease Agreement. Such Resolution shall make reference to this Lease,
the Demised Premises, lease term and rental reserved, shall be duty
certified to by the Secretary or Assistant Secretary of said Board of
Directors and shall be appended hereto as Schedules I and 2 .
SEC. 1309. UNENFORCEABILITY. In the event any covenant, term,
provision, obligation, agreement or condition of this Lease is held to be
unenforceable at law it is mutually agreed and understood, by and between
the parties hereto, that the other covenants, terms, provisions,
obligations, agreements and conditions herein contained shall remain in full
force and effect.
SEC. 1310. REAL ESTATE COMMISSION. Lessor and Lessee each respectively
represent and warrant to the other that neither has employed the services of
any real estate broker or similar agent for the purposes of procuring this
Lease, other than Arizona Industrial Properties, which has been employed by
and will be paid by Seller. In the event either party hereto has so
employed any such other broker or agent, the party responsible for such
employment shall indemnify, defend and hold the other forever harmless from
and against any commissions, fees, brokerage or other compensation or for
any claims for any such commission, fees, brokerage or other compensation
due such other broker or agent arising out of this Agreement, and/or such
employment.
SEC. 1311. GOVERNING LAW. This Lease and the rights of the parties
hereto shall be interpreted and determined in accordance with the laws of
Arizona.
SEC. 1312. ENTIRE AGREEMENT. This Lease contains the Entire Agreement
between the parties respecting the matters herein set forth and supersedes
all prior agreements between the parties hereto about such matters.
SEC. 1313. ADDITIONAL TERMS. The Lessor hereby covenants, represents
and warrants as follows:
a. The Demised Premises consists of approximately 51,981 square
feet of land on which there has been constructed a building containing
approximately 22,338 square feet.
b. The washrooms now in the building within the Demised
Premises are connected to the sewer system of the City of Tempe by a four
inch sewer line.
c. Lessor has not received any notice of any violation of any
zoning ordinances, building codes or other local, state and federal
statutes, codes, ordinances, laws and regulations and has no knowledge of
the existence of any such violation. Required lot splits will be obtained
by Lessor, and Lessor will hold Lessee harmless from Lessor's failure to so
do. All equipment within the Demised Premises is in good working order at
the commencement of Lessee's occupancy of the Demised Premises. A
Certificate of Occupancy has been issued with respect to the Improvements on
the Demised Premises.
d. The Demised Premises are not encumbered, except as set forth
in this Lease. All due and payable real property taxes have been paid.
e. At Lessee's request, Lessor shall promptly execute and
acknowledge and deliver to Lessee a Memorandum of this Lease summarizing the
material terms of this Lease.
f. Lessor's covenants, representations and warranties shall be
true on and as of the date hereof, on and as of March 1, 1983 and shall
survive until the end of the term of this Lease.
SEC. 1314. EXHIBITS AND SCHEDULES. The following Exhibits and
Schedules are attached hereto and expressly made a part hereof, to wit:
EXHIBIT A Description of Demised Premises
SCHEDULE 1 Lessee's Resolution
SCHEDULE 2 Lessor's Resolution
SCHEDULE 3 Security Deposit
SCHEDULE 4 Options to Extend Term
SCHEDULE 5 Additional Work to be Performed by Lessor
SCHEDULE 6 Salt River Project Easement
SCHEDULE 7 Early Occupancy
SCHEDULE 8 Covenant Not to Develop
IN WITNESS WHEREOF, said Lessor and Lessee have caused this instrument
to be executed by their respective duly authorized officers, all as of the
day and year first above written.
CMD SOUTHWEST, INC., Lessor
/s/Vice President
ATTEST:
/s/Asst. Secretary
NELCO PRODUCTS, INC., Lessee
/s/ EP Smoot, President
ATTEST:.
/s/Harry Linzer, Secretary
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Dorothy F. Schultz, a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that James R. Rumbaugh, Vice President, and
Brian L. Rieger, Asst. Secretary of the said CMD SOUTHWEST, INC., who are
personally known to me to be the same persons whose names are subscribed to
the foregoing instrument as such Vice President, and Asst. Secretary,
appeared before me this day in person and acknowledged that they signed,
sealed and delivered said instrument as their free and voluntary act and as
the free and voluntary act of said corporation, for the uses and purposes
therein set forth.
GIVEN under my hand and Notarial Seal this 24th day of A.D. 1983.
/s/Dorothy F. Schultz
Notary Public
My Commission expires April 5, 1985
STATE OF NEW YORK )
) SS
COUNTY OF NASSAU )
I, Alan R. Lesh, a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that Harry Linzer, Secretary of the said NELCO
PRODUCTS, INC., who are personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Secretary, appeared
before me this day in person and acknowledged that they signed, sealed and
delivered said instrument as their free and voluntary act and as the free
and voluntary act of said corporation, for the uses and purposes therein set
forth.
GIVEN under my hand and Notarial Seal this 15 day of February, A.D.
1983.
Alan R. Lesh
Notary Public
My Commission expires March 30, 1984
STATE OF )
) SS.
County of )
I, , a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that E. P. SMOOT, President of NELCO PRODUCTS,
INC., who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such President, appeared before me
this day in person and acknowledged that he signed, sealed and delivered
said instrument as their free and voluntary act and as the free and
voluntary act of said corporation, for the uses and purposes therein set
forth.
GIVEN under my hand and Notarial Seal this
day of , 1983.
My Commission Expires:
State of California
County of Orange
I, Lynette Kirker, a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that E. P. Smoot, President of Nelco Products,
Inc., proved to me on the basis of satisfactory evidence to be the same
person whose name is subscribed to the foregoing instrument as such
President, appeared before me this day in person and acknowledged that he
signed, sealed and delivered said instrument as their free and voluntary act
and as the free and voluntary act of said corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and Notarial Seal this 22 day of February, 1983.
/s/Lynette Kirker
Notary Public
My comm. expires April 27, 1984
SCHEDULE I
LESSEE'S RESOLUTION:
CERTIFICATE OF RESOLUTION
OF
NELCO PRODUCTS, INC.
The undersigned, Harry Linzer, Secretary of Nelco Products, Inc., a
Delaware corporation (hereinafter referred to as the "Corporation"),
hereby certifies that the following resolutions were duly and regularly
passed and adopted in all respects as required by law and the Bylaws of
the Corporation and that such resolutions are still in full force and
effect and have not been revoked:
RESOLVED, that the Corporation should, and it hereby does, approve
that certain Lease made the 15th day of February, 1983, by and
between CMD Southwest, Inc., an Arizona corporation, as Lessor,
and the Corporation, as Lessee, for a building containing
approximately 22,338 square feet located on Lot 8 and the West
28.9 feet of Lot 9, Broadway Industrial Park Unit 4-A, as recorded
in Book 228 of Maps, page 38, of the records of the Maricopa
County, Arizona Recorder; and
FURTHER RESOLVED, that E. P. Smoot, President of the Corporation,
Richard Perry, Vice President/Finance of the Corporation, and
Harry Linzer, Secretary of the Corporation, should be, and each of
them acting alone hereby is, authorized to execute said lease on
behalf of the Corporation.
IN WITNESS WHEREOF, the undersigned has signed his name as Secretary
of the Corporation on the 15 day of February, 1983.
/s/ Harry Linzer
SCHEDULE 2
LESSOR'S RESOLUTION:
To Be Provided By Lessor
CERTIFICATE OF RESOLUTION
OF
CMD SOUTHWEST, INC.
I, Brian L. Rieger, do hereby certify that I am the duly elected and
qualified Assistant Secretary of CMD Southwest, Inc., an Arizona
corporation, and that the following resolutions were duly adopted by
consent to corporate action by the directors of said corporation, and that
such resolutions are presently in full force and effect and have not been
revoked:
RESOLVED, that the Corporation should, and it hereby does, approve
that certain Lease made the 15th day of February, 1983, by and
between Nelco Products, Inc., a Delaware corporation, as Lessee,
and the Corporation, as Lessor, for a building containing
approximately 22,338 square feet located on Lot 8 and the West
28.9 feet of Lot 9, Broadway Industrial Park Unit 4-A, as recorded
in Book 228 of Maps, page 38, of the records of the Maricopa
County, Arizona Recorder; and
FURTHER RESOLVED, that G. G. Martin, President of the Corporation,
J. R. Rumbaugh, Vice President of the Corporation, B. L. Rieger,
Assistant Secretary of the Corporation, should be, and each of
them acting alone hereby is, authorized to execute said lease on
behalf of the Corporation.
IN WITNESS WHEREOF, the undersigned has signed his name as Assistant
Secretary of the Corporation this 27th day of February, 1983.
/s/ Brian L. Rieger
Assistant Secretary
SCHEDULE 3
SECURITY DEPOSIT:
Lessee has deposited the sum of Five Thousand Six Hundred Ninety-six
Dollars and Nineteen Cents ($5,696.19) with the Lessor as security for the
full and faithful performance by the Lessee of the terms of this Lease.
It is agreed that in the event Lessee defaults in respect of any of the
terms provisions and conditions of this Lease, including, but not limited
to, the payment of rent and additional rent, Lessor may use, apply or
retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum
as to which Lessee is in default or for any sum which Lessor may expend or
may be required to expend by reason of Lessee's default in respect of any
of the terms, covenants and conditions of this Lease, including, but not
limited to, any damages or deficiency accrued before or after summary
proceedings or other reentry by Lessor.
In the event that Lessee shall fully and faithfully comply with the
terms, provisions, covenants and conditions of the Lease, the security
shall be returned to Lessee promptly after the date fixed as the end of
the Lease Term and after delivery of the entire possession of the Demised
Premises to Lessor.
In the event of a sale of the Demised Premises, Lessor then has the
right to transfer the security to the purchaser, and upon such purchaser's
assumption, Lessor shall thereupon be released by Lessee from all
liability for return of such security and Lessee agrees to look to the new
Lessor solely for return of said security.
SCHEDULE 4
OPTIONS TO EXTEND TERM:
Lessee, at its option, may extend the term of this Lease for three (3)
additional five (5) year terms by delivering irrevocable notice thereof
upon the Lessor at least Six (6) Months prior to the expiration of the
then existing Lease Term, and upon delivery of said notice, the term of
this Lease shall be extended for said additional five (5) year period upon
the same terms without further action of the parties; subject, however, to
the further provisions of this SCHEDULE 4 .
RESTRICTIONS ON OPTIONS:
Lessee may not exercise an Option if Lessee is in any way in default
of any of the terms, conditions or covenants contained in this Lease
beyond an applicable cure period, and the occurrence of any default by
Lessee from and after the date of notice of exercise of an Option and
Lessee's subsequent failure to cure said default within the applicable
period, shall result in the immediate termination forever of the Options,
and all rights of Lessee as set forth in this Schedule without further
action of the parties and all without prejudice to the other rights of
Lessor.
The Options are for the sole benefit of the above named Lessee and
shall automatically terminate upon any assignment of this Lease, sublease
of the Demised Premises, or other transfer of this Lease and/or the rights
of Lessee, provided however, that Lessee shall have the right to exercise
only the next available option to extend the term an additional five (5)
years in the event Lessee assigns or subleases this Lease, pursuant to the
provisions of SEC. 1201, subject however, to the following terms and
conditions:
1) This right to exercise one (1) option to extend the term in the
event of an assignment or sublease is a one time right, and
shall not be applicable in the event of any subsequent
assignments or subleases;
2) Notwithstanding the provisions of Article 3 with regard to
determining the Annual Net Basic Rent, the Annual Net Basic Rent
during the extended term if this option is exercised following
an assignment or sublease, shall be the "Market Rental", and
shall be determined substantially in accordance with the
procedures set forth on pages 3 and 4 of this Lease for
determining Market Rental.
3) Notwithstanding the provisions of SEC. 1202, as a condition
precedent to the approval of any sublease, assignment or any
other type of transfer by the Lessee to any third party of all
or a portion of its interest in and to the Demised Premises
pursuant to the provisions of this Lease, Lessee agrees that it
will pay to the Lessor, contemporaneously with the rental
payments due during the five (5) year option period, any amounts
Lessee may receive in excess of the Market Rental as determined
aforesaid, and in the event less than all of the Demised
Premises are so subleased, assigned or transferred in any way,
the Lessee shall pay to the Lessor any increase in the square
foot rate of rent paid to Lessee during this option period by
any third party.
SCHEDULE 5
ADDITIONAL WORK TO BE PERFORMED BY LESSOR:
Upon execution of this Lease agreement, Lessor shall immediately
undertake the installation or construction of the following improvements:
1. Change the existing electrical service in the Building to 1,000
amps at 277/480 VT, provide a 100 amp main disconnect switch and step
down transformer to serve the existing building electrical system,
provide a 400 amp main disconnect switch for use by Lessee, provide
two 200 amp and one 100 amp main disconnect switches for use by
Lessee, switch the transformer from 208 three phase to 277/480 volt
three phase and mount a transformer to service the existing power
distribution panel.
2. Construct a truck well in the location cross-hatched below, with
a hinged dock plate which can be manually operated.
Such improvements shall be deemed fixtures and shall be
installed at Lessor's cost and expense and shall be completed
promptly, and with due diligence, unless delayed at any time by reason
of strikes, labor disputes, unavailability of materials and/or labor,
governmental laws or regulations, riots, acts of a public enemy,
national emergency, flood or other casualty, or other causes beyond
Lessor's reasonable control. Such improvements are the property of
Lessor.
Schedule 6
EASEMENT
Southwest, Inc., an Arizona corporation, CMD, a Delaware corporation for
an in consideration of the sum of One Dollar, and other valuable
consideration, receipt of which is hereby acknowledged, do hereby grant to
the Salt River Project Agricultural Improvement and Power District, a
political subdivision of the State of Arizona, its successors and assigns,
the non-exclusive right, easement and privilege to construct, operate and
maintain underground electrical conduits, together with its manholes,
transformer pads and vaults and other appurtenances through, over, under
and across the following described property:
The West 8.5 feet of the North 25.0 feet of the South 33.0 feet of
Lot 8, BROADWAY INDUSTRIAL PARK UNIT 4A, according to the plat of
record in Book 228 of Maps, page 38 records of Maricopa County,
Arizona.
Caution: The above described easement contains high voltage electrical
equipment and notice is hereby given that the location of underground
electrical conduits may vary from the locations indicated in the above
description, therefore all persons who may excavate in the area must
accordingly proceed with caution.
The GRANTEE shall at all times have the right of full and free ingress
and egress to said easement for the purpose heretofore specified, and the
right to permit other utility companies to use the right of way jointly
with the Grantee for their utility purposes.
In the event the right, privilege and easement herein granted shall be
abandoned and permanently cease to be used for the purpose herein granted,
all rights herein granted shall cease and revert to the grantors, their
heirs or assigns.
The covenants and agreements
CAUTION: The above described easement contains high voltage electrical
equipment and notice Is hereby given that the location of underground
electrical conduits may vary from the locations indicated in the above
description,therefore all persons who may excavate in the area must
accordingly proceed with caution.
The GRANTEE shall at all times have the right of full and free ingress
and egress to said easement for the purpose heretofore specified. and the
right to permit other utility companies to use the right of way jointly
with the Grantee for their utility purposes.
In the event the right. privilege and easement herein granted shall be
abandoned and permanently cease to be used for the purpose herein granted,
all rights herein granted shall cease and revert to the grantors, their
heirs or assigns.
The covenants and agreements herein set forth shall extend and inure
in favor and to the benefit of and shall be binding on the heirs,
successors in ownership and estate assigns and lessees of the respective
parties hereto.
IN WITNESS WHEREOF, CMD SOUTHWEST, INC. an Arizona Corporation has caused
its corporate name to be signed and its corporate seal to be affixed by
the undersigned officers thereunto duly authorized, this 10th day of June
1982.
/s/President
State of Arizona
County of Maricopa
and notarized
SCHEDULE 7
EARLY OCCUPANCY:
Anything herein to the contrary notwithstanding, upon execution of
this Lease it is understood and agreed that the Lessee shall have the
right, upon reasonable prior notice to Lessor and subject to any required
approval of public authority having jurisdiction, to enter upon the
Demised Premises for the purpose of preparing the premises for Lessee's
occupancy, provided however that Lessee's presence shall not cause any
delay or interference with Lessor's timely completion of the Improvements.
SCHEDULE 8
COVENANT NOT TO DEVELOP:
In the event Lessor desires to develop or sell, prior to February 28,
1985, approximately 58,247 square feet of vacant land located immediately
north of the Demised Premises (the "Parcel") and legally described as:
Lots 2 and 3, Unit 4-A, Broadway Industrial Park, as recorded in
Book 228 of Maps, Page 38, Maricopa County, Arizona, Records,
EXCEPT the easternmost 162 feet of Lot 2 and the westernmost 190
feet of Lot 3,
Lessor shall first notify Lessee in writing of such desire not less than
thirty (30) days prior to the date Lessor commences such development or
offers the Parcel for sale. The parties acknowledge that Lessor has no
obligation to sell the Parcel to Lessee, and that Lessee has no rights to
acquire the Parcel or affect its development.
Exhibit 10.09(b)
SECOND AMENDMENT TO LEASE
This SECOND AMENDMENT TO LEASE ("Second Amendment") is made on this 24 day
of March, 1995 between CMD SOUTHWEST ONE, an Illinois limited partnership
("Lessor"), and NELCO TECHNOLOGY, INC., an Arizona corporation ("Lessee").
A. Lessor and Lessee previously entered into that certain Lease
dated March 14, 1988 ("Original Lease"), as amended by that certain First
Amendment to Lease dated December 10, 1992 ("First Amendment") for the
lease of the premises commonly known as 11 17 West Fairmont, Tempe,
Arizona. The Original Lease and the First Amendment are hereinafter
collectively referred to as "Lease".
B. Lessor and Lessee now desire to amend the Lease, subject to the
terms and conditions set forth in this Second Amendment.
Lessor and Lessee agree as follows:
1 . Definitions. All of the terms used in this Second Amendment shall
have the same meanings set forth in the Lease, except to the extent
expressly set forth otherwise herein.
2. First Extension Term. Section 2 of the First Amendment is
hereby deleted in its entirety and replaced with the following:
"The term of the Lease is hereby extended ("First Extension Term")
until 11:59 P.M. (local time at the Demised Premises) on the date
immediately preceding the tenth anniversary of the Substantial Completion
Date (as hereinafter defined) ("Termination Date"). The term "Substantial
Completion Date" shall mean the date certified in writing by Fulton
Architects that: the work described in those certain plans and
specifications prepared by Fulton Architects, and attached hereto as
Exhibit A, to be performed in that certain premises commonly known as 1131
West Fairmont, Tempe, Arizona 85282, pursuant to the terms of that certain
Lease between CMD Southwest Inc. and Lessee for the lease of the premises
commonly known as 1131 West Fairmont, Tempe, Arizona 85282, is
substantially complete."
3. First Extension Term Annual Net Basic Rent. Section 3 of the
First Amendment is hereby deleted in its entirety and replaced with the
following:
"During the period commencing on the Substantial Completion Date,
Lessee shall pay to Lessor ("Annual Net Basic Rent") in equal monthly
installments ("Monthly Net Basic Rent") as follows:
Lease Monthly Net Annual
Year Basic Rent Basic Rent
Years 1-3 $6,750 $ 81,000
Years 4-6 $7,500 $ 90,000
Years 7-9 $8,400 $100,800
Year 10 $9,500 $114,000
The term "Lease Year" shall mean each twelve (12) month period throughout
the First Extension Term of this Lease beginning with the Substantial
Completion Date. Such Annual Net Basic Rent shall be paid to Lessor in
equal monthly installments on or be the first day of the First Extension
Term and on or before the first day of each successive calendar month
throughout the First Extension Term."
4. Second Extension Term. The Second Option to Extend Term in
Schedule 6 the Lease is hereby deleted and replaced with the following:
"A. Provided that this Lease is in full force and effect and Lessee is
not
in default under any terms and conditions of this Lease as of the date of
the Second Extension Option Notice (as hereinafter defined) and as of the
Second Extension Term Commencement Date (as hereinafter defined) and
subject to the terms herein, Lessee shall have the right ("Second
Extension Option") to extend the term of the Lease for the period ("Second
Extension Term") commencing on and including the Second Extension Term
Commencement Date and ending at 11:59 P.M. (local time at the Demised
Premises) on the Second Extension Term Expiration Date (as hereinafter
defined). Lessee shall exercise the Second Extension Option, if at all,
by delivering written notice of such exercise ("Second Extension Option
Notice") on or before the 270th day prior to the Termination Date. If
Lessee fails to deliver the Second Extension Option Notice the Lessor on
or before the 270th day prior to the Termination Date, Lessee shall be
deemed to have forever waived any and all rights to extend the term of
this Lease.
(i) The phrase "Second Extension Term Commencement Date means
the first day following the Termination Date.
(ii) The phrase "Second Extension Term Expiration Date" means
the day immediately preceding the fifth anniversary of the Second
Extension Term Commencement Date.
B. For the period commencing on the Second Extension Term
Commencement Date and ending on the day immediately preceding the third
anniversary of the Second Extension Term Commencement Date, the annual net
rent shall be the prevailing Market Rate (as defined below) as of Second
Extension Term Commencement Date. Notwithstanding anything contained
herein or in the Lease to the contrary, in no event shall the annual net
rent for such period be less than $114,000.00.
(i) The Market Rate will be determined as hereinafter set
forth without regard to (i) the rate of rent Lessee is then paying for
the Demised Premises, and (ii) the value of Lessee's improvements and
trade fixtures. In the event Lessee desires to exercise the Second
Extension Option, Lessee shall submit to Lessor, simultaneously with
the delivery of the Second Extension Option Notice, a written
statement setting forth Lessee's proposed Market Rate, which statement
shall include the method used and assumptions made in arriving at such
a rate. Lessor shall within twenty (20) days of receipt of the
statement accept or reject the same or submit a revised statement of
Market Rate which statement shall include the method used and
assumptions made in arriving at such a rate. If Lessor accepts
Lessee's statement of Market Rate, the Market Rate shall be that
contained in Lessee's statement of Market Rate and Lessee shall pay to
Lessor, commencing on the Second Extension Term Commencement Date and
ending on the day immediately preceding the third anniversary of the
Second Extension Term Commencement Date, annual net rent equal to the
product of Market Rate times 13,180 square feet. If Lessor elects to
submit a revised statement, Lessee shall within ten (10) days of
receipt thereof either accept or reject the same. If Lessee accepts
Lessor's revised statement of Market Rate, the Market Rate shall be
that contained in Lessor's revised statement of Market Rate and Lessee
shall pay to Lessor annual net rent as described above in this
paragraph. If, however, Lessor rejects Lessee's statement of Market
Rate or Lessee rejects Lessor's revised statement of Market Rate, the
rejecting party shall name and appoint an independent M.A.I. appraiser
and give written notice thereof to the non-rejecting party within five
(5) days of the date of such rejection. The non-rejecting party
shall, with five (5) days of the receipt of said notice of rejection,
name and appoint another appraiser and give the rejecting party
written notice thereof Thereafter, said appraisers shall select a
third appraiser. If said appraisers are unable to agree on the
selection of a third appraiser within five (5) days, they shall
jointly petition the Superior Court of the County of Maricopa,
Arizona, for the appointment of a third appraiser. Thereupon, the
said appraisers shall independently determine the Market Rate for
leasing the Demised Premises. Their respective written reports of
Market Rate shall be submitted to Lessor and Lessee not later than six
(6) months prior to the Termination Date. Upon delivery of the
aforesaid written reports of value, the Market Rate shall be computed
as follows: (i) average the three appraisals and disregard the
appraisal which deviates the greatest from the average; and (ii)
average the two remaining appraisals. The average of the two
remaining appraisals shall constitute the Market Rate and shall be
binding upon Lessor and Lessee. Lessee shall pay to Lessor as
provided herein annual net rent, commencing on the Second Extension
Term Commencement Date and ending on the day immediately preceding the
third anniversary of the Second Extension Term Commencement Date,
equal to the product of Market Rate times 13,180 square feet. Lessor
and Lessee shall each bear the fees, cost and expense of the appraiser
selected by it, and fees, costs and expenses of the appraiser
appointed by the parties' appraisers shall be shared equally by Lessor
and Lessee. Either party's failure to fully comply in a timely
fashion with the provisions regarding determination of Market Rate
shall be deemed an abandonment of this method of determining rental,
and the Market Rate shall be determined solely by the non-defaulting
party's appraiser.
C. For the period commencing on the third anniversary of the Second
Extension Term Commencement Date and ending on the Second Extension Tenn
Expiration Date, the annual net rent shall be the product obtained by
multiplying the amount of annual net rent in effect in the year
immediately preceding the third anniversary of the Second Extension Term
Commencement Date by 1.15.
D. Except to the extent set forth otherwise herein, all of the
terms of the Lease shall apply during the Second Extension Term."
5. Third Extension Term.
A. Provided that Lessee shall have exercised the Second Extension
Option and that this Lease is in full force and effect and Lessee is not
in default under any terms and conditions of this Lease as of the date of
the Third Extension Option Notice (as hereinafter defined) and as of the
Third Extension Term Commencement Date (as hereinafter defined) and
subject to the terms herein, Lessee shall have the right ("Third Extension
Option") to extend the term of Lease for the period ("Third Extension
Term") commencing on and including the Third Extension Term Commencement
Date and ending at 11:59 P.M. (local time at the Demised Premises) on the
Third Extension Term Expiration Date (as hereinafter defined). Lessee
shall exercise the Third Extension Option, if at all, by delivering
written notice of such exercise ("Third Extension Option Notice") on or
before the 270th day prior to the Second Extension Term Expiration Date.
If Lessee fails to deliver the Third Extension Option Notice to Lessor on
or before the 270th day prior to the Second Extension Term Expiration
Date, Lessee shall be deemed to have forever waived any and all rights to
extend the term of this Lease.
(a) The phrase "Third Extension Term Commencement Date"
means the first day following the fifth anniversary of the Termination
Date.
(b) The phrase "Third Extension Term Expiration Date" means
the day immediately preceding the fifth anniversary of the Third
Extension Term Commencement Date.
B. For the period commencing on the Third Extension Term
Commencement Date and ending on the day immediately preceding the third
anniversary of the Third Extension Term Commencement Date, the annual net
rent shall be the prevailing Market Rate as of Third Extension Term
Commencement Date. Notwithstanding anything contained herein or in the
Lease to the contrary, in no event shall the annual net rent during the
Third Extension Term be less than that in effect on the last day of the
Second Extension Term. Market Rate shall be determined in the same manner
as provided for the Second Extension Term, except that all references to
"Second Extension Option," "Second Extension Term Commencement Date" and
"Second Extension Option Notice" shall mean "Third Extension Option,"
"Third Extension Term Commencement Date" and "Third Extension Option
Notice," respectively.
C. For the period commencing on the third anniversary of the Third
Extension Term Commencement Date and ending on the Third Extension Term
Expiration Date, the annual net rent shall be the product obtained by
multiplying the amount of annual net rent in effect in the year
immediately preceding the third anniversary of the Third Extension Term
Commencement Date by 1. 15.
D. Except to the extent set forth otherwise herein, all of the
terms of the Lease shall apply during the Third Extension Term.
6. Full Force and Effect. Except to the extent expressly provided
otherwise in this Second Amendment, all of the terms and conditions set
forth in the Lease shall remain in full force and effect.
7. Conflicts. In the event that any of the provisions of the Lease
conflict with any of the terms and provisions of this Second Amendment,
the terms and provisions of this Second Amendment shall prevail.
LESSOR:
CMD SOUTHWEST ONE, an Illinois limited
partnership
By CMD SOUTHWEST, INC., an Arizona
corporation
By: /s/
Its: President
LESSEE:
NELCO TECHNOLOGY, INC., an Arizona
corporation
By: Kevin Brumbaugh
Its: Vice President/General Manager
Exhibit 10.09(c)
THIRD AMENDMENT TO LEASE
This THIRD AMENDMENT TO LEASE ("Third Amendment") is made on this 18th
day of January, 1996 between CMD SOUTHWEST ONE, an Illinois limited
partnership ("Lessor"), and NELCO TECHNOLOGY, INC., an Arizona corporation
("Lessee").
A. Lessor and Lessee previously entered into that certain Lease
dated March 14, 1988 ("Original Lease"), as amended by that certain First
Amendment to Lease dated December 10, 1992 ("First Amendment") and by that
certain Second Amendment to Lease dated March 24, 1995 ("Second
Amendment") for the lease of the premises commonly known as 11 17 West
Fairmont, Tempe, Arizona according to the terms thereof The Original
Lease, as amended by the First Amendment and Second Amendment, is referred
to herein as "Lease".
B. Lessor and Lessee now desire to amend the Lease, subject to the
terms and conditions set forth in this Third Amendment.
In consideration of the mutual covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Lessor and Lessee hereby agree as follows:
1. Definitions. All of the terms used in this Third Amendment
shall have the same meanings set forth in the Lease, except to the extent
expressly set forth otherwise herein.
2. First Extension Term. Section 2 of the Second Amendment is
hereby amended as follows:
(a) Substantial Completion Date. Notwithstanding anything contained
in the Lease to the contrary, the term "Substantial Completion Date" shall
mean December 8, 1995.
(b) Termination Date. Notwithstanding anything contained in the
Lease to the contrary, the term "Termination Date" shall mean December 31,
2005.
3. Full Force and Effect. Except to the extent expressly provided
otherwise in this Third Amendment, all of the terms and conditions set
forth in the Lease shall remain in full force and effect.
4. Conflicts. In the event that any of the provisions of the Lease
conflict with any of the terms and provisions of this Third Amendment, the
terms and provisions of this Third Amendment shall prevail.
5. Time of Essence. Time is of the essence of each and every term
of this Third Amendment.
IN WITNESS WHEREOF, said Landlord and Tenant have caused this instrument
to be executed by their respective duly authorized officers, all as of the
day and year first written above.
LESSOR:
CMD SOUTHWEST ONE, an Illinois limited
partnership
By: CMD SOUTHWEST INC.
Its: General Partner
By: /s/
Its: President
LESSEE:
NELCO TECHNOLOGY, INC., an Arizona
corporation
By: /s/Kevin Brumbaugh
Its: VP/GM
EXHIBIT 10.11
LEASE
THIS INDENTURE, made this 31 day of August, A.D. 1989, by and between
Cemanudi Associates, an Illinois Limited Partnership, (hereinafter, for
convenience, referred to as the "Lessor"), and Nelco Technology, Inc., a
corporation organized and existing by and pursuant to the laws of the
state of Arizona, (hereinafter, for convenience, referred to as the
"Lessee").
WITNESSETH:
ARTICLE I
THE LEASED PREMISES,
FIXTURES AND EQUIPMENT:
SEC. 101. THE LEASED PREMISES. That the Lessor, for and in
consideration of TEN DOLLARS ($10.00), to it in hand paid by the Lessee,
the receipt whereof is hereby acknowledged; and in consideration of the
agreements, conditions, covenants and obligations to be kept, fulfilled,
observed or performed by the Lessee, does hereby demise and lease, and the
Lessee does hereby take and rent from the Lessor, in "As Is" condition and
upon the terms herein set forth, approximately 38,311 square feet of land,
more specifically described on Exhibit "A" attached hereto, which Exhibit
is by this reference expressly made a part hereof, together with a
building located thereon containing approximately 13,995 square feet (the
"Building") and including all easements, improvements, tenements,
appurtenances, hereditaments, fixtures, rights and privileges thereto
belonging, or in any way appertaining and subject to any restrictions,
easements and encroachments and to any zoning ordinances, laws, rules or
regulations of any Public Authority, now or hereafter in effect, relating
to or affecting the Demised Premises; including, without limitation, all
those indicated on Exhibit "A".
The Demised Premises are commonly known as 1104 West Geneva Drive,
Tempe, Arizona 85282.
SEC. 102:1. BUILDING FIXTURES AND EQUIPMENT. All fixtures, machinery
and equipment which are necessary to the general operation and maintenance
of the Demised Premises and which are now in the Demised Premises, shall
be the property of the Lessor, whether owned by Lessor at the commencement
of the term, subsequently purchased by Lessor, or purchased by Lessee in
accordance with the provisions of this Lease. Without in any way limiting
the generality of the aforegoing, all electric power panels, lighting
fixtures, plumbing, heating and air-conditioning equipment presently
located in the Demised Premises shall be considered necessary to the
general operation and maintenance of the Demised Premises.
SEC. 102:2. TRADE FIXTURES. Only those trade fixtures, machinery,
non-structural partitions and other equipment and items which are
supplied, installed and used by Lessee in the conduct of its business,
including process machinery and equipment, process piping and process
electric switch gear (other than replacement of building equipment
referred to above), which may hereafter be installed therein, shall be the
property of Lessee and may be removed by Lessee at any time prior to or
upon termination of the Lease, whether by lapse of time or otherwise;
provided the Lessee is not, at any such time, in default of any of the
terms or conditions of this Lease. Lessee shall remove, on demand by
Lessor and at Lessee's expense, any and all such items at the termination
of the Lease term, whether by lapse of time or otherwise, and repair any
damage caused by such removal, restoring the Demised Premises to their
condition prior to the installation of all such items or any of them.
SEC. 103. "DEMISED PREMISES" and 'IMPROVEMENTS" DEFINED. "Demised
Premises" shall mean the real estate described in Exhibit "A" and shall
include any and all Improvements, now or hereafter, located or constructed
thereon.
"Improvements" shall mean all buildings and all other improvements,
(except for Lessee's trade fixtures) now or hereafter located or
constructed on the Demised Premises, including, without limitation, the
Building, fixtures, other structures and equipment on such premises which
are the property of Lessor as above described in Sec. 102:1.
ARTICLE 2
TERM POSSESSION:
SEC. 201. TERM. The term of this Lease shall be for a period of
Five (5) years commencing upon September 1, 1989 and ending at midnight
August 31, 1994 subject to the further provisions of this Lease.
SEC. 202. HOLD-OVER TENANCY. In the event the Lessee remains in
possession of the Demised Premises after the expiration of the term of
this Lease, or any extension hereof, without written consent of Lessor,
the Lessee shall then be obligated to pay double the rate of the then
current annual rent as set forth herein, in equal installments on the
first day of each calendar month, for so long as the Lessor is willfully
kept out of possession of the Demised Premises. No such payment, nor the
acceptance thereof, shall in any way constitute a waiver of the rights of
Lessor to dispossess the Lessee and recover possession of the Demised
Premises and the just and former estate of the Lessor and to bring any
action for damages suffered by Lessor on account of Lessee's failure to
vacate the Premises.
Notwithstanding the foregoing, in the event there is a dispute as to
the "Market Rental", as such term is hereinafter defined, or if such
"Market Rental" has not been determined prior to the time within which
Lessee must exercise its second option to extend, as provided in Schedule
3, Lessee may elect to extend the then term of this Lease one (1)
additional month on the same terms and conditions and at the same rental
as Lessee is then paying, by notifying Lessor of such election not less
than sixty (60) days prior to the expiration of the Lease.
ARTICLE 3
RENTAL:
SEC. 301. RENTAL. The Lessee hereby covenants and agrees with the
Lessor, as follows:
The following terms shall have the following respective meanings for
the purpose of this lease:
(a) Consumer Price Index. The term "Consumer Price Index means the
United States All Items Consumer Price Index (1982-1984=100), All
Urban Consumer Section, as published by the United States Department
of Labor, Bureau of Labor Statistics. If the manner in which the
Consumer Price Index is determined by the Bureau of Labor Statistics
shall be substantially revised, including without limitation, a change
in the base index year, an adjustment shall be made by Lessor in such
revised index which would produce results equivalent, as nearly as
possible, to those which would have been obtained if such Consumer
Price Index had not been so revised. If the Consumer Price Index
shall become unavailable to the public because publication is
discontinued, or otherwise, or if equivalent data is not readily
available to enable Lessor to make the adjustment referred to in the
preceding sentence, then Lessor will substitute therefor a comparable
index based upon changes in the cost of living or purchasing power of
the consumer dollar published by any other governmental agency or, if
no such index shall be available, then a comparable index published by
a major bank or other financial institution or by a university or a
recognized financial publication.
(b) CPI Adjustment. The term "CPI Adjustment" means the percentage
increase, if any, in the Consumer Price Index for the calendar month
of July, 1991 over the Consumer Price Index for the calendar month of
August, 1989.
The Lessee hereby covenants and agrees with the Lessor, as follows:
To take and accept said demise and lease of the Demised Premises on
the terms as herein set forth and to pay as Annual Net Basic Rent for said
Demised Premises at the following annual rates applicable during the
following respective periods:
(a) During the period beginning on and including September 1, 1989
("Commencement Date") and ending on and including August 13, 1991,
Sixty-three Thousand Eight Hundred Seventeen and 20/100 Dollars
($63,817.20); and
(b) During the period beginning on and including August 14, 1991 and
ending on and including the last day of the term of this lease, an
amount equal to the greater of (i) Sixty-three Thousand Eight Hundred
Seventeen and 20/100 Dollars ($63,817.20) multiplied by the CPI
Adjustment, and (ii) Sixty-three Thousand Eight Hundred Seventeen and
20/100 Dollars ($63,817.20).
Such rental shall be paid in then lawful money of the United States of
America in equal monthly installments each in an amount equal to one-
twelfth (1/12) of the amount of the Annual Net Basic Rent applicable
during such month, to be paid in advance upon the Commencement Date and on
the first day of each and every calendar month thereafter during the term
hereof to the Lessor at such place as may, from time to time, be
designated by them; and in the absence of such designation, at the last
known office of the Lessor in Tempe, Arizona. Notwithstanding anything
herein to the contrary, (a) if the Commencement Date occurs on a date
other than the first day of a calendar month, the amount of the monthly
installment of Annual Net Basic Rent payable on the Commencement Date
shall be prorated based on the number of days from and including the
Commencement Date through and including the last day of such calendar
month and a calendar month consisting of thirty (30) days, and (b) if the
last day of the term of this Lease occurs on a day other than the last day
of a calendar month, the amount of the monthly installment of Annual Net
Basic Rent payable on the first day of such calendar month shall be
prorated based on the number of days of such month which fall within the
term and a calendar month consisting of thirty (30) days.
It is intended that the rent provided for in this Lease shall be an
absolutely net return to Lessor for the term of this Lease, and any
renewals or extensions thereof, free of any and all expenses or charges
with respect to the Demised Premises including, without limitation, any
Taxes and assessments, now or hereafter imposed upon or related to the
Demised Premises, commonly known as real estate taxes, general or special
or improvement assessments, and any taxes and assessments, whether by way
of an income tax or otherwise which may be levied, assessed or imposed by
the State in which the Demised Premises are located, or by any political
or taxing subdivision thereof, upon the income arising from the rents
provided herein in lieu of or as a substitute for taxes or assessments
imposed upon or related to the Demised Premises and commonly known as real
estate taxes; and that Lessee, and not Lessor, shall be required to, and
shall pay, such taxes and assessments, but not to pay any other income tax
or gift, estate or fee title transfer tax payable upon transfer of fee
title to the Demised Premises which may be levied against the Lessor, or
any of Lessor's interest or Mortgage payments, Lessor's expenses in
negotiating this Lease, or management fees, if any, paid by Lessor to
third parties.
Lessee hereby acknowledges that late payment by Lessee to Lessor of
rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include but are not limited to;
processing and accounting charges and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Demised
Premises. Accordingly, if any installment of rent or any other payment
due from Lessee shall not be received by Lessor within Ten (10) days after
such amount shall be due, Lessee shall pay to Lessor in addition to the
amount due, a late charge equal to Ten Percent (10%) of such overdue
amount. The parties hereto hereby agree that such late charge by Lessor
is a fair and reasonable estimate of the costs Lessor will incur by reason
of any such late payment. Such late charge is deemed to be only one of
several cumulative remedies available to Lessor hereunder and acceptance
of such late charge by Lessor shall in no event constitute a waiver of
Lessee's default with respect to such overdue amount nor prevent Lessor
from exercising any of the other rights and remedies granted hereunder.
ARTICLE 4
TAXES, ASSESSMENTS, UTILITY CHARGES,
INSPECTION FEES AND LIENS:
SEC. 401. TAXES, ASSESSMENTS. The Lessee shall pay as additional
rent, during the full term hereof, all taxes; including, without
limitation, ad valorem general real estate taxes, installments of
assessments, general and special, and all other public charges levied upon
or assessed against and properly attributable to the Demised Premises, or
any part thereof, or arising by reason of the existence, occupancy, use or
possession of the Demised Premises, or the business carried on therein,
including, without limitation, the Arizona Rental Income Tax, all of which
are hereinafter, collectively referred to as "Taxes", but not to pay any
other income tax, or gift, estate or fee title transfer tax payable upon
transfer of fee title to the Demised Premises which may be levied against
the Lessor.
The Lessee shall pay to Lessor, contemporaneously with the monthly
rent payments One Twelfth (1-12th) of the estimated annual Taxes, such
estimate to be made by Lessor. Upon receipt of the real estate tax bills
each year the Lessor will make payment thereof prior to delinquency and
promptly provide Lessee with a copy of the receipted tax bill.
Adjustments of amounts (credit or debit) shall be made between the
parties within thirty (30) days of the receipt by Lessor, of any such
bill. All Taxes shall be prorated for the first and last years of the
term hereof and any extension or renewal thereof. Proration with respect
to the Taxes for the last year of the term shall be made on the basis of
the last available tax bill, provided, however, that upon receipt of the
tax bill an appropriate adjustment shall be made.
SEC. 402. UTILITY CHARGES. Lessee shall secure service and pay all
charges for water, electricity, gas, telephone and any and all other
utility services furnished to the Demised Premises.
The Lessor, the Public Authorities and the.Utilities servicing or
located on the Demised Premises shall, at all reasonable hours, by its or
their agents or employees, have the right to install, repair and replace
the utility conduits, meters and other facilities located on the Demised
Premises; it being understood and agreed, however, that the Lessor shall
not be liable for the care, upkeep or maintenance of such facilities.
SEC. 403. LICENSES, PERMITS AND FEES. All licenses, permits and
fees of any kind or character whatsoever, imposed on the Demised Premises
or the use and operation thereof by the City, County, State or Federal
Government, or any other governmental unit or Public Authority or for
inspection of the Demised Premises, or any part thereof during the term
hereof, shall be paid promptly by Lessee prior to delinquency.
SEC. 404. MECHANIC'S LIENS. Lessee shall not permit any liens to
stand against the Demised Premises for any labor or material in connection
with work of any character' performed or claimed to have been performed on
the Demised Premises at the direction or sufferance of Lessee (except work
done by Lessor), whether such work was performed or furnished prior to, or
subsequent to the commencement of the term of this Lease.
In the event of any such lien attaching to the Demised Premises,
Lessee will promptly notify Lessor of such event and Lessee will pay off
the same and have such lien released of record within Thirty (30) days of
the filing of such lien of record.
SEC. 405. PAYMENT BY LESSOR. If at any time, any tax, assessment,
charge, rate, fee or inspection fee, generally or specifically charged or
assessed against and properly attributable to said Demised Premises shall
become due or payable and the Lessee shall not pay the same, or have paid
same to Lessor or, in the event any lien for labor or material shall not
be released of record by Lessee within Thirty (30) days of the filing of
such lien of record, the Lessor may, at its option, pay the same at any
time thereafter without inquiring into the validity thereof whether or not
Lessee has failed to pay such amount or Lessee has paid such amount to
Lessor, and the amount of any and all such payments so made by the Lessor
(with interest thereon at Eighteen Percent (18%) per annum from and after
the date any such payment was paid by Lessor) shall be and hereby is
declared to be so much additional and further rent for the Demised
Premises, due from and payable by the Lessee with the next installment of
rent and may be collected in the same manner as other rents due hereunder;
provided, however, that subject to the further provisions hereinafter set
forth, Lessee shall have the right, at Lessee's expense, to contest in
good faith the validity of any Taxes, assessments, charges, liens, rates
or fees so specifically charged or assessed against the Demised Premises;
provided, however, that Lessee notifies Lessor in writing of Lessee's
intention to so contest within Thirty (30) days in advance of the date
such Taxes, assessments, charges, liens, rates or fees charged or assessed
against the Demised Premises were due and payable; and further provided
that such contest is commenced within Thirty (30) days of the date of such
notice.
SEC. 406. CONTEST. In the event Lessee desires to contest any
Taxes, assessments, charges, liens, rates or fees herein provided, it
shall do so by paying the amounts under protest, or shall provide for the
payment thereof, together with all penalties, interest, costs and
expenses, by the deposit of a sufficient sum of money to be held in escrow
by Lessor or, at the option of Lessor, by a good and sufficient
undertaking as may be required or permitted by law, all to the end that no
delinquency or proceedings based upon delinquency shall in anywise affect
the title or interest of Lessor in the Demised Premises.
Lessee agrees that it will prosecute any such contest with due
diligence and in the event any such contest be adjudicated adversely to
Lessee, that Lessee will, within Thirty (30) days after final
determination, or within the time provided for in such adjudication,
whichever is sooner thereof, pay the full amount of any such Taxes,
assessments, charges, liens, rates or fees, or other obligations not paid
by Lessee to Lessor which may have been the subject of such contest as so
determined, together with all interest and penalties, costs and charges
which may be payable in connection therewith and satisfy and cause the
release of the same of record.
Lessee shall keep the Lessor notified, from time to time throughout
the period of its pendency, as to the progress and status of any such
contest. If a final determination is not had within Three (3) years from
the date of instituting any such contest, or in the event of any default
of the Lessee, pursuant to the terms of this Lease, Lessor at its option,
may pay out of any funds held in escrow for any such Taxes, assessments,
charges, liens, rates or fees which may be under contest, together with
all penalties, interest charges and other expenses whatever in connection
with such contest and Lessee shall immediately upon written demand from
Lessor, terminate any such contest.
In the event the funds so held are insufficient to pay and satisfy the
same, Lessor, at its option, may pay any deficiency and any amount so paid
will be reimbursed by Lessee as additional rent due hereunder, promptly
upon demand, notwithstanding any previous termination of the term of this
Lease by lapse of time or otherwise, with interest at Eighteen Percent
(18%) per annum from the date of expenditure by Lessor.
Nothing contained in this agreement shall be construed to authorize
Lessee to create or incur on behalf of Lessor any liability, indebtedness
or obligation whatsoever. Anything herein to the contrary,
notwithstanding, Lessee shall defend, completely indemnify and hold Lessor
forever harmless from any and all consequences of any such Taxes,
assessments, charges, liens, rates or fees, or any contest thereof which
were the obligations of Lessee to pay hereunder.
ARTICLE 5
INSURANCE:
SEC. 501. PROPERTY INSURANCE. The Lessee covenants and agrees that
immediately upon the commencement of the term hereof, Lessee will cause,
at Lessee's expense, the Building and, Improvements placed on the Demised
Premises by the Lessor, including any and all additions thereto, to be
insured for full replacement cost against loss or damage by fire,
lightning and other casualty covered by the provisions of endorsements for
Extended Coverage and Special Extended Coverage, to include the peril of
collapse, vandalism and malicious mischief, replacement cost, and will
keep insurance to the full replacement value, from time to time, of the
Building and Improvements placed on said Demised Premises by Lessor,
including any and all additions thereto, in full force and effect during
the term hereof so long as this Lease is in effect, including all
extensions hereof.
No such policy of insurance shall include either the contents of the
Building located on the Demised Premises or any other property of the
Lessee or any third party except as a separate stated item of insurance,
separate and in addition to the coverage which shall apply exclusively to
Lessor's Building and other Improvements owned by Lessor. All such
policies shall provide that Lessor and any Mortgagee(s) shall be the
insureds as their interests appear, and shall further provide that any
loss shall be payable to Lessor and any Mortgagee(s) notwithstanding any
act or omission of Lessee which might otherwise result in a forfeiture or
reduction of said insurance.
In addition, Lessee shall maintain steam boiler insurance in such
amounts as Lessor may from time to time reasonably require on all steam
boilers, pressure boilers or such apparatus as Lessor may deem necessary
to be covered by such insurance, if any.
The Lessee will not place, nor permit to be placed, any other policies
of insurance upon the Building or other Improvements placed upon Demised
Premises by Lessor without advance written permission of Lessor and
without Lessor and Lessor's Mortgagee(s) as a named insured, provided,
however, that nothing herein shall be construed as limiting in any way the
manner in which Lessee insures its personal property and trade fixtures
placed within the Demised Premises.
SEC. 502. PUBLIC LIABILITY INSURANCE. Lessee, at Lessee's expense,
and for mutual benefit of the Lessor any Mortgagee(s) and the Lessee,
shall maintain Comprehensive Public Liability Insurance, covering the
Demised Premises in an amount not less than ONE MILLION DOLLARS
($1,000,000). Such insurance shall include the following coverages:
premises/operations, independent contractors, personal injury, broad form
property damage and contractual liability.
SEC. 503. INSURANCE GENERALLY. All insurance policies shall be with
companies reasonably satisfactory to Lessor and shall provide for at least
Thirty (30) days mandatory advance written notice to Lessor before
cancellation, reduction or other amendment and the property policies shall
contain a standard mortgage clause. Certificates evidencing such
insurance shall be delivered by Lessee to Lessor at the commencement of
the term of this Lease and all subsequent amendments and endorsements
shall be promptly delivered to Lessor. Statements for premiums on such
policies shall be sent to and paid by Lessee.
In the event Lessee shall refuse or fail to provide the insurance
coverage herein required or to provide evidence of such coverage as herein
described, the Lessor may, at its election, but with no obligation so to
do, procure and, from time to time, renew such insurance and all amounts
expended therefor with interest thereon at Eighteen Percent (18%) per
annum from the respective dates of such expenditures shall be so much
additional rent hereunder due from the Lessee on demand.
Lessee agrees to indemnify the Lessor for any loss suffered as the
result of the exercise of any deductible feature that may be incorporated
in the insurance contract and Lessor hereby reserves the right to
disapprove the amount and provisions of any such deductible feature.
Lessee agrees to be a self insurer as to such deductible amounts and
further agrees to pay such amounts to Lessor in the same manner as though
such insurance policies did not contain deductible provisions.
ARTICLE 6
USE MAINTENANCE AND CONDITION OF
THE DEMISED PREMISES:
SEC. 601. DEMISED PREMISES. Lessee shall not breach or suffer the
breach of any of the conditions, agreements and restrictions of record
affecting the Demised Premises and shall defend, completely indemnify and
hold Lessor forever harmless from all consequences of any such breach.
Lessee may use and occupy the Demised Premises for light manufacturing
(including mass lamination, manufacturing of copper clad boards, printing
and etching of copper clad laminated boards and the manufacturing of
prepreg), storage, assembly, distribution and for offices in connection
therewith; provided, however, that Lessee shall strictly comply with all
present and future laws, ordinances and regulations of public authorities,
as well as all insurance underwriting and inspection and rating
requirements, now or hereafter in any manner affecting the use of the
Demised Premises, the sidewalks, alleys, driveways and parkways adjacent
thereto, if any, or any Building thereon, or the use thereof. Lessee
shall not permit any unlawful occupation, business, trade or nuisance to
be conducted on the Demised Premises, or any use to be made thereof
contrary to any law, ordinance or regulation. Without in any way limiting
the generality of the aforegoing, Lessee will not, at any time, store any
material or equipment of any kind or character outside the Building(s)
located on the Demised Premises except in strict compliance with all
applicable ordinances, laws or regulations of any governmental unit or
other public authority having jurisdiction.
Lessee, at the sole cost and expense of Lessee, shall have the right
to contest the validity of any such rules, laws, ordinances or regulations
affecting the use of the Demised Premises; provided, however, in any
event, that Lessee shall defend, completely indemnify and hold the Lessor
forever harmless from all consequences of any such contest and the
violation of any such rule, law, ordinance or regulation.
Lessee will not use or permit to be used upon or in said Demised
Premises or any Building thereon anything that will invalidate any policy
of insurance at any time insuring the Demised Premises, or any Building(s)
or Improvements thereon, nor shall Lessee permit any dangerous condition
to exist on the Demised Premises for which appropriate and sufficient
safeguards in compliance with all applicable laws have not been taken.
Lessee shall not cause or suffer any signs to be erected upon the
Demised Premises, nor upon any Building(s) or Improvements located thereon
without the prior written approval of Lessor, which shall not be
unreasonably withheld.
Anything herein to the contrary, notwithstanding, Lessee shall not at
any time overload any structural member (including, by way of illustration
and not limitation, all roofs, columns, walls, beams, trusses and floors)
of the Building located on the Demised Premises; nor shall Lessee cause or
suffer the demolition of the Building(s) or Improvements, or any part(s)
thereof (except as provided in Sec. 603) without the prior written
approval of Lessor.
The Lessee further covenants and agrees that the entry into occupancy
of the Demised Premises by the Lessee shall constitute an acknowledgment
that the same and the Building(s) and Improvements thereon have been
received by the Lessee in good condition and repair, subject to the
warranties set forth herein.
SEC 602. ENVIRONMENTAL PROVISIONS. As used herein, the term
"Environmental Laws" includes all statutes, regulations, ordinances and
orders, federal, state and local, including, but not limited to, Title 49
of the Arizona Revised Statutes, which concern the regulation or
protection of the human health or the environment, including the ambient
air, surface water, groundwater, and surface and subsurface land use, and
any regulations promulgated thereto. The term "Regulated Substance"
includes, but is not limited to, any and all hazardous substances,
hazardous wastes, toxic substances or hazardous materials defined or
regulated by the Environmental Laws including but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. 9601 et seq.) and the Arizona Environmental Quality Act (A.R.S. 49-
201, et seq.) and any rules, regulations and guidelines adopted thereto.
Lessee shall immediately notify Lessor in writing of any (a)
correspondence or communication from any entity, governmental or private,
regarding an actual, potential, or alleged violation of Environmental
Laws, and (b) any event or change mi Lessee's operation of the Demised
Premises that will change Lessee's or Lessor's obligations or liabilities
under the Environmental Laws.
Lessee shall, at Lessee's own expense, comply with all existing and
hereinafter enacted Environmental Laws, and any amendments thereto,
affecting Lessee's operation and use of the Demised Premises and Lessee's
use, storage and disposal of Regulated Substances. Lessee shall obtain,
prior to the commencement of the Lease, all permits, licenses and other
authorizations required under the Environmental Laws.
Lessor or Lessor's duly-authorized representative shall have the right
to enter the premises at all reasonable times to determine whether Lessee
is in compliance with this Section. Lessee's failure to abide by the
terms of this Section shall be restrainable by injunction and may result
in termination of the Lease, at Lessor's sole discretion.
Lessee shall defend, indemnify and hold harmless Lessor, its agents,
successors and assigns, from and against any claims demands, penalties,
fines, liabilities (whether governmental or private), settlements,
damages, costs, or expenses (including, without limitation, attorney's and
consultants' fees, court costs, and litigation expenses), arising out of
or in any way related to (a) the presence, use, generation, storage,
treatment, disposal, release or threatened release of any Regulated
Substance that is on, from, or affecting the human health or environment,
whether or not previously disclosed to Lessor; (b) any personal injury
(including wrongful death) or property damage of any kind arising out of
or related to a Regulated Substance: or (c) any violation of any
Environmental Law; provided, however, that such events described in
clauses (a), (b) or (c) of this sentence are directly caused by or
directly attributable to the acts or omissions of Lessee, its agents, and
contractors. The provisions of this Section and this indemnification
shall be in addition to any other obligations and liabilities Lessee shall
have to Lessor at law or in equity and shall survive the termination of
this Lease.
SEC. 603. MAINTENANCE. The Lessor warrants that the foundation,
exterior bearing walls, and wood roof structure shall be free from defects
in material and workmanship until such times as any of these structural
systems have been altered or modified by Lessee. In the event, of the
occurrence of any such defect during the warranty period and upon receipt
of written notice from Lessee, Lessor shall promptly commence and
diligently prosecute to completion such repairs as are necessary to
correct such defect. Except for the aforegoing Lessor warranties, Lessee
shall maintain and preserve the Demised Premises, including, without
limitation, the interior and exterior of the Building thereon in good and
clean condition making all repairs, replacements and restorations
necessary for such maintenance and preservation: including, without
limitation, tuckpointing, painting, glass replacement, glazing, caulking
and the repair, replacement and restoration of the roof covering, docks,
landscaping and, parking areas. All repairs, replacements and
restorations shall be in quality at least equal to the original
construction.
Notwithstanding anything herein to the contrary, on or before each
anniversary date of this Lease or extension thereof, Lessee shall deliver
to Lessor written evidence satisfactory to Lessor that the roof of the
building on the Demised Premises has been serviced by a roofing contractor
licensed by the State of Arizona and satisfactory to Lessor.
At the termination of this Lease, by lapse of time or otherwise,
Lessee shall deliver the Demised Premises to the Lessor in good condition
and repair as obtained therein at the commencement of the term of this
Lease subject, however, to the loss or damage due to any casualty to the
extent actually recovered by Lessor under insurance policies to be
obtained and maintained by Lessee as herein set forth and normal wear and
tear. Anything herein to the contrary, notwithstanding, Lessee will not
suffer any waste t@-occur on the Demised Premises and will make every
reasonable effort to prevent the Demised Premises from falling into
disrepair; including, without limitation, the prompt performance of all
repair, replacement and restoration obligations of Lessee as herein set
forth.
SEC. 604. ALTERATIONS. Lessee shall make no alterations to the
Demised Premises without prior written approval of Lessor which shall not
be unreasonably withheld provided, however, Lessee shall make no material
alterations to the Demised Premises (including roof, floor, and structural
wall penetration). Lessee shall remove, on demand by Lessor and at
Lessee's expense, any and all alterations at the termination of this
Lease, whether by lapse of time or otherwise, and shall repair any damage
caused by such removal, restoring the Demised Premises to their condition
prior to the making of any such alteration(s), or any of them.
Any and all alterations, additions and improvements made to or placed
upon the Demised Premises by the Lessee, or suffered by Lessee to be made
to or placed upon the Demised Premises, as well as all fixtures and
articles of personal property attached to or made a part of the Demised
Premises, which Lessee has not removed or been required to remove by
Lessor, shall immediately become the property of the Lessor at the
termination of this Lease and shall be surrendered to the Lessor.
Subject to the provisions hereinabove set forth, the Lessee may expend
such additional sums of money upon the Demised Premises, the Building and
Improvements on said Demised Premises as the Lessee may desire, with the
full understanding that such additional sums so paid shall not be deducted
from or set off against any rents or other payments due hereunder.,
SEC. 605. LESSORS RIGHT TO INSPECT AND REPAIR. Lessor, its agents
and employees shall have the right, at any reasonable time after notice to
Lessee, to enter upon the Demised Premises to inspect the same in the
presence of an agent of Lessee and Lessee agrees to make such agent
available. In the event Lessee fails to commence such repairs,
replacements or restorations as are necessary to maintain the Demised
Premises in good condition, within Thirty (30) days after notice from
Lessor or fails to diligently prosecute the same to completion, the
Lessor, at its option, but without any obligation so to do, may make such
repairs, replacements, or restorations, and amounts expended for such work
by the Lessor shall be reimbursed by the Lessee as additional rent due
hereunder, promptly on demand, together with interest at Eighteen Percent
(18%) per annum from date of expenditure.
Anything herein to the contrary, notwithstanding, Lessor shall have
the right, at any time, to enter upon the Demised Premises, but without
any obligation so to do, in order to effect any repair, replacement or
restoration of an emergency nature and Lessee shall reimburse Lessor as
additional rent due hereunder, promptly upon demand, for expenditures
incurred for such work and if Lessee denies Lessor such access, Lessee
agrees to defend, indemnify and hold forever harmless the Lessor from and
against any and all liability, fines, suits, claims, demands, actions,
causes of action, losses, costs, damages, judgments and expenses of any
kind or character, name or nature due to or arising directly or indirectly
out of such emergency.
ARTICLE 7
INDEMNIFICATION AND HOLDING
HARMLESS OF LESSOR:
SEC. 701. INDEMNIFICATION. To the extent permitted by law, Lessee
shall defend, completely indemnify and hold forever harmless the Lessor
from and against any and all liability, fines, suits, claims, demands,
actions, causes of action, losses, costs, damages, judgments and expenses
of any kind or character, name or nature, due to or arising out of:
(a) Any breach, violation or non-performance of any covenant,
obligation, condition or agreement in this Lease set forth and
contained on the part of the Lessee to be fulfilled, kept,
observed or performed; and/or
(b) any damage to, loss or destruction of any property arising
directly or indirectly out of Lessee's use and occupancy of the
Demised Premises, except for any such damages, losses or
destruction resulting from or attributable to the breach of the
warranty contained in the first sentence of Section 603 hereof;
and/or
(c) any injury to any person(s), including death, resulting at any
time therefrom, occurring in or about the Demised Premises
and/or the sidewalks, drive and alleyways, pkways, if any, and
any and all other appurtenances thereunto appertaining arising
directly or indirectly out of
Lessee's use and occupancy of the Demised Premises, except for
any such injuries or deaths resulting from or attributable to
the breach of the warranty contained in the first sentence of
Section 603 hereof.
In the event the Lessor is made a party to any action or proceeding
which Lessee is required to defend pursuant to the provisions of this
Lease, the Lessor shall have the right to appear and to take part in any
such action or proceeding by legal counsel of Lessor's choice at Lessor's
cost and expense.
Lessee and Lessor hereby agree to completely indemnify the prevailing
party as to an costs and expenses incurred to enforce any of the terms,
provisions, conditions or covenants of this Lease; including, but not
limited to, reasonable attorney's fees.
Nothing herein shall be construed as obligating the Lessee to
indemnify or hold harmless any party, from and against the consequences of
willful or negligent acts or omissions of the party to be indemnified.
SEC. 702. LOSS OF PROPERTY. Anything in this Lease to the contrary
notwithstanding Lessee agrees that under no circumstances shall Lessor be
liable to Lessee or to any third party for any loss of, destruction of,
damage to or shortage of any property other than that directly or
indirectly caused by defects, latent or otherwise, warranted herein by
Lessor; including, by way of illustration and not limitation, equipment or
inventory placed on the Demised Premises or suffered to be placed thereon
by Lessee, it being the intention of the parties hereto that the risk of
any and all such loss, destruction, damage or shortage shall be borne by
Lessee and Lessee agrees to defend, completely indemnify and hold Lessor
forever harmless from and against any and all liability, suits, claims,
demands, actions causes of action, losses, costs, damages, judgments and
expenses if any arising out of such loss, destruction, damage or shortage.
ARTICLE 8
DAMAGE OR DESTRUCTION
OF BUILDINGS:
SEC. 801. DAMAGE OR DESTRUCTION OF BUILDINGS. If any Building or
Improvements placed by the Lessor on the Demised Premises shall be injured
or destroyed by fire or other casualty insured against pursuant to the
terms of this Lease, the Lessor will, with due diligence and dispatch,
proceed to collect the insurance thereon and if the Lessor elects to
repair or restore such Building, the Lessor will apply the insurance
monies derived from said policies to such repair and restoration.
In the event that the monies realized from the insurance policies
shall not be sufficient to restore such Building and/or Improvements to
their condition immediately prior to such fire or other such casualty, the
Lessor may, at the option of Lessor, advance the additional funds
necessary therefor, and to the extent that the insufficiency of the
insurance proceeds was due to the failure of Lessee to comply with the
provisions of this Lease and to the extent of any deductible feature in
the insurance coverage to be provided by the Lessee, the Lessee covenants
and agrees to repay any such advance to the Lessor as additional rent due
hereunder, promptly upon demand, with interest at the rate of Eighteen
Percent (18%) per annum from the date of such expenditure.
In the event Lessor does not elect to repair or restore such Building
and/or Improvements within Thirty (30) days after such a casualty, such
election to be evidenced by written notice to Lessee within said time
period, or if the repair or restoration cannot reasonably be accomplished
within a period of one hundred twenty (120) days after such casualty, then
in either of such events this Lease and the term hereof, may be terminated
and cancelled at the election of either party hereto, provided written
notice is given to the other party within Ten (10) days after the
expiration of the last aforementioned such Thirty (30) day period. Absent
such timely notice this Lease shall remain in full force and effect.
ARTICLE 9
RENT ABATEMENT
BECAUSE OF DAMAGE:
SEC. 901. RENT ABATEMENT BECAUSE OF DAMAGE. In the event the
Building and/or Improvements on the Demised Premises shall be damaged by
fire or other casualty covered by the provisions of the insurance policies
then in effect as provided for herein, the Lessee shall not be required to
pay rent on any untenantable portion of said Building and the rental
reserved hereunder shall be reduced to the proportion that the square foot
area of the Building remaining tenantable bears to the total square foot
area of the original Building. Such rental shall be increased pro rata,
from time to time, if and when additional areas of the Building are
returned to tenantable condition.
ARTICLE 10
CONDEMNATION:
SEC. 1001. AWARD. In the event the Demised Premises, or any part
thereof, shall be condemned or taken for a public or a quasi-public use,
or is sold by Lessor under threat of condemnation, any award made or sales
price paid to compensate for the value of the Demised Premises,
Building(s) and Improvements thereon, or for damages to the remainder
thereof shall be paid to the Lessor and Lessee shall have no claim thereto
and the Lessee hereby irrevocably assigns and transfers to the Lessor any
right to any such compensation or damage awards, providing, however, that
Lessee shall have the right to prove in the proceeding and to receive any
award which may be made for damages for or condemnation of Lessee's
personal property, including movable trade fixtures and equipment and
relocation costs.
In the event any or all of the Demised Premises shall be so condemned
or taken, the Lessee shall execute and deliver to Lessor, promptly on
demand, all documents necessary and proper to evidence the termination of
the interest of the Lessee in and to the Demised Premises and this Lease,
including, without limitation, a recordable release and cancellation of
this Lease and a quit claim deed. The failure of the Lessee to so execute
and deliver such documents shall in no way affect such termination of this
Lease and the interest of the Lessee in and to the Demised Premises.
SEC. 1002. REMAINDER SUSCEPTIBLE OF OCCUPANCY. In the event a part
of the Demised Premises remains which is susceptible of occupation for the
uses set forth herein, this Lease shall, as to the part so taken,
terminate as of the date title shall vest in the condemning authority and
the rent payable hereunder shall be adjusted so that the Lessee shall be
required to pay for the remainder of the term only such fractional portion
of such rent as the area of the part of the building located on the
Demised Premises remaining after condemnation bears to the area of said
Building as of the date of condemnation: and in such event, this Lease
shall remain in full force and effect and the Lessor shall promptly
commence and diligently prosecute to complete the restoration of the
Building so that it shall again constitute a complete architectural unit
but the Lessee shall be required to pay only that fractional portion of
the rent as is provided for hereinabove in this Sec. 1002.
In the event the Lessor does not so terminate this Lease, this Lease
shall remain in full force and effect and the Lessor shall promptly
commence and diligently prosecute to completion the restoration of the
Building so that it shall again constitute a complete architectural unit
but the Lessee shall be required to pay only that fractional portion of
the rent as is provided for hereinabove in this SEC. 1002.
SEC. 1003. REMAINDER NOT SUSCEPTIBLE OF OCCUPANCY. In the event all
of the Demised Premises, or such part thereof be taken or condemned so
that there does not remain a portion susceptible for occupancy for the
uses set forth herein, this Lease shall terminate upon the date the title
to the part taken vests in the condemning authority and Lessee's
obligation to pay rent or to discharge any other obligation hereunder,
other than the payment of money then due and damages arising out of any
breach of the covenants, conditions or terms hereof by the Lessee, shall
cease.
Notwithstanding anything herein to the contrary, the Demised Premises
shall not be deemed tenantable in the event more than twenty-rive percent
(25%) of the area of the Building located on the Demised Premises is taken
or condemned.
ARTICLE 11
DEFAULT, BANKRUPTCY
SEC. 1101. DEFAULT, BANKRUPTCY. It is mutually agreed and understood
by and between the parties hereto that in the event during the term of
this Lease, regardless of the pendency of any bankruptcy, insolvency,
receivership or reorganization proceedings, in law, equity or before any
administrative tribunal, or any other governmental entity which has been
prevented or which might prevent compliance by Lessee with the terms or
provisions of this Lease:
(1) Lessee shall default in the payment of any installment of rent
or other payment required to be made by Lessee pursuant to the
provisions of this lease and such default shall continue for Ten
(10) days after notice of such default from Lessor provided
however that in the event Lessor has had to give Lessee notices
of such default more than twice in any twelve (12) consecutive
month period, this notice requirement shall thereupon terminate
and Lessee shall be in default after the expiration of any such
ten (10) day period regardless of lack of notice from Lessor; or
(2) Lessee shall make default in the provisions of any of the
agreements, conditions, covenants or obligations hereunder. to
be kept, fulfilled, observed or performed by the Lessee and such
default shall not be cured within Thirty (30) days after notice
of such default from Lessor to Lessee;
Anything hereinabove to the contrary, notwithstanding, as to any
such default except the payment of any rent or other monies
reserved herein, in the event the Lessee shall, within said
Thirty (30) day period, commence the cure of such default and
diligently pursue to completion any such cure as soon as
reasonably practicable, the Lessor may not declare the term
ended and this Lease terminated and cancelled; or
(3) if any voluntary petition or similar pleading under any
bankruptcy act or any federal or state law seeking
reorganization or arrangement with creditors or adjustment of
debts is filed by or against Lessee, or if any such petition or
pleadings is involuntary and Lessee is not discharged thereof
within Thirty (30) days after the date of its filing; or
(4) if Lessee admits its inability to pay its debts or if a
receiver, trustee or other appointee of a court, administrative
tribunal or other public authority is appointed for all or a
substantial part of Lessee's property and if such appointment is
not vacated within Thirty (30) days after being made; or
(5) if the leasehold interest of Lessee is levied upon or attached
by process of law, and such levy or attachment is not released
of record within Thirty (30) days; or
(6) if Lessee makes an assignment for the benefit of creditors, or
if any proceedings are filed by or against Lessee to declare
Lessee insolvent or unable to meet its debts and such
proceedings are not discharged within Thirty (30) days after the
date of their filing; or
(7) if a receiver or similar type of appointment or court appointee
or nominee of any name or character is made for all or a
substantial part of Lessee's property and if such receiver is
not discharged within Thirty (30) days after appointment;
then, in any such event, Lessor shall have the right, at any time
thereafter (but prior to any timely cure as hereinabove provided), with or
without notice to avail itself to any or all of the following remedies,
(a) to lock the doors of the Demised Premises and exclude Lessee
therefrom; (b) to retain or re-enter and take complete possession of the
Demised Premises pursuant to Landlord's statutory lien; (c) to remove all
persons and all of Lessee's property therefrom; (d) to terminate this
Lease forthwith; (e) to@sue for the rent due and to become due under this
Lease; (f) to sue for- any damages sustained by Lessor and/or (g) to keep
this Lease in full force and effect reletting the Demised Premises on such
terms and conditions as Lessor may deem appropriate without prejudicing
Lessor's rights to recover past and future rents or other obligations of
Lessee hereunder.
Anything herein to the contrary, notwithstanding any payment of rent
or any other payment to be made by the Lessee to Lessor, pursuant to the
provisions of this Lease, shall bear interest at the rate of Eighteen
Percent (18%) per annum from the date payment was due.
In the event the right, title and interest of Lessee in and to the
Demised Premises and this Lease is terminated, whether by lapse of time or
otherwise, the Lessee shall execute and deliver to Lessor, promptly on
demand, all documents reasonably requested by Lessor to evidence such
termination: including, without limitation, a recordable release and
cancellation of this Lease and a quit claim deed. The failure of Lessee
to so execute and deliver such documents shall in no way affect the
termination of this Lease and the interest of the Lessee in and to the
Demised Premises.
SEC. 1102. NO WAIVER. No waiver by Lessor of any default by the
Lessee of any of the obligations, agreements, conditions or covenants on
the part of the Lessee to be fulfilled, kept, observed or performed
hereunder shall be a waiver of any subsequent default or of any other
obligation, agreement, condition or covenant, nor shall any forbearance by
Lessor to seek a remedy for any default by Lessee be a waiver by Lessor of
any of the rights and remedies available to Lessor hereunder or by law
granted or permitted, with respect to such or any subsequent default.
ARTICLE 12
TRANSFER, ASSIGNMENT, SUBLEASE
SEC. 1201. TRANSFER, ASSIGNMENT, SUBLEASE. The Lessee may not
assign, transfer, mortgage or pledge this Lease or the interest of the
Lessee herein or hereunder or sublet Demised Premises or any portion
thereof, without, in each case, the prior written consent of the Lessor
which shall not be unreasonably withheld. Any purported assignment,
mortgage, transfer, pledge or sublease without the prior written consent
of the Lessor which shall not be unreasonably withheld. Any purported
assignment, mortgage, transfer, pledge or sublease without the prior
written consent of Lessor shall be absolutely null and void and of no
legal force or effect.
SEC. 1202. INCREASED RENT TO LESSOR. As a condition precedent to the
approval of any sublease, assignment or any other type of transfer by the
Lessee to any third party of all or a portion of its interest in and to
the Demised Premises pursuant to the provisions of this Lease, Lessee
agrees that it will pay to the Lessor, contemporaneously with the rental
payments due hereunder, Fifty Percent (50%) of any increased economic
benefit received by Lessee, including, without limitation, rent in excess
of the rent reserved herein and in the event less than all of the Demised
Premises are so subleased, assigned or transferred in any way, the Lessee
shall pay to the Lessor Fifty Percent (50%) of any increase in the square
foot rate of rent paid to Lessee by any third party. Lessee shall also
increase any security deposit required hereunder to the amount of a full
month's rent.
The rent that Lessee pays to the Lessor for the purpose of this,
Section 1202. shall be calculated by dividing the monthly rent reserved
herein by the square foot area of the building located on the Demised
Premises as stated hereinabove.
SEC. 1203. MAINTENANCE, REPAIR, AND RESTORATION UPON ASSIGNMENT OR
SUBLETTING. As a condition precedent to Lessor's consent to any
assignment or subletting of this Lease or all or any part of the Demised
Premises Lessor may at it's sole discretion require Lessee to undertake
any deferred maintenance and to make all repairs and restorations which
are the obligations of Lessee under this Lease prior to the effective date
of any such assignment or sublease in the same fashion as could be
required at the expiration of this Lease Term.
SEC. 1204. LESSOR MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Lessor
shall have the right to sell, mortgage, pledge, hypothecate or in any
other manner transfer or assign the interest of the Lessor in the Demised
Premises and/or in the Lease, subject to all of the covenants and
conditions of and Lessee's rights under this Lease. The term "Lessor", as
used in this Lease, means only the owner for the time being of the Demised
Premises and in the event of any sale, conveyance or other transfer of the
Demised Premises, or the interest of Lessor in the Demised Premises, the
Lessor shall upon purchaser's assumption, be and hereby is entirely freed
of all covenants and obligations of Lessor hereunder arising after the
date of such sale, transfer assignment or conveyance. This Lease shall
not be affected by any such sale and Lessee agrees to attorn to the
purchaser or assignee.
SEC. 1205. SUBORDINATION. This Lease shall be subject and
subordinate to the lien of any mortgage or mortgages which at any time may
be placed upon the Demised Premises by Lessor, its successors or assigns,
and to any replacements, renewals or extensions thereof, provided that the
holder of the encumbrance agrees to recognize for itself and its
successors, and assigns, Lessee's rights hereunder notwithstanding any
foreclosure. Lessee agrees, at any time hereafter, on demand, to execute
and deliver any instruments, releases or other documents that may be
required for the purpose of subjecting and subordinating this Lease to the
lien of any such mortgage or mortgages subject to the provisions set forth
above.
SEC. 1204. LESSOR MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Lessor
shall have the right to sell, mortgage, pledge, hypothecate or in any
other manner transfer or assign the interest of the Lessor in the Demised
Premises and/or in the Lease, subject to all of the covenants and
conditions of and Lessee's rights under this Lease. The term "Lessor", as
used in this Lease, means only the owner for the time being of the Demised
Premises and in the event of any sale, conveyance or other transfer of the
Demised Premises, or the interest of Lessor in the Demised Premises, the
Lessor shall upon purchaser's assumption, be and hereby is entirely freed
of all covenants and obligations of Lessor hereunder arising after the
date of such sale, transfer assignment or conveyance. This Lease shall
not be affected by any such sale and Lessee agrees to attorn to the
purchaser or assignee.
SEC. 1205. SUBORDINATION. This Lease shall be subject and
subordinate to the lien of any mortgage which at any time may be placed
upon the Demised premises by Lessor, its successors or assigns, and to any
replacements, renewals or extensions thereof, provided that the holder of
the emcumbrance agrees to recognize for itself and its successors, and
assigns, Lessee's rights hereunder notwithstanding any foreclosure.
Lessee agrees, at any time hereafter, on demand, to execute and deliver
any instruments, releases or other documents that may be required for the
purpose of subjecting and subordinating this Lease to the lien of any such
mortgage or mortgages subject to the provisions set forth above.
SEC. 1206. LESSEE'S ESTOPPEL LETTER. Lessee agrees at any time and
from time to time upon not less than Ten (10) days prior written request
by Lessor to execute, acknowledge and deliver to Lessor a statement in
writing certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications that the same is in full force
and effect as modified and stating the modifications), and the dates to
which the basic rent and other charges have been paid in advance, if any,
and all of the defaults of Lessor hereunder, if any, it being intended
that any such statement delivered pursuant to this Section may be relied
upon by any prospective purchaser of the fee or mortgagee or assignee of
any mortgage upon the fee of the Demised Premises.
ARTICLE 13
MISCELLANEOUS:
SEC. 1301. NOTICES. Any notice provided for herein shall be given by
registered or certified mail addressed, if to Lessor, as follows:
Cemanudi Associates
3225 S. Hardy Drive, Suite 105
Tempe, Arizona 85282
with a copy to:
Cemanudi Associates
One First National Plaza
Chicago, Illinois 60603
Attention: Law Department
and if to Lessee, as follows:
Nelco Technology, Inc.
1130 West Geneva Drive
Tempe, Arizona 85282
Attention: President
with a copy to:
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
SEC. 1302. CHANGE OF ADDRESS. The person and places to which notices
or payments are to be mailed may be changed, from time to time, by Lessor
or Lessee upon written notice to the other.
SEC. 1303. MODIFICATION. This Lease may be modified only by written
agreement signed by Lessor and Lessee.
SEC. 1304. DESCRIPTIVE HEADINGS. The descriptive headings and index
of this Agreement are inserted for convenience in reference only and do
not constitute a part of this Agreement.
SEC. 1305. SUCCESSORS AND ASSIGNS. This Lease and the covenants,
terms, conditions and Provisions hereof, shall be binding upon the
respective parties hereto and upon their respective successors, assigns
and personal representatives and shall inure to the benefit of said
respective parties hereto and their said respective successors, assigns
and personal representatives.
Wherever in this Lease a reference to any of the parties hereto is
made, such reference shall be deemed to include, wherever applicable and
even though not expressly stated, also a reference to the successors,
assigns and personal representatives of such party, as the case may be,
the same as if in every case expressly stated.
The phrase "successors and assigns" is used in this Lease in its
broadest possible meaning and includes, in addition to administrators,
trustees and conservators; every person, firm, corporation or other entity
succeeding to the interest in or to this Lease, or any part thereof, or in
or to any real estate, or any part or portion thereof, described or
referred to herein or any part hereto, or of any of the successors or
assigns of any such party, whether such succession results from the act of
a party in interest, occurs by operation of law or is the effect of the
operation of law together with any act(s) of any such party or parties.
SEC. 1306. ENTRY TO SHOW PREMISES. Lessor, its agents or assigns
may, from time to time, during the term of this Lease, and each and every
extension hereof after notice to and in the company of Lessee, enter the
Demised Premises at reasonable times to show the same to prospective
buyers or tenants.
During the last Six (6) months of the term of this Lease or after the
occurrence of any default on the part of the Lessee hereunder, after
notice to and in the company of Lessee, the Lessor hereby reserves the
right to enter the Demised Premises (and prior to the curing of such
default) and to place, on the outer walls or roof of any building(s)
located thereon and upon any part of the Demised Premises, outside such
building(s), "For Sale" and/or "For Rent" signs of a type similar to those
used in the area. Lessee agrees not to remove, interfere with, or
obstruct the view of any such sign(s).
SEC. 1307. TIME OF ESSENCE. Time is of the essence of this Lease and
in all of the conditions, obligations, agreements, provisions, terms and
covenants hereof.
SEC. 1308. RESOLUTION. Lessee shall, contemporaneously with the
execution and,delivery of this Lease, also deliver to Lessor a copy of a
Resolution of the Board of Directors of Lessee, or other evidence
satisfactory to Lessor, specifically authorizing those of Lessee's
officers whose names are subscribed hereto to enter into this Lease
Agreement with the Lessor named herein. Such Resolution shall make
reference to this Lease of the Demised Premises, lease term and rental
reserved, shall be duly certified to by the Secretary of said Board of
Directors and shall be appended hereto as Schedule 2. Lessor shall,
contemporaneously with the execution and delivery of this Lease, also
deliver to Lessee evidence of Lessor's general partner's authority to bind
Lessor of the officer of Lessor's general partner who executes this Lease
Agreement.
SEC. 1309. UNENFORCEABILITY. In the event any covenant, term,
provision, obligation, agreement or condition of this Lease is held to be
unenforceable at law it is mutually agreed and understood, by and between
the parties hereto, that the other covenants, terms, provisions,
obligations, agreements and conditions herein contained shall remain in
full force and effect.
SEC. 1310. WAIVER OF TRIAL BY JURY. The Lessee waives a trial by
jury of any or all issues arising in any action, or proceeding between the
parties hereto, or their successors arising out of, or in any way
connected with this Lease, or any of its provisions the Lessee's use, or
occupancy of the Demised Premises and/or any claim of injury or damage.
SEC. 1311. GOVERNING LAW. This Lease and the rights of the parties
hereto shall be interpreted and determined in accordance with the laws of
Arizona.
SEC. 1312. ENTIRE AGREEMENT. This Lease contains the Entire
Agreement between the parties respecting the matters herein set forth and
supersedes, all prior agreements between the parties hereto about such
matters.
SEC. 1313. ADDITIONAL TERMS. The Lessor hereby covenants, represents
and warrants as follows:
(a) The Demised Premises consists of approximately 38,311 square
feet of land together with a building located thereon containing
approximately 13,995 square feet.
(b) Lessor has not received any notice of any violation of any
zoning ordinances, building codes or other local, state and federal
statutes, codes, ordinances, laws and regulations and has no knowledge of
the existence of any such violation.
(c) At Lessee's request, Lessor shall promptly execute and
acknowledge and deliver to Lessee Memorandum of this Lease summarizing the
material terms of this Lease.
(d) Lessor's covenants, representations and warranties shall be true
on and as of the date hereof, on and as of August 31, 1989.
SEC. 1314. EXHIBITS AND SCHEDULES. The following Exhibits and
Schedules are attached hereto and expressly made a part hereof, to wit:
Exhibit A- Legal Description
Schedule 1- Security Deposit
Schedule 2- Lessee's Board Resolution
Schedule 3- First and Second-Option to Extend Term
IN WITNESS WHEREOF, said Lessor and Lessee have caused this instrument
to be executed by their respective duly authorized officers, all as of the
day and year first above written.
Cemanudi Associates, Lessor
By CMD Corporation, its General Partner
By /s/ President
ATTEST:
/s/Secretary
NELCO TECHNOLOGY, INC.
By: /s/Robert A. Forcier, President
ATTEST:
/s/Ron Fleming, Secretary
EASEMENT
R/W# 2381 AGT. PRL
COUNTY Maricopa
Parcel MCR 228-38
CMD SOUTHWEST INCORPORATED, an Arizona corporation, for an in consideration
of the sum of One Dollar, and other valuable consideration, receipt of which
is hereby acknowledged, do hereby grant to the Salt River Project
Agricultural Improvement and Power District, a political subdivision of the
State of Arizona, its successors and assigns, the non-exclusive right,
easement and privilege to construct, operate and maintain underground
electrical conduits, together with its manholes, transformer pads and vaults
and other appurtenances through, over, under and across the following
described property:
The East 162 feet of Lot 9 of BROADWAY INDUSTRIAL PARK UNIT 4-A, as
recorded in Book 228 of Maps, page 38, Maricopa County, Arizona.
Said easement being 7.0 feet in width, 3.5 feet on each
side of the following described centerline:
Commencing at the Southeast corner of said Lot 9; thence
North 89 degrees 53', 53" West (assumed bearing) along
the South line thereof, a distance of 70.5 feet; thence
North 16 degrees 13' 47" East a distance of 8.0 feet to
the TRUE POINT OF BEGINNING of the easement herein
described; thence continue North 16 degrees 13' 47" East
a distance of 103.7 feet; thence North 03 degrees 41'
27" East a distance of 103.3 feet; thence South 88
degrees 37' 07" West a distance of 13.0 feet to a
terminus:
Caution: The above described easement contains high voltage electrical
equipment and notice is hereby given that the location of underground
electrical conduits may vary from the locations indicated in the above
description, therefore all persons who may excavate in the area must
accordingly proceed with caution.
The GRANTEE shall at all times have the right of full and free ingress
and egress to said easement for the purpose heretofore specified, and the
right to permit other utility companies to use the right of way jointly with
the Grantee for their utility purposes.
In the event the right, privilege and easement herein granted shall be
abandoned and permanently cease to be used for the purpose herein granted,
all rights herein granted shall cease and revert to the grantors, their
heirs or assigns.
The covenants and agreements herein set forth shall extend and inure in
favor and to the benefit of and shall be binding on the heirs, successors in
ownership and estate, assigns and lessees of the respective parties hereto.
IN WITNESS WHEREOF, CMD SOUTHWEST INCORPORATED, an Arizona corporation
has caused its corporate name to be signed and its corporate seal to be
affixed by the undersigned officers thereunto duly authorized, this 24th day
of August, 1981.
/s/ President
State of Arizona
County of Maricopa
CERTIFICATE OF RESOLUTION
OF
NELCO TECHNOLOGY, INC.
The undersigned, Harry Linzer, Secretary of NELCO TECHNOLOGY, INC., an
Arizona corporation (hereinafter referred to as the "Corporation"), hereby
certifies that the following resolutions were duly and regularly passed and
adopted in all respects as required by law and the Bylaws of the
Corporation, and that such resolutions are still in full force and effect
and have not been revoked:
RESOLVED, that the Corporation should, and it hereby does, approve
that certain Lease by and between Cemanudi Associates, an Illinois
limited partnership, as Lessor, and the Corporation, as Lessee, for
approximately 38,311 square feet of land, together with a building
located thereon containing approximately 13,995 square feet,
commonly known as 1104 West Geneva Drive, Tempe, Arizona 85282; and
FURTHER RESOLVED, that Robert A. Forcier, President of the
Corporation, should be acting alone hereby is, authorized to execute
said Lease on behalf of the Corporation.
IN WITNESS WHEREOF, the undersigned has signed his name as Secretary of the
Corporation on this 1st day of September, 1989.
Harry Linzer
Secretary
SCHEDULE 1
SECURITY DEPOSIT:
Lessee has deposited the sum of Five Thousand Dollars ($5,000) with the
Lessor as security for the full and faithful performance by the Lessee of
the terms of this Lease. It is agreed that in the event Lessee defaults in
respect of any of the terms, provisions and conditions of this Lease,
including, but not limited to, the payment of rent and additional rent,
Lessor may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Lessee is in default or for any sum which
Lessor may reasonably expend or may be reasonably required to expend by
reason of Lessee's default in respect of any of the terms, covenants and
conditions of this Lease, including, but not limited to, any damages or
deficiency accrued before or after summary proceedings or other re-entry by
Lessor.
In the event that Lessee shall fully and faithfully comply with the
terms, provisions, covenants and conditions of the Lease, the security shall
be returned to Lessee promptly after the date fixed as the end of the Lease
Term and after delivery of the entire possession of the Demised Premises to
Lessor.
In the event of a sale of the demised premises, Lessor then has the
right to transfer the security to the purchaser, and upon the purchaser's
assumption Lessor shall thereupon be released by Lessee from all liability
for return of such security and Lessee agrees to look to the new Lessor
solely for return of said security.
SCHEDULE 2
LESSEE'S BOARD RESOLUTION
[To be inserted by Lessee]
SCHEDULE 3
FIRST OPTION TO EXTEND TERM
Lessee, at its option, may extend the term of this Lease for an
additional Five (5) years by delivering irrevocable written notice thereof
upon the Lessor at lease Six (6) Months prior to the expiration of the then
existing Lease Term, and upon delivery of said notice, the term of this
Lease shall be extended for said additional period upon the same terms
without further action of the parties; subject, however, to the further
provisions of this schedule.
RENTAL DURING FIRST EXTENSION OF TERM:
In the event the original term of this Lease is extended as hereinabove
provided, the Annual Net Basic Rent during the first three (3) years of the
extended term will be the greater of the following:
(a) The Annual Net Basic Rent during the last two (2) years of the
original Lease term; or
(b) An amount equal to the product of Sixty-three Thousand Eight
Hundred Seventeen and 20/100 Dollars ($63,817.20) multiplied by a
fraction which has as its denominator the United States All Item
Consumer Price Index (1982-1984 = 100), All Urban Consumer
Section, issued by the Bureau of Labor Statistics, U.S. Department
of Labor (hereinafter the "CPI-U") published for the month
immediately prior to the beginning of the original term of this
Lease and, as its numerator said Index published for the month
immediately prior to the commencement date of said extension;
In the event the original term of this Lease is extended as herein
provided, the Annual Net Basic Rent during the last two (2) years of the
extended term will be the greater of the following:
(c) The Annual Net Basic Rent during the first three (3) years of the
extended term; or
(d) An amount calculated by the following formula:
(A)x(.50)x{(B/C)-1.00}+(A) = Annual Basic Rent during the last two
(2) year of extended term of Lease.
where A = The amount described in preceding subparagraphs (a) or (b)
whichever is greater;
where B = The CPI-U published for the period immediately prior to the
commencement date of the last two year period of the
extended term.
where C = The CPI-U published for the period immediately prior to the
commencement date of the Five year extended term.
All such Annual Net Basic Rent due to be paid during any and all
extensions of the original Lease Term shall be paid in equal monthly
installments, in advance, in the same manner as the rent paid during the
original Term of this Lease.
In the event that the Index hereinabove referred to ceases to
incorporate a significant number of items contained therein in the Index
last published prior to the commencement date of the original term of this
Lease, or if a substantial change is made in the method of establishing such
Index, then the Index shall be adjusted to the figure that would have
resulted had no change occurred in the manner of computing such Index. In
the event that such Index (or a successor or substitute Index) is not
available, a reliable governmental or other non-partisan publication
evaluating the information theretofore used in determining the Index, shall
be used in lieu of such Index.
SECOND OPTION TO EXTEND TERM:
Provided Lessee has validly exercised the First Option to Extend Term
hereinabove described, Lessee at its option, may extend the term of this
Lease for a second, additional Five (5) years by delivering irrevocable
written notice thereof upon the Lessor at lease Six (6) months prior to the
expiration of the first Five year extension of the Lease Term, and upon
delivery of said notice, the term of this Lease shall be extended for said
additional period upon the same terms without further action of the parties,
subject, however to the further provisions of this Schedule.
RENTAL DURING SECOND EXTENSION OF TERM:
The Annual Net Basic Rent due to be paid to Lessor for said Demised
Premises during the first Three (3) years of the second option to extend
shall be the "Market Rental, as that term is hereinafter defined. The
Market Rental will be equal to the product of 13,995 multiplied by the
market rate of rent per square foot for comparable warehouse/office space
for a comparable lease term on the commencement date of the option term
(hereinafter referred to as "Market Rate"). The Market Rate will be
determined as hereinafter set forth without regard to (a) the rate of rent
Lessee is then paying for the Demised Premises, and (b) the value of
Lessee's improvements and trade fixtures. In the event Lessee desires to
consider exercising its second option to extend as set forth in this
Schedule, Lessee shall submit to Lessor nine (9) months prior to the
expiration of the then existing lease term, a written statement setting
forth the Lessee's proposed Market Rate, which statement shall include the
method used and assumptions made in arriving at such a rate. Lessor shall
within twenty (20) days of receipt of the statement accept or reject the
same or submit a revised statement of Market Rate which statement shall
include the method used and assumptions made in arriving at such a rate. If
Lessor accepts Lessee's statement of Market Rate, Market Rate shall be
determined as set forth therein and Lessee shall, in the event it exercises
its option to extend, pay to Lessor during the first Three (3) years of the
second option to extend, Annual Net Basic Rent equal to the product of
Market Rate times 13,995 square feet. If Lessor elects to submit a revised
statement, Lessee shall within ten (10) days of receipt thereof either
accept or reject the same. If Lessee accepts Lessor's revised statement of
Market Rate, Market Rate shall be determined as set forth therein and Lessee
shall, in the event it exercises its option to extend, pay to Lessor Annual
Net Basic Rent determined as set forth above in this paragraph. If,
however, Lessor rejects Lessee's statement of Market Rate or Lessee rejects
Lessor's revised statement of Market Rate, the rejecting party shall name
and appoint an independent M.A.I. appraiser and give written notice thereof
to the non-rejecting party within five (5) days of the date of such
rejection. The non-rejecting party shall, within five (5) days of the
receipt of said notice of rejection, name and appoint another appraiser and
give the rejecting party written notice thereof. Thereafter, said
appraisers shall select a third appraiser. If said appraisers are unable to
agree on the selection of a third appraiser within five (5) days, they shall
jointly petition the Superior Court of the County of Maricopa, Arizona, for
the appointment of a third appraiser. Thereupon, the said appraisers shall
independently determine the market rate for leasing the Demised Premises.
Their respective written reports of Market Rate shall be submitted to Lessor
and Lessee not later than seven (7) months prior to the expiration of the
then term or on such later date as Lessor and Lessee may mutually agree.
Upon delivery of the aforesaid written reports of value, and Market Rate
shall be computed as follows: (a) average the three appraisals and disregard
the appraisal which deviates the greatest from the average; and (b) average
the two remaining appraisals. The average of the two remaining appraisals
shall constitute the Market Rate and shall be binding upon the Lessor and
Lessee. In the event Lessee then exercises its option to extend, the
exercise of which shall take place, if at all, at lease six (6) months prior
to the expiration of the then existing lease term, Lessee shall pay to
Lessor during the first three (3) years of the second option to extend
Annual Net Basic Rent equal to the product of Market Rate times 13,995
square feet. The Lessor and Lessee shall each bear the fees, costs and
expenses of the appraiser selected by it, and the fees, costs and expenses
of the appraiser appointed by the parties' appraisers shall be shared
equally by Lessor and Lessee. Either party's failure to fully comply in a
timely fashion with the provisions regarding determination of Market Rate
shall be deemed an abandonment of this method of determining rental, and the
Market Rate shall be determined solely by the non-defaulting party's
appraiser. Thereafter, the Annual Net Basic Rent to be paid for the Demised
Premises during the fourth and fifth years of the second option to extend
shall be the greater of the following:
(a) The Market Rental (as determined hereinabove); or
(b) An amount calculated by the following formula:
(A)x(.50)x{(B/C)-1.00}+(A) = Annual Basic Rent during the last two
(2) year of second extended term of Lease.
where A = The Annual Net Basic Rent during the first three (3) years
of the second extended term.
where B = The CPI-U published for the period immediately prior to the
commencement date of the last two year period of the second
extended term.
where C = The CPI-U published for the period immediately prior to the
commencement date of the second Five year extended term.
In the event that the Price Index hereinabove referred to ceases to
incorporate a significant number of items contained in the Index last
published prior, or if a substantial change is made in the method of
establishing such Index, then the Index shall be adjusted to the figure that
would have resulted had no change occurred in the manner of computing such
Index. In the event that such Index (or a successor or substitute Index) is
not available, a reliable governmental or other non-partisan publication
evaluating the information theretofore used in determining the Index, shall
be used in lieu of such Index.
All such rental required herein shall be paid in then lawful money of
the United States of America in equal monthly installments; one installment
to be paid upon the first day of each and every calendar month during the
term hereof to the Lessor at such place as may, from time to time, be
designated by them; and in the absence of such designation, at the last
known office of the Lessor in Tempe, Arizona.
RESTRICTIONS ON OPTION:
Lessee may not exercise an Option if Lessee is in any way in default of
any of the terms, conditions or covenants contained in this Lease beyond an
applicable cure period, and the occurrence of any default by Lessee from and
after the date of notice of exercise of an Option and Lessee's subsequent
failure to cure said default within the applicable period, shall result in
the immediate termination forever of the Options, and all rights of Lessee
as set forth in this Schedule without further action of the parties and all
without prejudice to the other rights of Lessor.
The Options are for the sole benefit of the above named Lessee and shall
automatically terminate upon any assignment of this Lease, sublease of the
Demised Premises, or other transfer of this Lease and/or the rights of
Lessee, provided, however, that Lessee shall have the right to exercise only
the next available option to extend the term an additional five (5) years in
the event Lessee assigns or subleases this Lease, pursuant to the provisions
of SEC. 1201, subject however, to the following terms and conditions:
1) This right to exercise one (1) option to extend the term in the
event of an assignment or sublease is a one time right, and shall
not be applicable in the event of any subsequent assignments or
subleases;
2) Notwithstanding the provisions of Article 3 with regard to
determining the Annual Net Basic Rent, the Annual Net Basic Rent
during the extended term if this option is exercised following an
assignment or sublease, shall be the "Market Rental", and shall be
determined substantially in accordance with the procedures set
forth in this Schedule 3 for determining Market Rental.
3) Notwithstanding the provisions of SEC.1202, as a condition
precedent to the approval of any sublease, assignment of any other
type of transfer by the Lessee to any third party of all or a
portion of its interest in and to the Demised Premises pursuant to
the provisions of this Lease, Lessee agrees that it will pay to
the Lessor, contemporaneously with the rental payments due during
the five (5) year option period, any amounts Lessee may receive in
excess of the Market Rental as determined aforesaid, and in the
event less than all of the Demised Premises are so subleased,
assigned or transferred in any way, the Lessee shall pay to the
Lessor any increase in the square foot rate of rent paid to Lessee
during this option period by any third party.
EXHIBIT 10.12
LEASE
THIS LEASE made this 24th day of March, 1995 by and between CMD
SOUTHWEST INC., an Arizona corporation ("Landlord"), and NELCO TECHNOLOGY,
INC., an Arizona corporation ("Tenant").
WITNESSETH:
ARTICLE I
LEASED PREMISES,
FIXTURES AND EQUIPMENT:
SEC. 101 LEASED PREMISES. That Landlord, for and in consideration of
TEN DOLLARS ($10.00), to it in hand paid by Tenant, the receipt whereof is
hereby acknowledged; and in consideration of the agreements, conditions,
covenants and obligations to be kept, fulfilled, observed or performed by
Tenant, does hereby demise and lease, and Tenant does hereby take and rent
from Landlord, upon the terms herein set forth, approximately 58,247 square
feet of land, more specifically described on Exhibit "A" attached hereto,
which Exhibit is by this reference expressly made a part hereof, together
with a building to be constructed thereon containing approximately 18,601
square feet ("Building") and including all easements, improvements,
tenements, appurtenances, hereditaments, fixtures, rights and privileges
thereto belonging, or in any way appertaining and subject to any
restrictions, easements and encroachments and to any zoning ordinances,
laws, rules or regulations of any Public Authority, now or hereafter in
effect, relating to or affecting the Demised Premises.
The Demised Premises are commonly known as 1131 West Fairmont, Tempe,
Arizona 85282.
SEC. 102:1. BUILDING FIXTURES AND EQUIPMENT. All fixtures, machinery
and equipment which are necessary to the general operation and maintenance
of the Demised Premises, shall be the property of Landlord, whether owned by
Landlord at the commencement of the term, subsequently purchased by
Landlord, or purchased by Tenant in accordance with the provisions of this
Lease. Without in any way limiting the generality of the foregoing, all
electric power panels, lighting fixtures, plumbing, heating and air-
conditioning equipment shall be considered necessary to the general
operation and maintenance of the Demised Premises.
SEC. 102:2. TRADE FIXTURES. Only those trade fixtures, machinery, non-
structural partitions and other equipment which are supplied, installed and
used by Tenant in the conduct of its business, including process machinery
and equipment, process piping and process electric switch gear (other than
building equipment), which may hereafter be installed therein, shall be the
property of Tenant and may be removed by Tenant at any time prior to or upon
termination of the Lease, whether by lapse of time or otherwise; provided
Tenant is not, at any such time, in default of any of the terms or
conditions of this Lease. Tenant shall remove, on demand by Landlord and at
Tenant's expense, any and all such items at the termination of the Lease
term, whether by lapse of time or otherwise, and repair any damage caused by
such removal, restoring the Demised Premises to their condition prior to the
installation of all such items or any of them.
SEC. 103. "DEMISED PREMISES" and "IMPROVEMENTS" DEFINED. "Demised
Premises" shall mean the real estate described in Exhibit "A" and shall
include any and all Improvements, now or hereafter, located or constructed
thereon. "Improvements" shall mean all buildings and all other
improvements, (except for Tenant's trade fixtures) now or hereafter located
or constructed on the Demised Premises, including, without limitation, the
Building, fixtures, other structures and equipment on such premises which
are the property of Landlord as above described in Sec. 102: 1.
ARTICLE 2
TERM, POSSESSION:
SEC. 201. TERM. Promptly after execution and delivery of counterparts
of this Lease by both parties and payment of the first month's rent and
Security Deposit to Landlord, Landlord will promptly commence and diligently
prosecute to Substantial Completion (as hereinafter defined) the work
("Landlord's Work"), at Landlord!s sole cost and expense, in a good and
workmanlike manner, as described in those certain plans and specifications
prepared by Fulton Architects, 7633 E. Acoma Suite 206B, Scottsdale, AZ.
85260 and attached hereto as Exhibit B.
"Substantial Completion" shall mean the date certified in writing by
Fulton Architects that Landlord's Work is substantially complete, in
accordance with Exhibit B.
The term of this Lease ("Term") shall be for a period of Ten (10) years
commencing upon the date of Substantial Completion ("Commencement Date") and
ending at 11:59 P.M. (local time at the Demised Premises) on the day
immediately preceding the tenth anniversary date of the Commencement Date
("Termination Date"), subject to the further provisions of this Lease.
SEC. 202. HOLD-OVER TENANCY. In the event Tenant remains in possession
of the Demised Premises after the expiration of the term of this Lease, or
any extension hereof, without written consent of Landlord, Tenant shall then
be obligated to pay double the rate of the then current annual rent as set
forth herein, in equal installments on the first day of each calendar month,
for so long as Landlord is willfully kept out of possession of the Demised
Premises. No such payment, nor the acceptance thereof, shall in any way
constitute a waiver of the rights of Landlord to dispossess Tenant and
recover possession of the Demised Premises and the just and former estate of
Landlord and to bring any action for damages suffered by Landlord on account
of Tenant's failure to vacate the Premises.
ARTICLE 3
RENTAL:
SEC. 301. RENTAL. Tenant hereby covenants and agrees with Landlord to
take and accept said demise and lease of the Demised Premises on the terms
as herein set forth and to pay throughout the Term to Landlord or such other
person as Landlord may direct in writing the annual sums (" Annual Net Basic
Rent") in equal monthly installments ("Monthly Net Basic Rent") as follows:
Monthly Net Annual Net
Lease Year Basic Rent Basic Rent
Years 1-3 $9,200.00 $110,400.00
Years 4-6 $10,275.00 $123,300.00
Years 7-9 $11,600.00 $139,200.00
Year 10 $13,000.00 $156,000.00
The term "Lease Year" shall mean each twelve (12) month period throughout
the Term of this Lease beginning with the Commencement Date. The Annual Net
Basic Rent during each Lease Year shall be paid by Tenant to Landlord in
monthly installments in advance on the first day of each calendar month of
the Term, except that Tenant shall pay the first such monthly installment
upon the execution hereof subject to adjustment as hereinafter set forth.
All such rent shall be paid in lawful money of the United States of America
(either in cash, wire transfer or corporate check of Tenant, which rent
shall be deemed paid upon receipt of such check unless such check is
subsequently dishonored), without any set-off or deduction whatsoever. Time
is of the essence of this Lease. In the event the Term commences on a day
other than the first day of a calendar month, then upon the Commencement
Date, Tenant shall pay to Landlord as rental for the period from the
Commencement Date to the first day of the next succeeding calendar month
that proportion of said monthly rental which the number of days between the
Commencement Date and the first day of said next succeeding calendar month
bears to 30. In the event the Term ends on a day other than the last day of
a calendar month, then upon the first day of the last calendar month of the
Term, Tenant shall pay to Landlord as rental for the period from said first
day of the last calendar month to and including the last day of the Term
that proportion of the monthly rental which the number of days between said
first day of said last calendar month and the last day of the Term bears to
30.
It is intended that the rent provided for in this Lease shall be an
absolutely net return to Landlord for the term of this Lease, and any
renewals or extensions thereof, free of any and all expenses or charges with
respect to the Demised Premises including, without limitation, any Taxes and
assessments, now or hereafter imposed upon or related to the Demised
Premises, commonly known as real estate taxes, general or special or
improvement assessments, and any taxes and assessments, whether by way of an
income tax or otherwise which may be levied, assessed or imposed by the
State in which the Demised Premises are located, or by any political or
taxing subdivision thereof, upon the income arising from the rents provided
herein in lieu of or as a substitute for taxes or assessments imposed upon
or related to the Demised Premises and commonly known as real estate taxes;
and that Tenant, and not Landlord, shall be required to, and shall pay, such
taxes and assessments, but not to pay any other income tax which may be
levied against Landlord.
Tenant hereby acknowledges that late payment by Tenant to Landlord of
rent and other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include but are not limited to,
processing and accounting charges and late charges which may be imposed on
Landlord by the terms of any mortgage or trust deed covering the Demised
Premises. Accordingly, if any installment of rent or any other payment due
from Tenant shall not be received by Landlord within Ten (10) days after
such amount shall be due, Tenant shall pay to Landlord in addition to the
amount due, a late charge equal to Eight Percent (8%) of such overdue
amount. The parties hereto hereby agree that such late charge by Landlord
is a fair and reasonable estimate of the costs Landlord will incur by reason
of any such late payment. Such late charge is deemed to be only one of
several cumulative remedies available to Landlord hereunder and acceptance
of such late charge by Landlord shall in no event constitute a waiver of
Tenant's default with respect to such overdue amount nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder.
ARTICLE 4
TAXES, ASSESSMENTS, UTILITY CHARGES,
INSPECTION FEES AND LIENS:
SEC. 40 1. TAXES, ASSESSMENTS. Tenant shall pay as additional rent,
during the full term hereof, all taxes; including, without limitation, ad
valorem general real estate taxes, installments of assessments, general and
special, and all other public charges levied upon or assessed against the
Demised Premises, or any part thereof, or arising by reason of the
existence, occupancy, use or possession of the Demised Premises, or the
business carried on therein, including, without limitation, the Arizona
Rental Income Tax, all of which are hereinafter, collectively referred to as
("Taxes").
Tenant shall pay to Landlord, contemporaneously with the monthly rent
payments One Twelfth (1/12th) of the estimated annual Taxes, such estimate
to be made by Landlord. Upon receipt of the real estate tax bills each year
Landlord will make payment thereof prior to delinquency and promptly provide
Tenant with a copy of the tax bill.
Adjustments of amounts (credit or debit) shall be made between the
parties within thirty (30) days of the receipt by Landlord, of any such
bill. All Taxes shall be prorated for the first and last years of the term
hereof and any extension or renewal thereof. Proration with respect to the
Taxes for the last year of the term shall be made on the basis of the last
available tax bill, provided, however, that upon receipt of the tax bill an
appropriate adjustment shall be made.
SEC. 402. UTILITY CHARGES. Tenant shall secure service and pay all
charges for water, electricity, gas, telephone and any and all other utility
services furnished to the Demised Premises.
Landlord, the Public Authorities and the Utilities servicing or located
on the Demised Premises shall, at all reasonable hours, by its or their
agents or employees, have the right to install, repair and replace the
utility conduits, meters and other facilities located on the Demised
Premises; it being understood and agreed, however, that Landlord shall not
be liable for the care, upkeep or maintenance of such facilities.
SEC. 403. LICENSES, PERMITS AND FEES. All licenses, permits and fees
of any kind or character whatsoever, imposed on the Demised Premises or the
use and operation thereof by the City, County, State or Federal Government,
or any other governmental unit or Public Authority or for inspection of the
Demised Premises, or any part thereof during the term hereof, shall be paid
promptly by Tenant prior to delinquency.
SEC. 404. MECHANIC'S LIENS. Tenant agrees to keep the Demised Premises
and the Building free from any liens arising out of any work performed on
the Demised Premises or materials furnished to the Demised Premises (except
work performed or materials furnished by or at the request of Landlord).
Landlord may, at any time and in accordance with applicable law, post
notices of non-responsibility on the Demised Premises and record verified
copies of those notices in connection with all work of any kind upon the
Demised Premises.
The parties hereto agree, and notice is hereby given, that Tenant is not
the agent of Landlord for the construction, alteration or repair of any
improvements on the Demised Premises, the same being at the sole direction
and expense of Tenant, except for the construction of the Building pursuant
to Section 201 hereof. All contractors, materialmen, mechanics, and
laborers are hereby charged with notice that they must look only to Tenant
for the payment of any charge for work done or material furnished on the
Demised Premises during the term of this Lease (except work performed or
materials furnished by or at the request of Landlord). Tenant shall have no
right, authority or power to bind Landlord or any interest of Landlord for
the payment of any claim for labor or material, or for any charge or
expense, incurred by Tenant as to improvements, alterations or repairs on or
to the Demised Premises, and Tenant shall post notices on the Demised
Premises during all construction work of any nature whatsoever that Landlord
is not responsible for any material and labor used on the Demised Premises,
except for the construction of the Building pursuant to Section 201 hereof.
Tenant shall hold harmless and indemnify Landlord from and against all
costs, expenses and liabilities from any mechanics', laborers' or
materialmen's liens which may be filed against the Demised Premises arising
out of Tenant's use or occupancy of the Demised Premises.
In the event of any such lien attaching to the Demised Premises, Tenant
will promptly notify Landlord of such event and Tenant will pay off the same
and have such lien released of record within forty-five (45) days of the
filing of such lien of record.
SEC. 405. PAYMENT BY LANDLORD. If at any time, any tax, assessment,
charge, rate, fee or inspection fee, generally or specifically charged or
assessed against said Demised Premises shall become due or payable and
Tenant shall not pay the same, or, in the event any lien for labor or
material shall not be released of record by Tenant within forty-five (45)
days of the filing of such lien of record (other than a lien for labor
performed or materials furnished by or at the request of Landlord), Landlord
may, at its option, pay the same at any time thereafter without inquiring
into the validity thereof, and the amount of any and all such payments so
made by Landlord (with interest thereon at Fifteen Percent (15 %) per annum
from and after the date any such payment was due and payable by Tenant)
shall be and hereby is declared to be so much additional and further rent
for the Demised Premises, due from and payable by Tenant with the next
installment of rent and may be collected in the same manner as other rents
due hereunder; provided, however, that subject to the further provisions
hereinafter set forth, Tenant shall have the right, at Tenant's expense, to
contest in good faith the validity of any Taxes, assessments, charges,
liens, rates or fees so specifically charged or assessed against the Demised
Premises; provided, however, that Tenant notifies Landlord in writing of
Tenant's intention to so contest within Thirty (30) days in advance of the
date such Taxes, assessments, charges, liens, rates or fees charged or
assessed against the Demised Premises were due and payable; and further
provided that such contest is commenced within Thirty (30) days of the date
of such notice.
SEC. 406. CONTEST. In the event Tenant desires to contest any Taxes,
assessments, charges, liens, rates or fees herein provided, it shall do so
by paying the amounts under protest, or shall provide for the payment
thereof, together with all penalties, interest, costs and expenses, by the
deposit of a sufficient sum of money to be held in escrow by Landlord or, at
the option of Landlord, by a good and sufficient undertaking as may be
required or permitted by law, all to the end that no delinquency or
proceedings based upon delinquency shall in anyway affect the title or
interest of Landlord in the Demised Premises.
Tenant agrees that it will prosecute any such contest with due diligence
and in the event any such contest be adjudicated adversely to Tenant, that
Tenant will, within Thirty (30) days after final determination, or within
the time provided for in such adjudication, whichever is sooner thereof, pay
the full amount of any such Taxes, assessments, charges, liens, rates or
fees, or other obligations which may have been the subject of such contest
as so therewith and satisfy and cause the release of the same of record.
Tenant shall keep Landlord notified, from time to time throughout the
period of its pendency, as to the progress and status of any such contest.
If a final determination is not had within Three (3) years from the date of
instituting any such contest, or in the event of any default of Tenant,
pursuant to the terms of this Lease, Landlord at its option, may pay out of
any funds held in escrow any such Taxes, assessments, charges, liens, rates
or fees which may be under contest, together with all penalties, interest
charges and other expenses whatever in connection with such contest and
Tenant shall immediately upon written demand from Landlord. terminate any
such contest.
In the event the funds so held are insufficient to pay and satisfy the
same, Landlord, at its option, may pay any deficiency and any amount so paid
will be reimbursed by Tenant as additional rent due hereunder, promptly upon
demand, notwithstanding any previous termination of the term of this Lease
by lapse of time or otherwise, with interest at Fifteen Percent (15%) per
annum from the date of expenditure by Landlord.
Nothing contained in this agreement shall be construed to authorize
Tenant to create or incur on behalf of Landlord any liability, indebtedness
or obligation whatsoever. Anything herein to the contrary, notwithstanding,
Tenant shall defend, completely indemnify and hold Landlord forever harmless
from any and all consequences of any such Taxes, assessments, charges,
liens, rates or fees, or any contest thereof which were the obligations of
Tenant to pay hereunder.
ARTICLE 5
INSURANCE:
SEC. 501. PROPERTY INSURANCE. Tenant covenants and agrees that
immediately upon the commencement of the term hereof, Tenant will cause, at
Tenant's expense, the Building and Improvements placed on the Demised
Premises by Landlord, including any and all additions thereto, to be insured
for full replacement cost against loss or damage by fire, lightning and
other casualty covered by the provisions of endorsements for Extended
Coverage and Special Extended Coverage or All Risk Coverage, to include the
peril of collapse, vandalism and malicious mischief, replacement cost, and
will keep insurance to the full replacement value, from time to time, of the
Building and Improvements placed on said Demised Premises by Landlord,
including any and all additions thereto, in full force and effect during the
term hereof so long as this Lease is in effect, including all extensions
hereof, and naming Landlord as a loss payee and Landlord!s mortgage as
mortgagee and a loss payee.
No such policy of insurance shall include either the contents of the
Building located on the Demised Premises or any other property of Tenant or
any third party except as a separate stated item of insurance, separate and
in addition to the coverage which shall apply exclusively to Landlord!s
Building and other Improvements owned by Landlord. All such policies shall
provide that Landlord and any mortgagee(s) shall be the insureds as their
interests appear, and shall further provide that any loss shall be payable
to Landlord and any mortgagee(s) notwithstanding any act or omission of
Tenant which might otherwise result in a forfeiture or reduction of said
insurance.
In addition, Tenant shall maintain steam boiler insurance in such
amounts as Landlord may from time to time reasonably require on all steam
boilers, pressure boilers or such apparatus as Landlord may reasonably deem
necessary to be covered by such insurance, if any.
Tenant will not place, nor permit to be placed, any other policies of
insurance upon the Building or other Improvements placed upon Demised
Premises by Landlord without advance written permission of Landlord and
without Landlord and Landlord!s Mortgagee(s) as a named insured.
SEC. 502. GENERAL LIABILITY INSURANCE. Tenant, at Tenant's expense,
and for mutual benefit of Landlord any Mortgagee(s) and Tenant, shall
maintain Commercial General Liability Insurance, covering the Demised
Premises in an amount not less than One Million Dollars ($1,000,000),
combined single limit. Such insurance shall include, but not be limited to,
the following coverages: premises/operations, independent contractors,
personal injury, broad form property damage and contractual liability and
shall name Landlord and Landlord's mortgagee as additional insureds.
SEC. 503. INSURANCE GENERALLY. All insurance policies shall be with
companies mutually satisfactory to Landlord and Tenant and shall provide for
at least Thirty (30) days mandatory advance written notice to Landlord
before cancellation, reduction or other amendment and the property policies
shall contain a standard mortgage clause. Certificates evidencing such
insurance shall be delivered by Tenant to Landlord at the commencement of
the term of this Lease and all subsequent amendments and endorsements shall
be promptly delivered to Landlord. Statements for premiums on such policies
shall be sent to and paid by Tenant.
In the event Tenant shall refuse or fail to provide the insurance
coverage herein required or to provide evidence of such coverage as herein
described, Landlord may, at its election, but with no obligation so to do,
procure and, from time to time, renew such insurance and all amounts
expended therefor with interest thereon at Fifteen Percent (15%) per annum
from the respective dates of such expenditures shall be so much additional
rent hereunder due from Tenant on demand.
Tenant agrees to indemnify Landlord for any loss suffered as the result
of the exercise of any deductible feature that may be incorporated in the
insurance contract and Landlord hereby reserves the right to disapprove the
amount and provisions of any such deductible feature. Tenant agrees to be
a self insurer as to such deductible amounts and further agrees to pay such
amounts to Landlord in the same manner as though such insurance policies did
not contain deductible provisions.
ARTICLE 6
USE MAINTENANCE AND CONDITION OF
THE DEMISED PREMISES:
SEC. 601. DEMISED PREMISES. Tenant shall not breach or suffer the
breach of any of the conditions, agreements and restrictions of record
affecting the Demised Premises and shall defend, completely indemnify and
hold Landlord forever harmless from all consequences of any such breach.
Tenant may use and occupy the Demised Premises for electronics substrate
materials manufacturing, related test/support activities, and for offices in
connection therewith; provided, however, that Tenant shall strictly comply
with all present and future laws, ordinances and regulations of public
authorities, as well as all insurance underwriting and inspection and rating
requirements, now or hereafter in any manner affecting the use of the
Demised Premises, the sidewalks, alleys, driveways and parkways adjacent
thereto, if any, or any building thereon, or the use thereof, provided,
however, that Tenant shall have no liability for any such compliance if such
compliance is in no way related to Tenant's use or occupancy of the Demised
Premises. Tenant shall not permit any unlawful occupation, business, trade
or nuisance to be conducted on the Demised Premises, or any use to be made
thereof contrary to any law, ordinance or regulation. The storage of any
material or equipment of any kind or character outside the Building(s)
located on the Demised Premises shall comply with applicable codes and
regulations.
Tenant will not use or permit to be used upon or in said Demised
Premises or any Building thereon anything that will invalidate any policy of
insurance at any time insuring the Demised Premises, or any Building(s) or
Improvements thereon, nor shall Tenant permit any dangerous condition to
exist on the Demised Premises.
Tenant shall not cause or suffer any signs to be erected upon the
Demised Premises, nor upon any Building(s) or Improvements located thereon
without the prior written approval of Landlord, which shall not be
unreasonably withheld.
Anything herein to the contrary, notwithstanding, Tenant shall not at
any time overload any structural member (including, by way of illustration
and not limitation, all roofs, columns, walls, beams, trusses and floors) of
the Building located on the Demised Premises; nor shall Tenant cause or
suffer the demolition of the Building(s) or Improvements, or any part(s)
thereof without the prior written approval of Landlord.
Tenant further covenants and agrees that the entry into occupancy of the
Demised Premises by Tenant shall constitute an acknowledgment that the same
and the Building(s) and Improvements thereon have been received by Tenant in
first-class condition and repair. Landlord warrants the following against
defects in material and workmanship for the periods set forth: roof, two
years; paving, structural components, mechanical systems, air conditioning
and electrical systems, one year; landscaping, ninety days; and plumbing,
one year (provided however, that drains on the Demised Premises are
warranted to be free flowing only on the Commencement Date). Tenant shall
not be deemed to have accepted those latent defects in the structure of the
Building, or in the electrical, plumbing, heating or air conditioning
systems of the Building, which would not be discoverable upon a reasonable
"walk-through" inspection of the Demised Premises, except that it shall be
conclusively presumed as against Tenant that the Demised Premises is in
first-class order and satisfactory condition with regard to such latent
defects unless such latent defects are described on a "punch list" prepared,
and agreed upon, by Tenant and Landlord within 60 days after the
commencement of the term of this Lease. Landlord agrees to promptly
commence and diligently prosecute to completion all such "punch list" items
in a good and workmanlike manner. Except as provided in this paragraph,
Tenant agrees that upon Tenant's occupancy of the Demised Premises, Tenant
is taking the Demised Premises in "AS IS" condition.
SEC. 602. MAINTENANCE. During the term of this Lease and any
extensions thereof, Tenant shall maintain and preserve the Demised Premises,
including, without limitation, the interior and exterior of the Building
thereon in first-class and clean condition making all repairs, replacements
and restorations necessary for such maintenance and preservation: including,
without limitation, tuckpointing, painting, glass replacement, glazing,
caulking and the repair, replacement and restoration of docks, landscaping
and, parking areas. All repairs, replacements and restorations shall be in
quality at least equal to the original construction.
At the termination of this Lease, by lapse of time or otherwise, Tenant
shall deliver the Demised Premises to Landlord in first-class condition and
repair as obtained therein at the commencement of the term of this Lease
subject, however, to ordinary wear and tear and to the loss or damage due to
any casualty to the extent actually recovered by Landlord under insurance
policies to be obtained and maintained by Tenant as herein set forth.
Anything herein to the contrary, notwithstanding, Tenant will not suffer any
waste to occur on the Demised Premises and will make every reasonable effort
to prevent the Demised Premises from falling into disrepair; including,
without limitation, the prompt performance of all repair, replacement and
restoration obligations of Tenant as herein set forth.
SEC. 603. ALTERATIONS. Tenant shall make no alterations to the Demised
Premises without prior written approval of Landlord which shall not be
unreasonably withheld. Tenant shall remove, on demand by Landlord and at
Tenant's expense, any and all alterations made by Tenant at the termination
of this Lease, whether by lapse of time or otherwise, and shall repair any
damage caused by such removal, restoring the Demised Premises to their
condition prior to the making of any such alteration(s), or any of them.
Any and all alterations, additions and improvements made to or placed
upon the Demised Premises by Tenant, or suffered by Tenant to be made to or
placed upon the Demised Premises, as well as all fixtures and articles of
personal property attached to or made a part of the Demised Premises, which
Tenant has not been required to remove by Landlord, shall immediately become
the property of Landlord at the termination of this Lease and shall be
surrendered to Landlord.
Subject to the provisions hereinabove set forth, Tenant may expend such
additional sums of money upon the Demised Premises, the Building and
Improvements on said Demised Premises as Tenant may desire, with the full
understanding that such additional sums so paid shall not be deducted from
or set off against any rents or other payments due hereunder.
SEC. 604. LANDLORD'S RIGHT TO INSPECT AND REPAIR. Landlord, its agents
and employees shall have the right, at any reasonable time, to enter upon
the Demised Premises to inspect the same. In the event Tenant fails to
commence such repairs, replacements or restorations as are necessary to
maintain the Demised Premises in first-class condition, within Thirty (30)
days after notice from Landlord or fails to diligently prosecute the same to
completion, Landlord, at its option, but without any obligation so to do,
may make such repairs, replacements, or restorations, and amounts expended
for such work by Landlord shall be reimbursed by Tenant as additional rent
due hereunder, promptly on demand, together with interest at Fifteen Percent
(15%) per annum from date of expenditure.
Anything herein to the contrary, notwithstanding, Landlord shall have
the right, at any time, to enter upon the Demised Premises, but without any
obligation so to do, in order to effect any repair, replacement or
restoration of an emergency nature and Tenant shall reimburse Landlord as
additional rent due hereunder, promptly upon demand, for reasonable
expenditures incurred for such work and if Tenant denies Landlord such
access, Tenant agrees to defend, indemnify and hold forever harmless
Landlord from and against any and all liability, fines, suits, claims,
demands, actions, causes of action, losses, costs, damages, judgments and
expenses of any kind or character, name or nature due to or arising directly
or indirectly out of such emergency.
ARTICLE 7
INDEMNIFICATION AND HOLDING
HARMLESS OF LANDLORD:
SEC. 701. INDEMNIFICATION. To the extent permitted by law, Tenant
shall defend, completely indemnify and hold forever harmless Landlord from
and against any and all liability, fines, suits, claims, demands, actions,
causes of action, losses, costs, damages, judgments and expenses of any kind
or character, name or nature, due to or arising out of:
(a) Any breach, violation or non-performance of any covenant,
obligation, condition or agreement in this Lease set forth and contained
on the part of Tenant to be fulfilled, kept, observed or performed;
and/or
(b) any damage to, loss or destruction of any property arising
directly or indirectly out of Tenant's use and occupancy of the Demised
Premises; and/or
(c) any injury to any person, including death resulting at any
time therefrom, occurring in the Demised Premises, or any injury to any
agent or business invitee of Tenant, including death resulting at any
time therefrom occurring on or about the Demised Premises, or any injury
to any person, including death resulting at any time therefrom wherever
occurring when such injury or death was proximately caused by Tenant's
negligence or intentional act or omission.
In the event Landlord is made a party to any action or proceeding which
Tenant is required to defend pursuant to the provisions of this Lease,
Landlord shall have the right to appear and to take part in any such action
or proceeding by legal counsel of Landlord's choice, at Tenant's sole cost
and expense, but Tenant shall not be obligated to pay any such cost or
expense for the legal counsel of Landlord's choice, unless such cost or
expense is covered by Tenant's commercial general liability insurance.
Tenant shall also completely indemnify Landlord as to all costs and
expenses incurred to enforce any of the terms, provisions, conditions or
covenants of this Lease; including, but not limited to, attorney's fees.
SEC. 702. LOSS OF PROPERTY. Anything in this Lease to the contrary
notwithstanding Tenant agrees that under no circumstances shall Landlord be
liable to Tenant or to any third party for any loss of, destruction of,
damage to or shortage of any property; including, by way of illustration and
not limitation, equipment or inventory placed on the Demised Premises or
suffered to be placed thereon by Tenant, it being the intention of the
parties hereto that the risk of any and all such loss, destruction, damage
or shortage shall be borne by Tenant and Tenant agrees to defend, completely
indemnify and hold Landlord forever harmless from and against any and all
liability, suits, claims, demands, actions causes of action, losses, costs,
damages, judgments and expenses if any arising out of such loss,
destruction, damage or shortage.
ARTICLE 8
DAMAGE OR DESTRUCTION
OF BUILDINGS:
SEC. 801. DAMAGE OR DESTRUCTION OF BUILDINGS. If any Building or
Improvements placed by Landlord on the Demised Premises shall be injured or
destroyed by fire or other casualty insured against by endorsement for
extended coverage and special extended coverage, Landlord will, with due
diligence and dispatch, proceed to collect the insurance thereon and if
Landlord elects to repair or restore such Building, Landlord will apply the
insurance monies derived from said policies to such repair and restoration
and shall promptly commence and diligently prosecute to substantial
completion such repair and restoration work.
In the event that the monies realized from the insurance policies shall
not be sufficient to restore such Building and/or Improvements to their
condition immediately prior to such fire or other such casualty, Landlord
may, at the option of Landlord, advance the additional funds necessary
therefor, and to the extent that the insufficiency of the insurance proceeds
was due to the failure of Tenant to comply with the provisions of this Lease
and to the extent of any deductible feature in the insurance coverage to be
provided by Tenant, Tenant covenants and agrees to repay any such advance to
Landlord as additional rent due hereunder, promptly upon demand, with
interest at the rate of Fifteen Percent (151/o) per annum from the date of
such expenditure.
In the event Landlord does not elect to repair or restore such Building
and/or Improvements within Thirty (30) days after such a casualty, such
election to be evidenced by written notice to Tenant within said time
period, then in such event this Lease and the term hereof, may be terminated
and canceled at the election of either party hereto, provided written notice
is given to the other party within Ten (10) days after the expiration of the
last aforementioned such Thirty (30) day period. Absent such timely notice
this Lease shall remain in full force and effect.
ARTICLE 9
RENT ABATEMENT
BECAUSE OF DAMAGE:
SEC. 901. RENT ABATEMENT BECAUSE OF DAMAGE. In the event the Building
and/or Improvements on the Demised Premises shall be damaged by fire or
other casualty covered by the provisions of the insurance policies then in
effect as provided for herein, Tenant shall not be required to pay rent on
any portion of said Building not susceptible to occupancy for the uses set
forth herein and the rental reserved hereunder shall be reduced to the
proportion that the square foot area of the Building remaining susceptible
to occupancy for the uses set forth herein tenantable bears to the total
square foot area of the Building. Such rental shall be increased pro rata,
from time to time, if and when additional areas of the Building are returned
to tenantable condition.
ARTICLE 10
CONDEMNATION:
SEC. 1001. AWARD. In the event the Demised Premises, or any part
thereof, shall be condemned or taken for a public or a quasi-public use, or
is sold by Landlord under threat of condemnation, any award made or sales
price paid to compensate for the value of the Demised Premises, Building(s)
and Improvements thereon, or for damages to the remainder thereof shall be
paid to Landlord and Tenant shall have no claim thereto and Tenant hereby
irrevocably assigns and transfers to Landlord any right to any such
compensation or damage awards, providing, however, that Tenant shall have
the right to prove in the proceeding and to receive any award which may be
made for damages for or condemnation of Tenant's movable trade fixtures and
equipment and relocation costs.
In the event any or all of the Demised Premises shall be so condemned or
taken, Tenant shall execute and deliver to Landlord, promptly on demand, all
documents necessary and proper to evidence the termination of the interest
of Tenant in and to the Demised Premises and this Lease, including, without
limitation, a recordable release and cancellation of this Lease and a quit
claim deed. The failure of Tenant to so execute and deliver such documents
shall in no way affect such termination of this Lease and the interest of
Tenant in and to the Demised Premises.
SEC. 1002. REMAINDER SUSCEPTIBLE OF OCCUPANCY. In the event a part of
the Demised Premises remains which is susceptible of occupation for the uses
set forth herein, this Lease shall, as to the part so taken, terminate as of
the date title shall vest in the condemning authority and the rent payable
hereunder shall be adjusted so that Tenant shall be required to pay for the
remainder of the term only such fractional portion of such rent as the area
of the part of the building located on the Demised Premises remaining after
condemnation bears to the area of said Building as of the date of
condemnation; but, in such event, either party hereto shall have the option
to terminate this Lease as of the date when title to the part so taken vests
in the condemning authority by written notice to the other party within
Thirty (30) days after the date on which the title so vests.
In the event either party hereto does not so terminate this Lease, this
Lease shall remain in full force and effect and Landlord shall promptly
commence and diligently prosecute to completion the restoration of the
Building so that it shall again constitute a complete architectural unit but
Tenant shall be required to pay only that fractional portion of the rent as
is provided for hereinabove in this SEC. 1002.
SEC. 1003. REMAINDER NOT SUSCEPTIBLE OF OCCUPANCY. Subject to the
further provisions of SEC. 1004 hereof, and in the event all of the Demised
Premises, or such part thereof be taken or condemned so that there does not
remain a portion susceptible for occupancy for the uses set forth herein,
this Lease shall terminate upon the date the title to the part taken vests
in the condemning authority and Tenant's obligation to pay rent or to
discharge any other obligation hereunder, other than the payment of money
then due and damages arising out of any breach of the covenants, conditions
or terms hereof by Tenant, shall cease.
SEC. 1004. LANDLORD'S RIGHT TO RESTORE. Anything herein to the
contrary, notwithstanding, in the event the Demised Premises are not
susceptible for occupancy for the uses set forth herein and in the further
event Landlord notifies Tenant, within Ten (10) days from the date the title
of any part so taken vested in the condemning authority, of Landlord's
intention to restore the Demised Premises to a condition susceptible of
occupancy for the uses set forth herein; and in the further event such
restoration is diligently prosecuted to completion and labor disputes,
material shortages, force majeure and other causes beyond Landlord's control
shall not be considered indiligence, this Lease shall remain in MI force and
effect; provided, however, that a rental adjustment shall be made
proportionate to any reduction in the area of the Building located on the
Demised Premises. Absent such timely notice, the provisions of SEC. 1003
shall control.
ARTICLE 11
DEFAULT, BANKRUPTCY:
SEC. 1101. DEFAULT, BANKRUPTCY. It is mutually agreed and understood
by and between the parties hereto that in the event during the term of this
Lease, regardless of the pendency of any bankruptcy, insolvency,
receivership or reorganization proceedings, in law, equity or before any
administrative tribunal, or any other governmental entity which has
prevented or which might prevent compliance by Tenant with the terms or
provisions of this Lease:
(1) Tenant shall default in the payment of any installment of
rent or other payment required to be made by Tenant pursuant to the
provisions of this lease and such default shall continue for Ten (10)
days; or
(2) Tenant shall default in the provisions of any of the
agreements, conditions, covenants or obligations hereunder to be kept,
fulfilled, observed or performed by Tenant and such default shall not be
cured within Thirty (30) days after notice of such default from Landlord
to Tenant;
Anything hereinabove to the contrary notwithstanding. as to
any such default except the payment of any rent or other monies reserved
herein, in the event Tenant shall, within said Thirty (30) day period,
commence the cure of such default and diligently pursue to completion
any such cure as soon as reasonably practicable, Landlord may not
declare the term ended and this Lease terminated and canceled; or
(3) if any voluntary petition or similar pleading under any
bankruptcy act or any federal or state law seeking reorganization or
arrangement with creditors or adjustment of debts is filed by or against
Tenant, or if any such petition or pleadings is involuntary and Tenant
is not discharged thereof within Thirty (30) days after the date of its
filing; or
(4) if Tenant admits its inability to pay its debts or if a
receiver, trustee or other appointee of a court, administrative tribunal
or other public authority is appointed for all or a substantial part of
Tenant's property and if such appointment is not vacated within Thirty
(30) days after being made; or
(5) if the leasehold interest of Tenant is levied upon or
attached by process of law, and such levy or attachment is not released
of record within Thirty (30) days; or
(6) if Tenant makes an assignment for the benefit of creditors,
or if any proceedings are filed by or against Tenant to declare Tenant
insolvent or unable to meet its debts and such proceedings are not
discharged within Thirty (30) days after the date of their filing; or
(7) if a receiver or similar type of appointment or court
appointee or nominee of any name or character is made for all or a
substantial part of Tenant's property and if such receiver is not
discharged within Thirty (30) days after appointment;
then, in any such event, Landlord shall have the right, at any time
thereafter, with or without notice to avail itself to any or all of the
following remedies, (a) to lock the doors of the Demised Premises and
exclude Tenant therefrom; (b) to retain or re-enter and take complete
possession of the Demised Premises pursuant to Landlord's statutory lien;
(c) to remove all persons and all of Tenants property therefrom; (d) to
terminate this Lease forthwith; (e) to sue for the rent due and to become
due under this Lease; (f) to sue for any damages sustained by Landlord
and/or (g) to keep this Lease in full force and effect reletting the Demised
Premises on such terms and conditions as Landlord may deem appropriate
without prejudicing Landlord's rights to recover past and future rents or
other obligations of Tenant hereunder.
Anything herein to the contrary, notwithstanding any payment of rent or
any other payment to be made by Tenant to Landlord, pursuant to the
provisions of this Lease, shall bear interest at the rate of Fifteen Percent
(15%) per annum from the date payment was due.
In the event the right, title and interest of Tenant in and to the
Demised Premises and this Lease is terminated, whether by lapse of time or
otherwise, Tenant shall execute and deliver to Landlord, promptly on demand,
all documents reasonably requested by Landlord to evidence such termination:
including, without limitations a recordable release and cancellation of this
Lease and a quit claim deed. The failure of Tenant to so execute and
deliver such documents shall in no way affect the termination of this Lease
and the interest of Tenant in and to the Demised Premises.
SEC. 1102. NO WAIVER. No waiver by Landlord of any default by Tenant
of any of the obligations, agreements, conditions or covenants on the part
of Tenant to be fulfilled, kept, observed or performed hereunder shall be a
waiver of any subsequent default or of any other obligation, agreement,
condition or covenant, nor shall any forbearance by Landlord to seek a
remedy for any default by Tenant be a waiver by Landlord of any of the
rights and remedies available to Landlord hereunder or by law granted or
permitted. with respect to such or any subsequent default.
ARTICLE 12
TRANSFER, ASSIGNMENT, SUBLEASE:
SEC. 1201. TRANSFER, ASSIGNMENT, SUBLEASE. Tenant may not assign,
transfer, mortgage or pledge this Lease or the interest of Tenant herein or
hereunder or sublet Demised Premises or any portion thereof, without, in
each case, the prior written consent of Landlord, which. shall not be
unreasonably withheld. Any purported assignment, mortgage, transfer, pledge
or sublease without the prior written consent of Landlord shall be
absolutely null and void and of no legal force or effect.
Notwithstanding anything contained herein to the contrary, Tenant shall
have the right to assign this Lease or sublet all or any portion of the
Demised Premises without the consent of Landlord if such assignment or
sublease is to an entity which controls, is controlled by, or is under
common control with Tenant, or which is the result of a merger or
consolidation with Tenant, or which acquires all or substantially all of
Tenant's assets. For purposes of this paragraph, in order for an entity to
control another, it must have voting control of and own at least fifty-one
percent (5 11/6) of every class of stock and/or other equity interest of the
other entity, in the case the other entity is a corporation; it must be the
owner of at least seventy-five percent (751/6) of the partnership interests
in the assets, liabilities, income, loss and distributions of the other
entity, in the case that the other entity is a partnership; it must be the
sole beneficiary of the other entity, in the case that the other entity is
a trust.
SEC. 1202. INCREASED RENT TO LANDLORD. As a condition precedent to the
approval of any sublease, assignment or any other type of transfer by Tenant
to any third party of all or a portion of its interest in and to the Demised
Premises pursuant to the provisions of this Lease, Tenant agrees that it
will pay to Landlord, contemporaneously with the rental payments due
hereunder, Fifty Percent (50%) of any increased economic benefit received by
Tenant, including, without limitation, rent in excess of the rent reserved
herein and in the event less than all of the Demised Premises are so
subleased, assigned or transferred in any way, Tenant shall pay to Landlord
Fifty Percent (50%) of any increase in the square foot rate of rent paid to
Tenant by any third party. Tenant shall also increase any security deposit
required hereunder to the amount of a full month's rent.
The rent that Tenant pays to Landlord for the purpose of this SEC. 1202
shall be calculated by dividing the monthly rent reserved herein by the
square foot area of the building located on the Demised Premises as stated
hereinabove.
SEC. 1203. MAINTENANCE, REPAIR, AND RESTORATION UPON ASSIGNMENT OR
SUBLETTING. As a condition precedent to Landlord's consent to any
assignment or subletting of this Lease or all or any part of the Demised
Premises Landlord may at it's sole discretion require Tenant to undertake
any deferred maintenance and to make all repairs and restorations which are
the obligations of Tenant under this Lease prior to the effective date of
any such assignment or sublease in the same fashion as could be required at
the expiration of this Lease Term.
SEC. 1204. LANDLORD MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Landlord
shall have the right to sell, mortgage, pledge, hypothecate or in any other
manner transfer or assign the interest of Landlord in the Demised Premises
and/or in the Lease, subject to all of the covenants and conditions of this
Lease. The term "Landlord", as used in this Lease, means only the owner for
the time being of the Demised Premises and in the event of any sale,
conveyance or other transfer of the Demised Premises, or the interest of
Landlord in the Demised Premises, subject to the provisions of Schedule 2
hereof, Landlord shall be and hereby is entirely freed of all covenants and
obligations of Landlord hereunder arising after the date of such sale,
transfer assignment or conveyance. This Lease shall not be affected by any
such sale and Tenant agrees to attorn to the purchaser or assignee.
SEC. 1205. SUBORDINATION. This Lease shall be subject and subordinate
to the lien of any mortgage or mortgages which at any time may be placed
upon the Demised Premises by Landlord, its successors or assigns, and to any
replacements, renewals or extensions thereof. Landlord shall use
commercially reasonable efforts to obtain the agreement of the holder of
such mortgage or mortgages to recognize Tenant's rights hereunder. Tenant
agrees, at any time hereafter, on demand, to execute and deliver any
instruments, releases or other documents that may be required for the
purpose of subjecting and subordinating this Lease to the lien of any such
mortgage or mortgages. Tenant hereby appoints Landlord the attorney-in-fact
of Tenant, irrevocably, to execute and deliver such instruments, releases or
other documents for and on behalf of Tenant, provided, however, Landlord
agrees that it shall exercise its power as Tenant's attorney-in-fact as
aforesaid only in the event that Tenant unreasonably withholds the delivery
of any such instruments, releases or documents for a period of time of 10
days after Landlord's request.
SEC. 1206. TENANT'S ESTOPPEL LETTER. Tenant agrees at any time and
from time to time upon not less than Ten (10) days prior written request by
Landlord to execute, acknowledge and deliver to Landlord a statement in
writing certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications that the same is in full force
and effect as modified and stating the modifications), and the dates to
which the basic rent and other charges have been paid in advance, if any,
and all of the defaults of Landlord hereunder, if any, it being intended
that any such statement delivered pursuant to this Section may be relied
upon by any prospective purchaser of the fee or mortgagee or assignee of any
mortgage upon the fee of the Demised Premises.
ARTICLE 13
MISCELLANEOUS:
SEC. 1301. NOTICES. Any notice provided for herein shall be given by
registered or certified mail addressed, if to Landlord, as follows:
CMD SOUTHWEST INC.
3225 S. Hardy Drive, Suite 105A
Tempe, Arizona 85282
with a copy to:
CMD SOUTHWEST INC.
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Attention: General Counsel
and if to Tenant, as follows:
Nelco Technology, Inc.
1104 W. Geneva
Tempe, Arizona 85282
with a copy to:
Nelco International Corporation
2401 E. Katella, Suite 370
Anaheim. California 92806
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
SEC. 1302. CHANGE OF ADDRESS. The person and places to which notices
or payments are to be mailed may be changed, from time to time, by Landlord
or Tenant upon written notice to the other.
SEC. 1303. MODIFICATION. This Lease may be modified only by written
agreement signed by Landlord and Tenant.
SEC. 1304. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience in reference only and do not
constitute a part of this Agreement.
SEC. 1305. SUCCESSORS AND ASSIGNS. This Lease and the covenants,
terms, conditions and provisions hereof, shall be binding upon the
respective parties hereto and upon their respective successors, assigns and
personal representatives and shall inure to the benefit of said respective
parties hereto and their said respective successors, assigns and personal
representatives.
Wherever in this Lease a reference to any of the parties hereto is made,
such reference shall be deemed to include, wherever applicable and even
though not expressly stated, also a reference to the successors, assigns and
personal representatives of such party, as the case may be, the same as if
in every case expressly stated.
The phrase "successors and assigns" is used in this Lease in its
broadest possible meaning and includes, in addition to administrators,
trustees and conservators; every person, firm, corporation or other entity
succeeding to the interest in or to this Lease, or any part thereof, or in
or to any real estate, or any part or portion thereof, described or referred
to herein or any part hereto, or of any of the successors or assigns of any
such party, whether such succession results from the act of a party in
interest, occurs by operation of law or is the effect of the operation of
law together with any act(s) of any such party or parties.
SEC. 1306. ENTRY TO SHOW PREMISES. Landlord, its agents or assigns
may, from time to time, during the term of this Lease, and each and every
extension hereof, enter the Demised Premises at reasonable times to show the
same to prospective buyers or tenants.
During the last Six (6) months of the term of this Lease or after the
occurrence of any default on the part of Tenant hereunder, Landlord hereby
reserves the right to enter the Demised Premises and to place, on the outer
walls or roof of any building(s) located thereon and upon any part of the
Demised Premises, outside such building(s), "For Sale" and/or "For Rent"
signs of a type similar to those used in the area. Tenant agrees not to
remove, interfere with, or obstruct the view of any such sign(s).
SEC. 1307. TIME OF ESSENCE. Time is of the essence of this Lease and
in all of the conditions, obligations, agreements, provisions. terms and
covenants hereof.
SEC. 1308. RESOLUTION. Tenant shall, contemporaneously with the
execution and delivery of this Lease, also deliver to Landlord a copy of a
Resolution of the Board of Directors of Tenant, specifically authorizing
those of Tenant's officers whose names are subscribed hereto to enter into
this Lease Agreement with Landlord named herein. Such Resolution shall make
reference to this Lease, the Demised Premises, lease term and rental
reserved, shall be duly certified to by the Secretary of said Board of
Directors and shall be appended hereto as Schedule 1.
SEC. 1309. UNENFORCEABILITY. In the event any covenant, term,
provision, obligation, agreement or condition of this Lease is held to be
unenforceable at law it is mutually agreed and understood, by and between
the parties hereto, that the other covenants, terms, provisions,
obligations, agreements and conditions herein contained shall remain in full
force and effect.
SEC. 1310. WAIVER OF TRIAL BY JURY. Each party hereto waives a trial
by jury of any or all issues arising in any action, or proceeding between
the parties hereto, or their successors arising out of, or in any way
connected with this Lease, or any of its provisions Tenant's use, or
occupancy of the Demised Premises and/or any claim of injury or damage.
SEC. 1311. GOVERNING LAW. This Lease and the rights of the parties
hereto shall be interpreted and determined in accordance with the laws of
Arizona.
SEC. 1312. ENTIRE AGREEMENT. This Lease contains the Entire Agreement
between the parties respecting the matters herein set forth and supersedes
all prior agreements between the parties hereto about such matters.
SEC. 1313. EXCULPATION. Neither of the partners, if Landlord is a
partnership, or if Landlord is a trustee of a trust, the beneficiaries of
such trust, nor the shareholders (nor any of the partners comprising same)
directors or officers of any of the foregoing (collectively, the "Parties")
shall be liable for the performance of Landlord's obligations under this
Lease. Tenant shall look solely to Landlord to enforce Landlord's
obligations hereunder and shall not seek any damages against the rest of the
Parties. The liability of Landlord for Landlord's obligations under this
Lease shall not exceed and shall be limited to the value of Landlord's
interest in the Site and Tenant shall not look to the property or assets of
any of the Parties in seeking either to enforce Landlord's obligations under
this Lease or to satisfy a judgment for Landlord's failure to perform such
obligation.
SEC. 1314. BROKERS. Landlord and Tenant each respectively represent
and warrant to the other that neither has employed the services of any real
estate broker or any similar agent for the purposes of processing this
Lease. In the event either party hereto has so employed any such broker or
agent, the party responsible for such employment shall indemnify, defend and
hold the other forever harmless from and against any commissions, fees,
brokerage or other compensation and for any claims for any such commissions,
fees, brokerage or other compensation arising out of this Lease, and/or such
employment.
SEC. 1315. EXHIBITS AND SCHEDULES. The following Exhibits and
Schedules are attached hereto and expressly made a part hereof, to wit:
Exhibit A Legal Description of Demised Premises
Exhibit B Plans and Specifications
Schedule I Tenant's Resolution
Schedule 2 Security Deposit
Schedule 3 Work to be Performed by Landlord
Schedule 4 Options to Extend
SEC. 1316. ADDITIONAL TERMS.
(a) On or before each anniversary of the date of this Lease, Tenant
shall deliver to Landlord upon Landlord's request written evidence
satisfactory to Landlord that the roof of the Building on the Demised
Premises has been serviced @y a roofing contractor licensed @y the State of
Arizona and satisfactory to Landlord.
(b) Tenant shall not store outside the building on the Demised
Premises any goods, materials, scraps, boxes, pallets, containers of all
types (except an ordinary refuse container needed for periodic refuse
disposal) and any other materials, equipment or items whatsoever unless such
items are entirely screened from street view and such storage complies with
any applicable regulations or laws.
(c) Tenant agrees to hire, at Tenant's sole cost and expense, a
professional landscape maintenance company and cause said company to
maintain the landscaping improvements to the Demised Premises weekly, in
good condition, for the term of this Lease.
(d) Notwithstanding anything contained in this Lease to the contrary:
Each party's obligations hereunder (except for the payment of rent or any
other sums to be paid pursuant to the terms of this Lease) shall be excused
to the extent that and during such time as such party is prevented from
discharging such obligations by acts of God, strikes, material shortages or
any other reason beyond such party's control; Tenant will not avail itself
of any remedy provided at law or in equity until Landlord fails to cure any
default on the part of Landlord within thirty days after its receipt of
written notice of such default from Tenant; and Landlord and Tenant agree
that in no event shall either party be liable to the other party for any
consequential or incidental damages.
(e) If Tenant is in default under the terms of that certain Lease
between CMD Southwest One and Tenant, dated March 14, 1988, for the lease of
the premises commonly known as II 17 W. Fairmont in Tempe, Arizona, such
default shall constitute a default under the terms and provisions of this
Lease, entitling Landlord to exercise any and all remedies available to
Landlord as provided herein, at Landlord's sole option.
IN WITNESS WHEREOF, said Landlord and Tenant have caused this instrument to
be executed by their respective duly authorized officers, all as of the day
and year first above written.
CMD SOUTHWEST INC., Landlord
By: /s/
Its: President
NELCO TECHNOLOGY, INC, Tenant
By: /a/Kevin Brumbaugh
Its: Vice President/General Manager
EXHIBIT A
LEGAL DESCRIPTION OF DEMISED PREMISES:
Lot 2 and 3 of Broadway Industrial Park Unit 4A as recorded in Book 228 of
Maps, Page 38, Maricopa County Records;
EXCEPT the East 162 feet of Lot 2 and Except the West 190 feet of Lot 3.
EXHIBIT B
To be appended.
Schedule I
Lease between CMD Southwest Inc. and Nelco Technology, Inc. for
1131 West Fairmont, Temps, Arizona
TENANT'S RESOLUTION
RESOLVED, that the Corporation should, and it hereby does, approve
that certain Lease by and between am Southwest Inc., an Arizona
corporation, as Lessor, and the Corporation, as Losses, for
approximately 58,247 square feet of land, together with a building
to be constructed thereon containing approximately 18,601 square
feet, located on a portion of Lots 2 and 3, Broadway Industrial
Park, Unit 4A, as recorded in Book 228 of Maps, page 38, Maricopa
County Records, Phoenix, Arizona, commonly known as 1131 West
Fairmont, Temps, Arizona 85282 for a period of tan years commencing
on substantial completion of the building at an annual net basic
rent of not more than $112, 800 for each of the first three years,
not more than $126, 000 for each of the fourth, fifth and sixth
years, not more than $142,200 for each of the seventh, eighth and
ninth years and not more than $160, 500 for the tenth year, plus
insurance, maintenance, utilities and real estates taxes, with
options to extend such lease for two additional five-year periods at
an annual net basic rent equal to the then prevailing market rate
during the first three years of the extension term, but not less
than $148,200, 115% of such rent during the next two years, the then
prevailing market rate during the next three years and 115% of such
rent during the final two years and with the prevailing market rate
to be determined by agreement of the Corporation and the landlord or
by the average of the two appraisals closest in value completed by
an appraiser appointed by. the Corporation, an appraiser appointed
by the landlord and an appraiser appointed by the other two
appraisers;
FURTHER RESOLVED, that E. Philip Smoot, President of the
Corporation, or Kevin Brumbaugh, Allen Levine or Lee H. Newton, Vice
Presidents of the Corporation, each acting alone hereby is
authorized to execute said Lease an behalf of the Corporation; and
FURTHER RESOLVED, that any officer of the Corporation be, and each
of them hereby is, authorized and directed to take such actions and
to do such things and to execute and deliver any and all such
letters, agreements, instruments and other documents in the name of
and on behalf of the Corporation and under its corporate seal
attested to by the Secretary where required, as any such officer may
deem necessary or desirable in order to carry out the purpose and
intent of the foregoing resolutions and all matters relating
thereto.
SCHEDULE 2
SECURITY DEPOSIT
Tenant has deposited the sum of Nine Thousand Five Hundred Dollars
($9,500) with Landlord as security for the full and faithful performance by
Tenant of the terms of this Lease. It is agreed that in the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
Lease, including, but not limited to, the payment of rent and additional
rent, Landlord may use, apply or retain the whole or any part of the
security so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Tenant is in default or for any
sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms, covenants and conditions of
this Lease, including, but not limited to, any damages or deficiency accrued
before or after summary proceedings or other reentry by Landlord.
In the event that Tenant shall fully and faithfully comply with the
terms, provisions, covenants and conditions of the Lease, the security shall
be returned to Tenant promptly after the date fixed as the end of the Lease
Term and after delivery of the entire possession of the Demised Premises to
Landlord.
In the event of any sale, conveyance or other transfer of the Demised
Premises, or the interest of Landlord in the Demised Premises , Landlord
shall use commercially reasonable efforts to transfer the security to the
purchaser, and Landlord shall thereupon be released by Tenant from all
liability for return of such security and Tenant agrees to look to the new
Landlord solely for return of said security.
SCHEDULE 3
WORK TO BE PERFORMED BY LANDLORD
Upon execution of this Lease and the delivery to Landlord of
certificates evidencing the insurance coverage required pursuant to Article
5 of this Lease, Landlord shall promptly commence and diligently prosecute
to completion improvements as generally described on the drawings and
specifications attached to this Lease as Exhibit B. Landlord!s certain
improvements to the Premises ("Premises Improvements") shall be
substantially in accordance with the Working Drawings and Specifications (as
hereinafter defined) and subject and according to the terms and conditions
set forth in this Schedule 3.
1. Premises Working Drawings and Specifications. Tenant shall
provide Landlord with Tenant's complete requirements for the Premises
Improvements within 25 days of the date hereof, and Landlords obligations
contained in this Schedule 3 are conditioned upon Landlord's receipt thereof
within said 25 day period. Within 21 days of Landlord's receipt thereof,
Landlord shall cause to be prepared and delivered to Tenant working drawings
and specifications for the Premises Improvements ("Working Drawings and
Specifications") incorporating such requirements. Tenant shall have the
right to approve or disapprove the Working Drawings and Specifications by
written notice to Landlord within 15 days after receipt thereof, which
approval may not be unreasonably withheld. If Tenant fails to deliver a
written notice of approval or disapproval within such 15 day period, the
Working Drawings and Specifications shall be deemed approved. If Tenant
delivers to Landlord within such 15 day period a written notice of
disapproval of the Working Drawings and Specifications, then Landlord shall
revise the Working Drawings and Specifications to remove the reasons for
Tenant's disapproval within 10 days of Landlord's receipt of such
disapproval notice. Landlord's preparation of the Working Drawings and
Specifications shall not constitute assumption of any liability on the part
of Landlord for the accuracy of their conformity with the requirements of
any building code or the municipal governmental regulation or ordinance.
2. Premises Construction Documents.
(a) Delivery of Documents. Landlord shall deliver to Tenant
within 15 days after the approval or deemed approval of the Working
Drawings and Specifications (1) a copy of the written contract with the
general contractor covering the construction of the Premises
Improvements ("Construction Contract"), and (2) a written budget
("Construction Budget").
(i) Construction Budget. The Construction Budget: (I)
shall set forth the total cost of completion of the Premises
Improvements in accordance with the Working Drawings and
Specifications, including the cost of the preparation of the
Working Drawings and Specifications ("Construction Cost"), and
(II) shall contain various line items for each category of the
work which comprises the Premises Improvements.
(b) Tenant's Approval of Construction Budget Tenant shall have
the right to approve or disapprove the Construction Budget by written
notice to Landlord within 15 days after receipt thereof, which approval
may not be unreasonably withheld. if Tenant fails to deliver a written
notice of approval or disapproval within such 15 day period, the
Construction Budget shall be deemed approved. If Tenant delivers to
Landlord within such 15 day period a written notice of disapproval of
the Construction Budget, then Landlord shall revise the Construction
Budget to remove the reasons for Tenant's disapproval within 10 days of
Landlord's receipt of such disapproval notice. Notwithstanding anything
contained herein to the contrary, in the event that Tenant has not
approved or have been deemed to approve the Construction Budget within
95 days of the date hereof, Landlord may terminate this Lease by
delivering written notice to Tenant, in which event all obligations of
Tenant and Landlord hereunder shall cease and this Lease shall be of no
further force or effect, provided, however, that Tenant shall pay to
Landlord upon demand the cost of preparing the Working Drawings and
Specifications, this obligation to survive the termination of this
Lease.
3. Premises improvements Allowance.
(a) Premises Improvements Allowance. The term "Premises
Improvements Allowance" means, for the purpose of this Lease, an amount
equal to the lesser of (A) the Construction Cost, and (B) the Maximum
Premises Improvements Allowance (as hereinafter defined).
(b) Maximum Premises Improvements Allowance. The term "Maximum
Premises Improvements Allowance" means, for the purpose of this Lease,
$650,000.00.
4. Premises Construction Escrow. Landlord shall within 10 days after
the approval or deemed approval by Tenant of the Construction Budget
pursuant to Section 2(b) hereof, establish an escrow ("Construction Escrow")
with itself or a title company satisfactory to Landlord ("Escrow Agent").
Landlord shall deposit in the Construction Escrow as and when required
amounts ("Landlord Deposits") which in the aggregate do not exceed the
Maximum Premises Improvements Allowance. If the Construction Cost is
greater than the Maximum Premises Improvements Allowance, then Tenant shall
deposit in the Construction Escrow within 5 days after the establishment of
the Construction Escrow an amount ("Tenant Deposit") equal to the difference
between (i) the Construction Cost and (ii) the Maximum Premises Improvements
Allowance. All amounts of the Construction Cost shall be paid by the Escrow
Agent pursuant to the terms of the Construction Contract as the Premises
Improvements are completed. Upon demand, Tenant and Landlord shall provide
the Escrow Agent with such waivers of lien and other documents as the Escrow
Agent reasonably requires. All amounts payable to the Escrow Agent with
respect to the creation, maintenance and disbursement of the Construction
Escrow shall be the sole responsibility of Tenant.
SCHEDULE 4
OPTIONS TO EXTEND
I. First Option to Extend.
1. Provided that this Lease is in full force and effect and Tenant is
not in default under any terms and conditions of this Lease as of the date
of the First Extension Option Notice (as hereinafter defined) and as of the
First Extension Term Commencement Date (as hereinafter defined) and subject
to the terms of this Schedule 4, Tenant shall have the night ("First
Extension Option") to extend the Term for the period ("First Extension
Term") commencing on and including the First Extension Term Commencement
Date and ending at 11:59 P.M. (local time at the Demised Premises) on the
First Extension Term Expiration Date (as hereinafter defined). Tenant shall
exercise the First Extension Option, if at all, by delivering written notice
of such exercise ("First Extension Option Notice") on or before the 270th
day prior to the Termination Date. If Tenant fails to deliver the First
Extension Option Notice to Landlord on or before the 270th day prior to the
Termination Date, Tenant shall be deemed to have forever waived any and all
rights to extend the Term pursuant to this Schedule 4.
(a) The phrase "First Extension Term Commencement Date" means
the first day following the Termination Date.
(b) The phrase "First Extension Term Expiration Date" means the
day immediately preceding the fifth anniversary of the First Extension
Term Commencement Date.
2. For the period commencing on the First Extension Term Commencement
Date and ending on the day immediately preceding the third anniversary of
the First Extension Term Commencement Date, the annual net rent shall be the
prevailing Market Rate (as defined below) as of First Extension Term
Commencement Date. Notwithstanding anything contained in this Schedule 4 to
the contrary, in no event shall the annual net rent for such period be less
than $148,200.00
(a) The Market Rate will be determined as hereinafter set forth
without regard to (i) the rate of rent Tenant is then paying for the
Demised Premises, and (ii) the value of Tenant's improvements and trade
fixtures. In the event Tenant desires to exercise the First Extension
Option, Tenant shall submit to Landlord, simultaneously with the
delivery of the First Extension Option Notice, a written statement
setting forth Tenant's proposed Market Rate, which statement shall
include the method used and assumptions made in arriving at such a rate.
Landlord shall within twenty (20) days of receipt of the statement
accept or reject the same or submit a revised statement of Market Rate
which statement shall include the method used and assumptions made in
arriving at such a rate. If Landlord accepts Tenant's statement of
Market Rate, the Market Rate shall be that contained in Tenant's
statement of Market Rate and Tenant shall pay to Landlord, commencing on
the First Extension Term Commencement Date and ending on the day
immediately preceding the third anniversary of the First Extension Term
Commencement Date, annual net rent equal to the product of Market Rate
times 18,601 square feet. If Landlord elects to submit a revised
statement, Tenant shall within ten (10) days of receipt thereof either
accept or reject the same. If Tenant accepts Landlord's revised
statement of Market Rate, the Market Rate shall be that contained in
Landlord's revised statement of Market Rate and Tenant shall pay to
Landlord annual net rent as described above in this paragraph. If,
however, Landlord rejects Tenant's statement of Market Rate or Tenant
rejects Landlord's revised statement of Market Rate, the rejecting party
shall name and appoint an independent M.A.I. appraiser and give written
notice thereof to the non-rejecting party within five (5) days of the
date of such rejection. The non-rejecting party shall, with five (5)
days of the receipt of said notice of rejection, name and appoint
another appraiser and give the rejecting party written notice thereof.
Thereafter, said appraisers shall select a third appraiser. If said
appraisers are unable to agree on the selection of a third appraiser
within five (5) days, they shall jointly petition the Superior Court of
the County of Maricopa, Arizona, for the appointment of a third
appraiser. Thereupon, the said appraisers shall independently determine
the Market Rate for leasing the Demised Premises. Their respective
written reports of Market Rate shall be submitted to Landlord and Tenant
not later than six (6) months prior to the Termination Date. Upon
delivery of the aforesaid written reports of value, the Market Rate
shall be computed as follows: (i) average the three appraisals and
disregard the appraisal which deviates the greatest from the average;
and (ii) average the two remaining appraisals. The average of the two
remaining appraisals shall constitute the Market Rate and shall be
binding upon Landlord and Tenant. Tenant shall pay to Landlord as
provided herein annual net rent, commencing on the First Extension Term
Commencement Date and ending on the day immediately preceding the third
anniversary of the First Extension Term Commencement Date, equal to the
product of Market Rate times 18,601 square feet. Landlord and Tenant
shall each bear the fees, cost and expense of the appraiser selected by
it, and fees, costs and expenses of the appraiser appointed by the
parties' appraisers shall be shared equally by Landlord and Tenant.
Either party's failure to fully comply in a timely fashion with the
provisions regarding determination of Market Rate shall be deemed an
abandonment of this method of determining rental, and the Market Rate
shall be determined solely by the non-defaulting party's appraiser.
3. For the period commencing on the third anniversary of the First
Extension Term Commencement Date and ending on the First Extension Term
Expiration Date, the annual net rent shall be the product obtained by
multiplying the amount of annual net rent in effect in the year immediately
preceding the third anniversary of the First Extension Term Commencement
Date by 1.15.
4. Except to the extent set forth otherwise herein, all of the terms
of the Lease shall apply during the First Extension Term.
II. Second Option to Extend.
1. Provided that Tenant shall have exercised the First Extension
Option and that this Lease is in fall force and effect and Tenant is not in
default under any terms and conditions of this Lease as of the date of the
Second Extension Option Notice (as hereinafter defined) and as of the Second
Extension Term Commencement Date (as hereinafter defined) and subject to the
terms of this Schedule 4, Tenant shall have the right ("Second Extension
Option") to extend the Term for the period ("Second Extension Term")
commencing on and including the Second Extension Term Commencement Date and
ending at 11:59 P.M. (local time at the Demised Premises) on the Second
Extension Term Expiration Date (as hereinafter defined). Tenant shall
exercise the Second Extension Option, if at all, by delivering written
notice of such exercise ("Second Extension Option Notice") on or before the
270th day prior to the First Extension Term Expiration Date. If Tenant
fails to deliver the Second Extension Option Notice to Landlord on or before
the 270th day prior to the First Extension Term Expiration Date, Tenant
shall be deemed to have forever waived any and all rights to extend the Term
pursuant to this Schedule 4.
(a) The phrase "Second Extension Term Commencement Date" means
the fifteenth anniversary of the Commencement Date.
(b) The phrase "Second Extension Term Expiration Date" means the
day immediately preceding the fifth anniversary of the Second Extension
Term Commencement Date.
2. For the period commencing on the Second Extension Term
Commencement Date and ending on the day immediately preceding the third
anniversary of the Second Extension Term Commencement Date, the annual net
rent shall be the prevailing Market Rate as of Second Extension Term
Commencement Date. Notwithstanding anything contained in this Schedule 4 to
the contrary, in no event shall the annual net rent during the Second
Extension Term be less than that in effect on the last day of the First
Extension Term. Market Rate shall be determined in the same manner as
provided for the First Extension Term, except that all references to "First
Extension Option," "First Extension Tenn Commencement Date" and "First
Extension Option Notice" shall mean "Second Extension Option," "Second
Extension Term Commencement Date" and "Second Extension Option Notice,"
respectively.
3. For the period commencing on the third anniversary of the Second
Extension Term Commencement Date and ending on the Second Extension Term
Expiration Date, the annual net rent shall be the product obtained by
multiplying the amount of annual net rent in effect in the year immediately
preceding the third anniversary of the Second Extension Term Commencement
Date by 1.15.
4. Except to the extent set forth otherwise herein, all of the terms
of the Lease shall apply during the Second Extension Tenn.
The options contained in this Schedule 4 are for the sole benefit of
Nelco Technology, Inc. or any affiliated entity to whom Nelco Technology,
Inc. has assigned its rights under this Lease.
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
AGREEMENT, dated March 18, 1996, by and between E. Phillip Smoot (the
"Executive") and Park Electrochemical Corp., a New York corporation (the
"Company").
WHEREAS, the Executive is presently employed by the Company as an
Executive Vice President; and
WHEREAS, the Board of Directors of the Company (the "Board") desires to
continue to employ the Executive and the Executive desires to continue to
furnish services to the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby accepts such continued employment, on
the terms and conditions hereinafter set forth.
2. Term. The period of employment of the Executive by the Company
hereunder (the "Employment Period") shall commence effective March 1, 1996
(the "Effective Date") and shall end on February 28, 1999, unless sooner
terminated as provided in Section 7; provided, however, that, if a Change in
Control (as defined in Section 7(e)) shall have occurred during the
Employment Period, the Employment Period shall continue in effect for at
least twenty-four (24) months subsequent to the month in which such Change
in Control occurs.
3. Position and Duties. During the Employment Period, the Executive
shall continue to serve as W an Executive Vice President of the Company and
(ii) the President and Chief Executive Officer and a director of Nelco
International Corporation, a subsidiary of the Company. In addition, during
the Employment Period, the Company will use its best efforts to cause the
Executive to be nominated and elected as a member of the Company's Board
and, if so elected, the Executive agrees to serve as a director of the
Company. The Executive shall report directly to the Company's President.
The Executive shall have such responsibilities and authority as may from
time to time be assigned to the Executive by the Company's President
provided that such responsibilities and authority are consistent with the
Executive's positions as stated herein. The Executive agrees to devote
substantially all of his working time and efforts to the performance of his
duties as set forth herein.
4. Place of Performance. The Executive's place of employment shall
be at the principal executive offices of Nelco International Corporation,
except for reasonably required travel on the Company's business.
5. Compensation and Related Matters.
(a) Base Salary. As compensation for.the performance by the
Executive of his obligations hereunder, during the Employment Period, the
Company shall pay the Executive a base salary at the rate of $325,000 per
annum ("Base Salary"). Base Salary may be increased in the discretion of
the Company and, if so increased, shall not thereafter during the Employment
Period be decreased.
(b) Bonuses. During the Employment Period, the Executive shall
be eligible to receive such annual bonus (the "Annual Bonus") as the Company
may determine in its discretion and consistent with past practice, based
upon the achievement of performance goals as established by the Company at
the beginning of each fiscal year.
(c) Expenses. The Company shall promptly reimburse the
Executive for all reasonable business expenses incurred during the
Employment Period and during the Consulting Period (as defined in Section 61
by the Executive in performing services hereunder, provided that such
expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company.
(d) Supplemental Account. Each year during the Employment
Period, an amount equal to the excess of W the sum of (x) the amount
contributed by the Company to the Park Electrochemical Corp. Employees,
Profit-Sharing Plan, as amended (the "Plan"), for such year plus (y) any
amounts forfeited by other participants in the Plan during such year, which
sum, but for the limitations imposed by section 415 of the Internal Revenue
Code of 1986, as amended (the "Code"), and by Section 4.14 of the Plan,
would have been allocated to the Executive's account under the Plan, over
(ii) the amount of contributions and forfeitures actually credited to the
Executive's account for such year, shall be credited by the Company to the
separate account previously established and currently maintained by the
Company for the Executive (the "Account"). In addition, interest shall be
credited annually to the Account at the same rate as net income, gains or
profits are earned on the Plan assets. Payments to the Executive from the
Account shall be made as and when distributions are made to the Executive
from the Plan and in the same proportion of the Account which the Plan
distribution bears to the Executive's account balance under the Plan. The
parties recognize and agree that the payments to be made by the Company to
the Executive from the Account are unsecured obligations of the Company,
that the Executive is only a general creditor of the Company in that respect
and that the amounts in the Account are assets of the Company which are
available to satisfy the claims of the Company's creditors generally.
(e) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate in all of the employee benefit plans and
arrangements currently maintained by the Company, in accordance with the
terms of such plans and arrangements, and shall be entitled to participate
in or receive benefits under any employee benefit plan or arrangement made
available by the Company in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions
and overall administration of such plans and arrangements.
(f) Automobile. The Company shall continue to furnish to the
Executive an automobile in accordance with past practice.
6. Consultancy. Upon expiration of the Employment Period and
provided that the Executive has continued in the Company's employ throughout
the Employment Period pursuant to this Agreement, then if the Company and
the Executive so agree, the Executive shall serve as a consultant to the
Company for a period of up to five years (the "Consulting Period"). During
the Consulting Period, the Executive shall make himself available to advise
and consult with officers and other employees of the Company so that the
Company may continue to have the benefit of his experience and knowledge of
the affairs of the Company and of his reputation and contacts in the
industries in which the Company is engaged in business. The Executive shall
be free, during the Consulting Period, to devote the balance of his time and
attention to such other business enterprises or activities as he may see
fit, subject to the restrictive covenant set forth in Section 11. During
the Consulting Period, the Executive's compensation shall be at the rate of
$75,000 per annum and he shall be entitled to the same medical and other
welfare benefits as are in effect on the date of his retirement. The
Consulting Period may terminate at any time upon 60 days' prior written
notice by either the Company or the Executive and shall terminate upon the
Executive's death.
7. Termination. The Executive's employment hereunder may be
terminated during the Employment Period without any breach of this Agreement
only under the circumstances set forth in the following subsections (a),
(b), (c) and (d):
(a) Death. The Executive's employment hereunder shall terminate
upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from
the full-time performance of his duties hereunder for the entire period of
six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8(a) hereof) is given shall not have
returned to the performance of his duties hereunder on a full-time basis,
the Company may terminate the Executive's employment hereunder for
"Disability."
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Executive for the commission of a
felony; or
(ii) the willful and continuing failure by the Executive to
substantially perform his duties hereunder (other than such failure
resulting from the Executive's incapacity due to physical or mental
illness or subsequent to the issuance of a Notice of Termination by the
Executive for Good Reason) that has not been fully cured within ten (10)
days following the date on which demand for substantial performance is
delivered by the Company in writing, specifically identifying the manner
in which the Company believes the Executive has not substantially
performed his duties; or
(iii) the willful misconduct by the Executive (including, but not
limited to, breach by the Executive of the provisions of Section 11)
that is demonstrably and materially injurious to the Company or its
subsidiaries, whether monetarily or otherwise.
On and after the occurrence of a Change in Control, the Executive's
employment may not be terminated for Cause unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Board at a meeting called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with
his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, the Executive was guilty of the conduct set forth in
this Section 7(c) and specifying the particulars thereof in detail. For
purposes of this Section 7(c), no act or failure to act on the Executive's
part shall be considered "willful" unless done or failed to be done by the
Executive in bad faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Company.
(d) Good Reason. On and after the occurrence of a Change in
Control, the Executive may terminate his employment during the Employment
Period hereunder for Good Reason. "Good Reason" shall mean the occurrence
(on or after a Change in Control), without the written consent of the
Executive, of an event constituting a material breach of this Agreement by
the Company that has not been fully cured within ten (10) days after written
notice thereof has been given by the Executive to the Company, provided
that, without limiting the generality of the foregoing, any one of the
following events shall constitute Good Reason:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's status as an executive officer of the Company or a
substantial adverse alteration in the nature of the Executive's
responsibilities from those in effect immediately prior to the Change in
Control;
(ii) a reduction by the Company in the Executive's Base Salary as
in effect immediately prior to the Change in Control;
(iii) the relocation of the Executive's principal place of
employment to a location more than twenty-five (25) miles from the place
of such employment immediately prior to the Change in Control;
(iv) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation or to pay to the
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company within fifteen (15)
days of the date such compensation is due;
(v) the failure by the Company to provide the Executive with
compensation plans which, in the aggregate, provide the Executive with
substantially comparable compensation opportunities to those
compensation opportunities for which the Executive was eligible
immediately prior to the Change in Control;
(vi) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect at the
time of the Change in Control;
(vii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 8(a) or that does not comply with Section 7(c),
if applicable (and for purposes of this Agreement, no such purported
termination shall be effective); or
(viii) the failure of a successor to the Company to expressly
assume and agree to perform this Agreement pursuant to Section 13(a).
The Executive's right to terminate his employment hereunder for Good Reason
shall not be affected by his incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.
(e) Definition of Change in Control. For purposes of this Agreement,
a "Change in Control', of the Company shall mean the occurrence of any one
of the following events:
(i) any Person (as defined below) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) , directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 35% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Company or a direct or indirect subsidiary thereof with any other
corporation other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least a majority of the
combined voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its subsidiaries other than in connection
with the acquisition by the Company or its subsidiaries of a business)
representing 35-. or more of the combined voting power of the Company's
then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least a majority of the combined voting power of
the voting securities of which are owned by Persons in substantially the
same proportions as their ownership of the Company immediately prior to
such sale.
For purposes of this Section 7(e), "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include W the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or Uv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive on and after a Change in
Control (other than termination pursuant to Section 7(a) hereof) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 14. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean, as
applicable, the date of death or the date specified in the Notice of
Termination, which, following a Change in Control, shall not be prior to the
date on which a Notice of Termination is given; provided, however, that,
following a Change in Control, if within thirty (30) days after any Notice
of Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination,
the Date of Termination shall be the date on which the dispute is finally
determined.
(c) Compensation During Dispute. If a purported termination
occurs on or after a Change in Control, and such termination is disputed in
accordance with subsection (b) of this Section 8, the Company shall continue
to pay the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation and employee
benefit plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the Date of Termination.
Amounts paid under this Section 8 (c) are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness ("Disability Period") I the Executive shall con-
tinue to receive his full Base Salary at the rate in effect at the beginning
of such period, reduced by any compensation payable to the Executive under
the Company's disability plan, if any, as in effect during such period,
until his employment is terminated for Disability pursuant to Section 7(b)
. For the two-year period following the Executive's termination for
Disability pursuant to Section 7(b), the Executive shall receive fifty
percent (50%) of his Base Salary, reduced by any compensation payable to the
Executive under the Company's disability plan, if any, as in effect during
such period. Subsequent to the two-year period following the termination of
the Executive's employment pursuant to Section 7 (b), or in the event the
Executive's employment is terminated by reason of his death, the Company
shall have no further obligations to the Executive under this Agreement and
the Executive's benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with
the terms of such programs.
(b) By Company without Cause or by the Executive for Good
Reason. If the Executive's employment is terminated by the Company other
than for Cause or Disability or by the Executive for Good Reason, then --
(i) in addition to any amounts due the Executive pursuant to
Sections 5(a) or 5(b), the Company shall continue to pay to the
Executive (or his legal representatives or estate) his Base Salary as in
effect on the Date of Termination for the remainder of the Employment
Period or, if greater, for one year; provided, however, that if such
termination occurs on or after a Change in Control, then the Company
shall pay to the Executive a lump sum amount, in cash, equal to three
(3) times the sum of Base Salary (at the rate in effect immediately
prior to the occurrence of the circumstance giving rise to the Notice of
Termination) and the Annual Bonus awarded in respect of the fiscal year
immediately prior to the fiscal year in which occurs the Change in
Control or the Date of Termination, whichever resulting bonus is
greater; and
(ii) the Company shall maintain in full force and effect, for the
continued benefit of the Executive and his dependents for the remainder
of the Employment Period or, if greater, for one year, all employee
welfare benefit plans and programs in which the Executive was entitled
to participate immediately prior to the Date of Termination, provided
that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; provided,
however, that if such termination occurs on or after a Change in
Control, then such benefit plans and programs shall be continued for a
period of three (3) years. In the event that the Executive's par-
ticipation in any such plan or program is barred, the Company shall
arrange to provide the Executive and his dependents with benefits
substantially similar to those which the Executive and his dependents
would otherwise have been entitled to receive under such plans and
programs from which their continued participation is barred.
(c) By Company for Cause or by the Executive Other than for Good
Reason. If the Executive's employment shall be terminated by the Company
for Cause or by the Executive other than for Good Reason, then the Company
shall pay the Executive his Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination, and the
Company shall have no additional obligations to the Executive under this
Agreement except as set forth in subsection (d) of this Section 9.
(d) Upon Expiration of the Agreement. if the Executive's
employment is terminated by the Company upon the expiration of the
Employment Period, the Company shall W continue to pay to the Executive (or
his legal representatives or estate) his Base Salary as then in effect for
one year and (ii) continue coverage under the Executive's employee welfare
benefit plans and arrangements described in Section 9(b)(iii) for one year;
provided, however, the provisions of this Section 9(d) shall not be
applicable if the Company and the Executive agree, in accordance with
Section 6, that the Executive shall continue to serve as a consultant to the
Company.
(e) Compensation Plans. Following any termination of the
Executive's employment, the Company shall pay the Executive all unpaid
amounts, if any, to which the Executive is entitled as of the Date of Termi-
nation under any compensation plan or program of the Company, at the time
such payments are due.
(f) Reduction. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of
this Agreement (the "Severance Payments") or any other plan, arrangement or
agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or part) by the
Company, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent
necessary to make such portion of the Total Payments deductible (and after
taking into account any reduction in the Total Payments provided by reason
of section 28OG of the Code in such other plan, arrangement or agreement),
the cash Severance Payments shall first be reduced (if necessary, to zero),
and all other Severance Payments shall thereafter be reduced (if necessary,
to zero); provided, however, that the Executive may elect (at any time prior
to the delivery of a Notice of Termination hereunder) to have the noncash
Severance Payments reduced (or eliminated) prior to any reduction of the
cash Severance Payments.
For purposes of this limitation, (i) no portion of the Total Payments
the receipt or enjoyment of which the Executive shall have effectively
waived in writing shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which, in the opinion of tax counsel
(the "Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control,
the Company's independent auditor (the "Auditor"), does not constitute a
"parachute payment" within the meaning of section 28OG(b)(2) of the Code,
including by reason of section 28OG(b)(4)(A) of the Code, (iii) the
Severance Payments shall be reduced only to the extent necessary so that the
Total Payments (other than those referred to in clauses W or (ii)) in their
entirety constitute reasonable compensation for services actually rendered
within the meaning of section 28OG(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions by reason of section 28OG of the Code,
in the opinion of the Tax Counsel, and (iv) the value of any noncash benefit
or any deferred payment or benefit included in the Total Payments shall be
determined by the Auditor in accordance with the principles of sections
28OG(d)(3) and (4) of the Code.
(g) Time of Payments. The lump sum payments provided for in
Section 9(b) shall be made not later than the fifth day following the Date
of Termination; Provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay
the Executive on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code).
10. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for the Executive by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
the Executive hereunder be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive
to the Company or otherwise except as is hereinafter specifically provided
in this Section 10. To the extent that the Executive, during the relevant
period described in Section 9(b)(ii), shall receive from a subsequent
employer benefits similar to those to be provided under Section 9(b)(ii),
the benefits to be provided under the provisions of said Section shall be
correspondingly reduced.
11. Confidential Information; Noncompetition Requirement.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets,
confidential information, and knowledge or data relating to the Company and
its subsidiaries and their businesses, which shall have been obtained by the
Executive at any time during the Executive's employment by the Company
(whether during the Employment Period or otherwise) and which shall not have
been or now or hereafter have become public knowledge (other than by acts by
the Executive or representatives of the Executive in violation of this
Agreement). The Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate or divulge any such trade secrets, information, knowledge or
data to anyone other than the Company and those designated by the Company.
Any termination of the Executive's employment or of this Agreement shall
have no effect on the continuing operation of this Section 11(a).
(b) Noncompetition Requirement. During any period that the
Executive is performing services hereunder as an employee or a consultant or
in respect of which the Executive is entitled to payment pursuant to Section
9(b)(i) and for an additional period of two (2) years thereafter (the
"Additional Period"), the Executive agrees that, without the prior written
consent of the Company, he shall not, directly or indirectly, with or
without pay, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, manager, investor,
lender, advisor, owner, associate or in any other individual or
representative capacity, (i) solicit, entice, encourage or otherwise attempt
to procure business from any customers (determined as of the Date of
Termination) of the Company or a subsidiary thereof for a business that is
competitive in any manner whatsoever (a "Competitive Business") with any
business in which the Company is then engaged, (ii) solicit, entice or
encourage any employee (determined as of the Date of Termination) of the
Company or a subsidiary thereof to leave the employ of the Company or any of
its subsidiaries, or (iii) engage or participate in any Competitive
Business; provided, however, that clause (iii) of this Section 11(b) shall
not apply during the Additional Period; and further provided, however, that
this Section 11(b) shall have no further force or effect upon the
termination of the Executive's employment on or after a Change in Control.
If any provision of Section 11(a) or of this Section 11(b) should be deemed
invalid, illegal or unenforceable because its scope is considered excessive,
such provision shall be modified so that the scope of the provision is
reduced only to the minimum extent necessary to render the modified
provision valid.
(c) Injunctive Relief. In the event of a breach or threatened
breach of subsections (a) or (b) of this Section 11, the Executive agrees
that the Company shall be entitled to injunctive relief in a court of
appropriate jurisdiction to remedy any such breach or threatened breach, the
Executive acknowledging that damages would be inadequate and insufficient.
12. Legal Fees. The Company shall reimburse the Executive for
any legal fees and expenses incurred by the Executive following a Change in
Control in contesting or disputing any termination of the Executive's
employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement or in connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder) other than for any such expenses,
costs, liabilities or legal fees incurred as a result of the Executive's bad
faith or gross negligence. Such payments shall be made at the time
specified in Section 9(g), or within five (5) days after the Executive's
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 12.
13. Successors; Binding Agreement.
(a) Company's Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as he would be entitled to hereunder if the Company had
terminated his employment on or after a Change in Control without Cause,
except that for purposes of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the Date of Termina-
tion. In the event of failure of the Company to obtain such assumption and
agreement prior to the effective date of any such succession, the Executive
shall have no rights or remedies other than as specifically set forth in the
preceding sentence. As used in this Agreement, "Company" shall mean the
Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for
in this Section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of
the Executive hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts unless otherwise
provided herein shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, or other designee or, if there be no
such designee, to the Executive's estate.
14. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
E. Phillip Smoot
218 Apolena Avenue
Balboa Island, California 92662
If to the Company:
Park Electrochemical Corp.
5 Dakota Drive
Lake Success, New York 11042
Attention: President
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by the Executive and an appropriate officer of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be binding on all successors to the
Company. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without
regard to its conflicts of law principles. Any action or proceeding
relating to this Agreement or any matters arising out of or in connection
with this Agreement, and any action for enforcement of any judgment in
respect thereof, shall be brought exclusively in the courts of the State of
New York or of the United States of America for the Eastern District of New
York, and the Company and the Executive each hereby accepts the exclusive
jurisdiction of the aforesaid courts and the appellate courts thereof. The
Company and the Executive each irrevocably consents to service of process
out of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof registered or certified mail, postage prepaid, to
the Company or the Executive at their respective addresses referred to in
Section 14. All references herein to "Sections" pertain to Sections of this
Agreement unless otherwise specified. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be
paid net of any applicable withholding required under federal, state or
local law. The obligations of the Company under Section 9 and of the
Executive under Section 11 shall survive the expiration of the term of this
Agreement. The compensation and benefits payable to the Executive under
this Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under
any severance plan, program, policy or arrangement of the Company.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
17. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
PARK ELECTROCHEMICAL CORP.
/s/ Jerry Shore
Name: Jerry Shore
Title: Chairman
/s/ E. Phillip Smoot
E. Phillip Smoot
EXHIBIT 10.12(a)
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made on this) 18th
day of January, 1996 between CMD SOUTHWEST INC., an Arizona corporation
("Landlord"), and NELCO TECHNOLOGY, INC., an Arizona corporation ("Tenant").
A. Landlord and Tenant previously entered into that certain Lease
dated March 24, 1995 ("Lease"), for the lease of certain premises ("Demised
Premises") consisting of approximately 58,247 square feet of land together
with a building thereon containing approximately 18,601 square feet and
commonly known as 1131 W. Fairmont, Tempe, Arizona 85282 according to the
terms thereof.
B. Landlord and Tenant desire to modify the term of the Lease, all
subject to the terms and conditions set forth herein.
In consideration of the mutual covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Definitions. All of the terms used in this First Amendment shall
have the same meanings as set forth in the Lease, except to the extent
expressly set forth herein.
2. Term. Article 2, Sec. 201 of the Lease is hereby amended as
follows:
(a) Commencement Date. Notwithstanding anything contained in the
Lease to the contrary, the term "Commencment Date" shall mean December
8, 1995;
(b) Termination Date. Notwithstanding anything contained in the Lease
to the contrary, the term "Termination Date" shall mean December 31,
2005.
3. Full Force and Effect. All of the terms and conditions set forth
in the Lease shall remain in full force and effect, except to the extent
otherwise expressly set forth in this First Amendment.
4. Conflicts. In the event that any of the provisions of the Lease
conflict with any of the terms and provisions of this First Amendment, the
terms and conditions of this First Amendment shall prevail.
5. Time of Essence. Time is of the essence of each and every term of
this First Amendment.
IN WITNESS WHEREOF, said Landlord and Tenant have caused this instrument
to be executed by their respective duly authorized officers, all as of the
day and year first written above.
LANDLORD:
CMD SOUTHWEST INC.,
an Arizona corporation
By: /s/ President
TENANT:
NELCO TECHNOLOGY, INC.,
an Arizona corporation
By: Kevin Brumbaugh
Vice President and General Manager
EXHIBIT 10.14(d)
1995 EXTENSION TO AMENDMENT TO SECOND EXTENSION OF LEASE
This Extension to Amendment to Second Extension of Lease (the "Second
Amendment") is made effective on the date of signing by both parties by and
between HOLYOKE SUPPLY COMPANY, INC., a Massachusetts corporation with its
principal place of business at 200-220 Race Street, Holyoke, Massachusetts
01040 (hereinafter referred to as "Landlord"), of the one part, and
DIELECTRIC POLYMERS, INC., a Massachusetts corporation having its principal
place of business at 21.8 Race Street, Holyoke, Massachusetts 01040
(hereinafter referred to as "Tenant"), of the other part.
WHEREAS, the parties hereto are parties under an Indenture of Lease
dated November 1, 1984 (the "Indenture") as extended in accordance with its
terms by an Extension of Lease dated May 30, 1986 (the "Extension") a Second
Extension of Lease dated as of May 30, 1991 (the "Second Extension"); and an
Amendment to Second Extension of Lease dated May 19, 1994 (the "Amendment");
and
WHEREAS, pursuant to the Amendment, the lease term expires on November
30, 1995 pursuant to Tenant's exercise of its option to extend the lease
term six months from May 31, 1995; and
WHEREAS, the parties have agreed to extend the term of the lease for a
period of one (1) year, through November 30, 1996;
NOW THEREFORE, the Landlord and Tenant hereby agree that all the
provisions of the Indenture, Extension, Second Extension and the Amendment
(collectively the "Lease") are incorporated herein by reference and shall
remain in full force and effect through November 30, 1996 except as modified
as follows:
1. Article I, Section 1 is amended in part to provide that the
premises demised to the Tenant on the Third Floor of building #1 at 200 Race
Street shall consist of the 7,469 square feet occupied by the Tenant at the
date of this Agreement.
2. Article II, Section 1 is amended in part to provide that the lease
shall be extended for a term of one (1) year, beginning December 1, 1995 and
ending November 30, 1996.
3. Article II, Section 2 is amended to provide that if the Tenant is
not in material default in any respect under the Lease at the time of its
giving of the notice described below, it shall have the right and option to
extend said lease for a term of six (6) months expiring May 31, 1997, on all
the same terms and conditions, including rent as set forth on paragraph 4
below. The Tenant, if it desires to exercise this option, shall do so by
giving the Landlord notice in writing of its intention to do so at least
ninety (90) days prior to December 1, 1996, such notice to be delivered by
certified mail, return receipt requested, at Landlord's principal place of
business. Except as otherwise provided, the term of this Lease shall be
automatically extended upon Landlord's receipt of Tenant's extension notice.
Tenant shall be in material default if there exists an "Event of Default" as
defined under Article XII, Section 1 of the Indenture.
4. Article III, Section 1 is amended by revising Paragraph A to state
the rent for Tenant's use of the entire Fourth Floor of the premises (17,000
square feet) during the extended term shall be ONE DOLLAR AND NINETY CENTS
($1.90) per square foot or THIRTY-TWO THOUSAND THREE HUNDRED DOLLARS
($32,300) per year payable in equal monthly installments of $2,691.67 in
advance on the first day of each and every month during the extended term
and proportionately at said rate for any partial month.
Article III, Section 1 is further amended to provide that rent for
Tenant's use of the Third Floor of the premises (7,469 square feet) during
the extended term shall be ONE DOLLAR and TEN CENTS ($1.10) per square foot
or EIGHT THOUSAND TWO HUNDRED SIXTEEN DOLLARS ($8,216) per year payable in
equal monthly installments of $684.67 in advance on the first day of each
and every month during the extended term and proportionately at said rate
for any partial month.
5. Landlord and Tenant agree that all remaining provisions of said
Lease shall remain in full force and effect through the extended term except
to the extent that said terms are inconsistent with the provisions of this
Agreement.
WITNESS the execution hereof, under seal, in any number of counterpart
copies, each of which counterpart copy shall be deemed to be an original for
all purposes as of the day and year first written above.
DIELECTRIC POLYMERS, INC., TENANT
Dated: 10/19/95 By: /s/ Lawrence G. Kuntz
President
HOLYOKE SUPPLY COMPANY INC., LANDLORD
Dated: 10/19/95 By: /s/ Daniel C. Moriarty, President
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
AGREEMENT, dated March 18, 1996, by and between E. Phillip Smoot (the
"Executive") and Park Electrochemical Corp., a New York corporation (the
"Company").
WHEREAS, the Executive is presently employed by the Company as an
Executive Vice President; and
WHEREAS, the Board of Directors of the Company (the "Board") desires to
continue to employ the Executive and the Executive desires to continue to
furnish services to the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby accepts such continued employment, on
the terms and conditions hereinafter set forth.
2. Term. The period of employment of the Executive by the Company
hereunder (the "Employment Period") shall commence effective March 1, 1996
(the "Effective Date") and shall end on February 28, 1999, unless sooner
terminated as provided in Section 7; provided, however, that, if a Change in
Control (as defined in Section 7(e)) shall have occurred during the
Employment Period, the Employment Period shall continue in effect for at
least twenty-four (24) months subsequent to the month in which such Change
in Control occurs.
3. Position and Duties. During the Employment Period, the Executive
shall continue to serve as W an Executive Vice President of the Company and
(ii) the President and Chief Executive Officer and a director of Nelco
International Corporation, a subsidiary of the Company. In addition, during
the Employment Period, the Company will use its best efforts to cause the
Executive to be nominated and elected as a member of the Company's Board
and, if so elected, the Executive agrees to serve as a director of the
Company. The Executive shall report directly to the Company's President.
The Executive shall have such responsibilities and authority as may from
time to time be assigned to the Executive by the Company's President
provided that such responsibilities and authority are consistent with the
Executive's positions as stated herein. The Executive agrees to devote
substantially all of his working time and efforts to the performance of his
duties as set forth herein.
4. Place of Performance. The Executive's place of employment shall
be at the principal executive offices of Nelco International Corporation,
except for reasonably required travel on the Company's business.
5. Compensation and Related Matters.
(a) Base Salary. As compensation for.the performance by the
Executive of his obligations hereunder, during the Employment Period, the
Company shall pay the Executive a base salary at the rate of $325,000 per
annum ("Base Salary"). Base Salary may be increased in the discretion of
the Company and, if so increased, shall not thereafter during the Employment
Period be decreased.
(b) Bonuses. During the Employment Period, the Executive shall
be eligible to receive such annual bonus (the "Annual Bonus") as the Company
may determine in its discretion and consistent with past practice, based
upon the achievement of performance goals as established by the Company at
the beginning of each fiscal year.
(c) Expenses. The Company shall promptly reimburse the
Executive for all reasonable business expenses incurred during the
Employment Period and during the Consulting Period (as defined in Section 61
by the Executive in performing services hereunder, provided that such
expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company.
(d) Supplemental Account. Each year during the Employment
Period, an amount equal to the excess of W the sum of (x) the amount
contributed by the Company to the Park Electrochemical Corp. Employees,
Profit-Sharing Plan, as amended (the "Plan"), for such year plus (y) any
amounts forfeited by other participants in the Plan during such year, which
sum, but for the limitations imposed by section 415 of the Internal Revenue
Code of 1986, as amended (the "Code"), and by Section 4.14 of the Plan,
would have been allocated to the Executive's account under the Plan, over
(ii) the amount of contributions and forfeitures actually credited to the
Executive's account for such year, shall be credited by the Company to the
separate account previously established and currently maintained by the
Company for the Executive (the "Account"). In addition, interest shall be
credited annually to the Account at the same rate as net income, gains or
profits are earned on the Plan assets. Payments to the Executive from the
Account shall be made as and when distributions are made to the Executive
from the Plan and in the same proportion of the Account which the Plan
distribution bears to the Executive's account balance under the Plan. The
parties recognize and agree that the payments to be made by the Company to
the Executive from the Account are unsecured obligations of the Company,
that the Executive is only a general creditor of the Company in that respect
and that the amounts in the Account are assets of the Company which are
available to satisfy the claims of the Company's creditors generally.
(e) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate in all of the employee benefit plans and
arrangements currently maintained by the Company, in accordance with the
terms of such plans and arrangements, and shall be entitled to participate
in or receive benefits under any employee benefit plan or arrangement made
available by the Company in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions
and overall administration of such plans and arrangements.
(f) Automobile. The Company shall continue to furnish to the
Executive an automobile in accordance with past practice.
6. Consultancy. Upon expiration of the Employment Period and
provided that the Executive has continued in the Company's employ throughout
the Employment Period pursuant to this Agreement, then if the Company and
the Executive so agree, the Executive shall serve as a consultant to the
Company for a period of up to five years (the "Consulting Period"). During
the Consulting Period, the Executive shall make himself available to advise
and consult with officers and other employees of the Company so that the
Company may continue to have the benefit of his experience and knowledge of
the affairs of the Company and of his reputation and contacts in the
industries in which the Company is engaged in business. The Executive shall
be free, during the Consulting Period, to devote the balance of his time and
attention to such other business enterprises or activities as he may see
fit, subject to the restrictive covenant set forth in Section 11. During
the Consulting Period, the Executive's compensation shall be at the rate of
$75,000 per annum and he shall be entitled to the same medical and other
welfare benefits as are in effect on the date of his retirement. The
Consulting Period may terminate at any time upon 60 days' prior written
notice by either the Company or the Executive and shall terminate upon the
Executive's death.
7. Termination. The Executive's employment hereunder may be
terminated during the Employment Period without any breach of this Agreement
only under the circumstances set forth in the following subsections (a),
(b), (c) and (d):
(a) Death. The Executive's employment hereunder shall terminate
upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from
the full-time performance of his duties hereunder for the entire period of
six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8(a) hereof) is given shall not have
returned to the performance of his duties hereunder on a full-time basis,
the Company may terminate the Executive's employment hereunder for
"Disability."
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Executive for the commission of a
felony; or
(ii) the willful and continuing failure by the Executive to
substantially perform his duties hereunder (other than such failure
resulting from the Executive's incapacity due to physical or mental
illness or subsequent to the issuance of a Notice of Termination by the
Executive for Good Reason) that has not been fully cured within ten (10)
days following the date on which demand for substantial performance is
delivered by the Company in writing, specifically identifying the manner
in which the Company believes the Executive has not substantially
performed his duties; or
(iii) the willful misconduct by the Executive (including, but not
limited to, breach by the Executive of the provisions of Section 11)
that is demonstrably and materially injurious to the Company or its
subsidiaries, whether monetarily or otherwise.
On and after the occurrence of a Change in Control, the Executive's
employment may not be terminated for Cause unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Board at a meeting called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with
his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, the Executive was guilty of the conduct set forth in
this Section 7(c) and specifying the particulars thereof in detail. For
purposes of this Section 7(c), no act or failure to act on the Executive's
part shall be considered "willful" unless done or failed to be done by the
Executive in bad faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Company.
(d) Good Reason. On and after the occurrence of a Change in
Control, the Executive may terminate his employment during the Employment
Period hereunder for Good Reason. "Good Reason" shall mean the occurrence
(on or after a Change in Control), without the written consent of the
Executive, of an event constituting a material breach of this Agreement by
the Company that has not been fully cured within ten (10) days after written
notice thereof has been given by the Executive to the Company, provided
that, without limiting the generality of the foregoing, any one of the
following events shall constitute Good Reason:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's status as an executive officer of the Company or a
substantial adverse alteration in the nature of the Executive's
responsibilities from those in effect immediately prior to the Change in
Control;
(ii) a reduction by the Company in the Executive's Base Salary as
in effect immediately prior to the Change in Control;
(iii) the relocation of the Executive's principal place of
employment to a location more than twenty-five (25) miles from the place
of such employment immediately prior to the Change in Control;
(iv) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation or to pay to the
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company within fifteen (15)
days of the date such compensation is due;
(v) the failure by the Company to provide the Executive with
compensation plans which, in the aggregate, provide the Executive with
substantially comparable compensation opportunities to those
compensation opportunities for which the Executive was eligible
immediately prior to the Change in Control;
(vi) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect at the
time of the Change in Control;
(vii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 8(a) or that does not comply with Section 7(c),
if applicable (and for purposes of this Agreement, no such purported
termination shall be effective); or
(viii) the failure of a successor to the Company to expressly
assume and agree to perform this Agreement pursuant to Section 13(a).
The Executive's right to terminate his employment hereunder for Good Reason
shall not be affected by his incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.
(e) Definition of Change in Control. For purposes of this Agreement,
a "Change in Control', of the Company shall mean the occurrence of any one
of the following events:
(i) any Person (as defined below) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) , directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 35% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Company or a direct or indirect subsidiary thereof with any other
corporation other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least a majority of the
combined voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its subsidiaries other than in connection
with the acquisition by the Company or its subsidiaries of a business)
representing 35-. or more of the combined voting power of the Company's
then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least a majority of the combined voting power of
the voting securities of which are owned by Persons in substantially the
same proportions as their ownership of the Company immediately prior to
such sale.
For purposes of this Section 7(e), "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include W the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or Uv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive on and after a Change in
Control (other than termination pursuant to Section 7(a) hereof) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 14. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean, as
applicable, the date of death or the date specified in the Notice of
Termination, which, following a Change in Control, shall not be prior to the
date on which a Notice of Termination is given; provided, however, that,
following a Change in Control, if within thirty (30) days after any Notice
of Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination,
the Date of Termination shall be the date on which the dispute is finally
determined.
(c) Compensation During Dispute. If a purported termination
occurs on or after a Change in Control, and such termination is disputed in
accordance with subsection (b) of this Section 8, the Company shall continue
to pay the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation and employee
benefit plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the Date of Termination.
Amounts paid under this Section 8 (c) are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness ("Disability Period") I the Executive shall con-
tinue to receive his full Base Salary at the rate in effect at the beginning
of such period, reduced by any compensation payable to the Executive under
the Company's disability plan, if any, as in effect during such period,
until his employment is terminated for Disability pursuant to Section 7(b)
. For the two-year period following the Executive's termination for
Disability pursuant to Section 7(b), the Executive shall receive fifty
percent (50%) of his Base Salary, reduced by any compensation payable to the
Executive under the Company's disability plan, if any, as in effect during
such period. Subsequent to the two-year period following the termination of
the Executive's employment pursuant to Section 7 (b), or in the event the
Executive's employment is terminated by reason of his death, the Company
shall have no further obligations to the Executive under this Agreement and
the Executive's benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with
the terms of such programs.
(b) By Company without Cause or by the Executive for Good
Reason. If the Executive's employment is terminated by the Company other
than for Cause or Disability or by the Executive for Good Reason, then --
(i) in addition to any amounts due the Executive pursuant to
Sections 5(a) or 5(b), the Company shall continue to pay to the
Executive (or his legal representatives or estate) his Base Salary as in
effect on the Date of Termination for the remainder of the Employment
Period or, if greater, for one year; provided, however, that if such
termination occurs on or after a Change in Control, then the Company
shall pay to the Executive a lump sum amount, in cash, equal to three
(3) times the sum of Base Salary (at the rate in effect immediately
prior to the occurrence of the circumstance giving rise to the Notice of
Termination) and the Annual Bonus awarded in respect of the fiscal year
immediately prior to the fiscal year in which occurs the Change in
Control or the Date of Termination, whichever resulting bonus is
greater; and
(ii) the Company shall maintain in full force and effect, for the
continued benefit of the Executive and his dependents for the remainder
of the Employment Period or, if greater, for one year, all employee
welfare benefit plans and programs in which the Executive was entitled
to participate immediately prior to the Date of Termination, provided
that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; provided,
however, that if such termination occurs on or after a Change in
Control, then such benefit plans and programs shall be continued for a
period of three (3) years. In the event that the Executive's par-
ticipation in any such plan or program is barred, the Company shall
arrange to provide the Executive and his dependents with benefits
substantially similar to those which the Executive and his dependents
would otherwise have been entitled to receive under such plans and
programs from which their continued participation is barred.
(c) By Company for Cause or by the Executive Other than for Good
Reason. If the Executive's employment shall be terminated by the Company
for Cause or by the Executive other than for Good Reason, then the Company
shall pay the Executive his Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination, and the
Company shall have no additional obligations to the Executive under this
Agreement except as set forth in subsection (d) of this Section 9.
(d) Upon Expiration of the Agreement. if the Executive's
employment is terminated by the Company upon the expiration of the
Employment Period, the Company shall W continue to pay to the Executive (or
his legal representatives or estate) his Base Salary as then in effect for
one year and (ii) continue coverage under the Executive's employee welfare
benefit plans and arrangements described in Section 9(b)(iii) for one year;
provided, however, the provisions of this Section 9(d) shall not be
applicable if the Company and the Executive agree, in accordance with
Section 6, that the Executive shall continue to serve as a consultant to the
Company.
(e) Compensation Plans. Following any termination of the
Executive's employment, the Company shall pay the Executive all unpaid
amounts, if any, to which the Executive is entitled as of the Date of Termi-
nation under any compensation plan or program of the Company, at the time
such payments are due.
(f) Reduction. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of
this Agreement (the "Severance Payments") or any other plan, arrangement or
agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or part) by the
Company, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent
necessary to make such portion of the Total Payments deductible (and after
taking into account any reduction in the Total Payments provided by reason
of section 28OG of the Code in such other plan, arrangement or agreement),
the cash Severance Payments shall first be reduced (if necessary, to zero),
and all other Severance Payments shall thereafter be reduced (if necessary,
to zero); provided, however, that the Executive may elect (at any time prior
to the delivery of a Notice of Termination hereunder) to have the noncash
Severance Payments reduced (or eliminated) prior to any reduction of the
cash Severance Payments.
For purposes of this limitation, (i) no portion of the Total Payments
the receipt or enjoyment of which the Executive shall have effectively
waived in writing shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which, in the opinion of tax counsel
(the "Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control,
the Company's independent auditor (the "Auditor"), does not constitute a
"parachute payment" within the meaning of section 28OG(b)(2) of the Code,
including by reason of section 28OG(b)(4)(A) of the Code, (iii) the
Severance Payments shall be reduced only to the extent necessary so that the
Total Payments (other than those referred to in clauses W or (ii)) in their
entirety constitute reasonable compensation for services actually rendered
within the meaning of section 28OG(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions by reason of section 28OG of the Code,
in the opinion of the Tax Counsel, and (iv) the value of any noncash benefit
or any deferred payment or benefit included in the Total Payments shall be
determined by the Auditor in accordance with the principles of sections
28OG(d)(3) and (4) of the Code.
(g) Time of Payments. The lump sum payments provided for in
Section 9(b) shall be made not later than the fifth day following the Date
of Termination; Provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay
the Executive on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code).
10. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for the Executive by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
the Executive hereunder be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive
to the Company or otherwise except as is hereinafter specifically provided
in this Section 10. To the extent that the Executive, during the relevant
period described in Section 9(b)(ii), shall receive from a subsequent
employer benefits similar to those to be provided under Section 9(b)(ii),
the benefits to be provided under the provisions of said Section shall be
correspondingly reduced.
11. Confidential Information; Noncompetition Requirement.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets,
confidential information, and knowledge or data relating to the Company and
its subsidiaries and their businesses, which shall have been obtained by the
Executive at any time during the Executive's employment by the Company
(whether during the Employment Period or otherwise) and which shall not have
been or now or hereafter have become public knowledge (other than by acts by
the Executive or representatives of the Executive in violation of this
Agreement). The Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate or divulge any such trade secrets, information, knowledge or
data to anyone other than the Company and those designated by the Company.
Any termination of the Executive's employment or of this Agreement shall
have no effect on the continuing operation of this Section 11(a).
(b) Noncompetition Requirement. During any period that the
Executive is performing services hereunder as an employee or a consultant or
in respect of which the Executive is entitled to payment pursuant to Section
9(b)(i) and for an additional period of two (2) years thereafter (the
"Additional Period"), the Executive agrees that, without the prior written
consent of the Company, he shall not, directly or indirectly, with or
without pay, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, manager, investor,
lender, advisor, owner, associate or in any other individual or
representative capacity, (i) solicit, entice, encourage or otherwise attempt
to procure business from any customers (determined as of the Date of
Termination) of the Company or a subsidiary thereof for a business that is
competitive in any manner whatsoever (a "Competitive Business") with any
business in which the Company is then engaged, (ii) solicit, entice or
encourage any employee (determined as of the Date of Termination) of the
Company or a subsidiary thereof to leave the employ of the Company or any of
its subsidiaries, or (iii) engage or participate in any Competitive
Business; provided, however, that clause (iii) of this Section 11(b) shall
not apply during the Additional Period; and further provided, however, that
this Section 11(b) shall have no further force or effect upon the
termination of the Executive's employment on or after a Change in Control.
If any provision of Section 11(a) or of this Section 11(b) should be deemed
invalid, illegal or unenforceable because its scope is considered excessive,
such provision shall be modified so that the scope of the provision is
reduced only to the minimum extent necessary to render the modified
provision valid.
(c) Injunctive Relief. In the event of a breach or threatened
breach of subsections (a) or (b) of this Section 11, the Executive agrees
that the Company shall be entitled to injunctive relief in a court of
appropriate jurisdiction to remedy any such breach or threatened breach, the
Executive acknowledging that damages would be inadequate and insufficient.
12. Legal Fees. The Company shall reimburse the Executive for
any legal fees and expenses incurred by the Executive following a Change in
Control in contesting or disputing any termination of the Executive's
employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement or in connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder) other than for any such expenses,
costs, liabilities or legal fees incurred as a result of the Executive's bad
faith or gross negligence. Such payments shall be made at the time
specified in Section 9(g), or within five (5) days after the Executive's
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 12.
13. Successors; Binding Agreement.
(a) Company's Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as he would be entitled to hereunder if the Company had
terminated his employment on or after a Change in Control without Cause,
except that for purposes of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the Date of Termina-
tion. In the event of failure of the Company to obtain such assumption and
agreement prior to the effective date of any such succession, the Executive
shall have no rights or remedies other than as specifically set forth in the
preceding sentence. As used in this Agreement, "Company" shall mean the
Company as herein before defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for
in this Section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of
the Executive hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts unless otherwise
provided herein shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, or other designee or, if there be no
such designee, to the Executive's estate.
14. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
E. Phillip Smoot
218 Apolena Avenue
Balboa Island, California 92662
If to the Company:
Park Electrochemical Corp.
5 Dakota Drive
Lake Success, New York 11042
Attention: President
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by the Executive and an appropriate officer of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be binding on all successors to the
Company. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without
regard to its conflicts of law principles. Any action or proceeding
relating to this Agreement or any matters arising out of or in connection
with this Agreement, and any action for enforcement of any judgment in
respect thereof, shall be brought exclusively in the courts of the State of
New York or of the United States of America for the Eastern District of New
York, and the Company and the Executive each hereby accepts the exclusive
jurisdiction of the aforesaid courts and the appellate courts thereof. The
Company and the Executive each irrevocably consents to service of process
out of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof registered or certified mail, postage prepaid, to
the Company or the Executive at their respective addresses referred to in
Section 14. All references herein to "Sections" pertain to Sections of this
Agreement unless otherwise specified. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be
paid net of any applicable withholding required under federal, state or
local law. The obligations of the Company under Section 9 and of the
Executive under Section 11 shall survive the expiration of the term of this
Agreement. The compensation and benefits payable to the Executive under
this Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under
any severance plan, program, policy or arrangement of the Company.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
17. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
PARK ELECTROCHEMICAL CORP.
/s/ Jerry Shore
Name: Jerry Shore
Title: Chairman
/s/ E. Phillip Smoot
E. Phillip Smoot
<TABLE>
EXHIBIT NO. 11.01
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY-DILUTED EARNINGS PER SHARE
(In thousands, except per share data)
<CAPTION>
Fiscal year ended
1996 1995 1994
ADJUSTMENT OF NET EARNINGS:
<S> <C> <C> <C>
Net earnings $24,898 $17,345 $8,062
Adjustments resulting from assumed
conversion of 5.5% Convertible
Subordinated Notes ("Notes") in fiscal
1996 and 7.25% Convertible Subordinated
Debentures ("Debentures") in fiscal
1995 and 1994:
Reduction of interest expense and
amortization of deferred debt
financing costs 81 389 2,476
Related tax effect on above (28) (136) (867)
Net earnings, as adjusted $24,951 $17,598 $ 9,671
ADJUSTMENT OF WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Weighted average number of common and
common equivalent shares outstanding 11,794 10,858 7,986
Add weighted average shares
assumed to be issued upon:
Conversion of Notes and Debentures 32 504 3,220
Exercise of stock options at period-end
market price if higher than average
market price for fiscal year 34 208 248
Weighted average number of common
and common equivalent shares
outstanding, as adjusted 11,860 11,570 11,454
FULLY-DILUTED EARNINGS PER SHARE $ 2.10 $ 1.52 $ .84
</TABLE>
EXHIBIT 22.01
SUBSIDIARIES OF PARK ELECTROCHEMICAL CORP.
The following table lists Park's subsidiaries and the jurisdiction in
which each such subsidiary is organized.
Jurisdiction of
Name Incorporation
Dielectric Polymers, Inc. Massachusetts
FiberCote Industries, Inc. Connecticut
Grand Rapids Die Casting Corp. Michigan
Metclad S.A. France
Nelco International Corporation Delaware
Nelco GmbH West Germany
Nelco Products, Inc. Delaware
Nelco Products Pte. Ltd. Singapore
Nelco S.A. France
Nelco Technology, Inc. Arizona
Neltec, Inc. Delaware
Neluk, Inc. Delaware
New England Laminates Co., Inc. New York
New England Laminates (U.K.) Ltd. England
Park Advanced Product Development Corp. New York
Technocharge Limited England
Zin-Plas Corporation Michigan
Zin-Plas of Canada, Inc. Canada
Zin-Plas Marketing and Business
Development Corporation Michigan
EXHIBIT 24.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements
Nos. 33-3777, 33-16650, 33-55383 and 33-63956 on Form S-8 of our report
dated April 18, 1996, with respect to the consolidated financial statements
and schedule of Park Electrochemical Corp. included in the Annual Report on
Form 10-K of Park Electrochemical Corp. for the fiscal year ended March 3,
1996.
ERNST & YOUNG LLP
New York, New York
May 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the financial statements of Park Electrochemical Corp. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> MAR-03-1996
<PERIOD-END> MAR-03-1996
<CASH> 75,970
<SECURITIES> 67,243
<RECEIVABLES> 44,678
<ALLOWANCES> 1,857
<INVENTORY> 27,712
<CURRENT-ASSETS> 217,772
<PP&E> 148,715
<DEPRECIATION> 72,276
<TOTAL-ASSETS> 298,975
<CURRENT-LIABILITIES> 56,807
<BONDS> 100,000
<COMMON> 1,358
0
0
<OTHER-SE> 133,069
<TOTAL-LIABILITY-AND-EQUITY> 298,975
<SALES> 312,966
<TOTAL-REVENUES> 315,251
<CGS> 242,655
<TOTAL-COSTS> 277,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 37,264
<INCOME-TAX> 12,366
<INCOME-CONTINUING> 24,898
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,898
<EPS-PRIMARY> $2.11
<EPS-DILUTED> $2.10
</TABLE>
