SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED,EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended March 2, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to________
Commission file number 1-4415
Park Electrochemical Corp.
(Exact name of registrant as specified in its charter)
New York 11-1734643
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Dakota Drive, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
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. [ ]
[cover page 1 of 2 pages]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.
As of close
Title of Class Aggregate market value of business on
Common Stock, $256,464,800* May 2, 1997
$.10 par value
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
Shares As of close
Title of Class outstanding of business on
Common Stock, 11,273,178 May 2, 1997
$.10 par value
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Shareholders to be held July
16, 1997 incorporated by reference into Part III of this Report.
=====================================================================
*Included in such amount are 1,015,032 shares of common stock valued
at $22.75 per share and held by Jerry Shore, the Registrant's Chairman
of the Board and a member of the Registrant's Board of Directors.
[cover page 2 of 2 pages]
PART I
Item 1. Business.
General
Park Electrochemical Corp. ("Park"), through its subsidiaries
(unless the context otherwise requires, Park and its subsidiaries are
hereinafter called the "Company"), is primarily engaged in the design,
production and marketing of advanced electronic materials used to fabricate
complex multilayer printed circuit boards, semiconductor packages and other
electronic interconnect systems. The Company's electronic materials
business operates under the "Nelco" name. The Company is also engaged in
the design, production and marketing of specialty adhesive tapes and films,
advanced composite materials and microwave circuitry materials for the
electronics, aerospace and industrial markets and plumbing hardware. Park
was founded in 1954 by Jerry Shore, the Company's Chairman of the Board and
largest shareholder.
Unless otherwise indicated, all information in this Report has been
adjusted to give effect to the Company's two-for-one stock split in the form
of a stock dividend, which was distributed August 15, 1995 to shareholders
of record at the close of business on July 24, 1995.
The Company's business is divided into two industry segments: (1)
electronic materials and (2) engineered materials and plumbing hardware.
See Note 12 of the Notes to Consolidated Financial Statements included in
Item 8 of this Report for information concerning the amounts of sales to
unaffiliated customers, operating profit, identifiable assets, depreciation
and amortization, and capital expenditures attributable to each of the
Company's industry segments during its last three fiscal years.
The sales, operating profit and identifiable assets of the Company's
operations by geographic area for the last three fiscal years are also set
forth in Note 12 of the Notes to Consolidated Financial Statements included
in Item 8 of this Report. The Company's foreign operations are conducted
principally by the Company's subsidiaries in the United Kingdom, France and
Singapore. The Company's foreign operations are subject to the impact of
foreign currency fluctuations. See Note 1 of the Notes to Consolidated
Financial Statements included in Item 8 of this Report.
Electronic Materials Operations
The Company is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards and other electronic interconnect systems, such as backplanes, PC
cards and semiconductor packaging systems. The Company's multilayer printed
circuit materials include copper-clad laminates, prepregs and semi-finished
multilayer printed circuit board panels. The Company has long-term
relationships with its major customers, which include leading independent
printed circuit board fabricators and major electronic equipment manufac-
turers. Multilayer printed circuit boards and interconnect systems are used
in virtually all advanced electronic equipment to direct, sequence and
control electronic signals between semiconductor devices (such as micropro-
cessors and memory and logic devices) and passive components (such as
resistors and capacitors). Examples of end uses of the Company's printed
circuit materials range from supercomputers to laptops and from satellite
switching equipment to cellular telephones. The Company has developed long-
term relationships with major customers as a result of its leading edge
products, extensive technical and engineering service support and responsive
manufacturing capabilities.
Park founded the modern day printed circuit industry in 1957 by
inventing a composite material consisting of an epoxy resin substrate
reinforced with fiberglass cloth which was laminated together with sheets of
thin copper foil. This epoxy-glass copper-clad laminate system is still
used to construct the large majority of today's advanced printed circuit
products. In 1962, the Company invented the first multilayer printed
circuit materials system used to construct multilayer printed circuit
boards. The Company also pioneered vacuum lamination and many other
manufacturing technologies used in the industry today. The Company believes
it is one of the industry's technological leaders.
As a result of its leading edge products, extensive technical and
engineering service support and responsive manufacturing capabilities, the
Company expects to continue to take advantage of several industry trends.
These trends include the increasing global demand for electronic products
and technology, the increasing complexity of electronic products, the
increasingly advanced electronic materials required for interconnect
performance and manufacturability, the consolidation of the printed circuit
board fabrication industry and the time-to-market and time-to-volume
pressures requiring closer collaboration with materials suppliers.
The Company believes that it is one of the world's largest
manufacturers of multilayer printed circuit materials and the market leader
in North America and Southeast Asia. It also believes that it is the only
significant independent manufacturer of multilayer printed circuit materials
in the world. The Company was the first manufacturer in the printed circuit
materials industry to establish manufacturing presences in the three major
global markets of North America, Europe and Asia, with facilities estab-
lished in Europe in 1969 and Asia in 1986.
Industry Background
The electronic materials manufactured by the Company and its
competitors are used to construct and fabricate complex multilayer printed
circuit boards and other advanced electronic interconnect systems.
Multilayer printed circuit materials consist of prepregs and copper-clad
laminates, as well as semi-finished multilayer printed circuit board panels.
Prepregs are chemically and electrically engineered plastic resin systems
which are impregnated into and reinforced by a specially manufactured
fiberglass cloth product or other woven or non-woven reinforcing fiber.
This insulating dielectric substrate is .030 inch to .002 inch in thickness
or less in some cases. These resin systems are usually based upon an epoxy
chemistry. One or more plies of prepreg are laminated together to form an
insulating dielectric substrate to support the copper circuitry patterns of
a multilayer printed circuit board. Copper-clad laminates consist of one or
more plies of prepreg laminated together with specialty thin copper foil
laminated on the top and bottom. Copper foil is specially formed in thin
sheets which may vary from .0030 inch to .0002 inch in thickness and
normally have a thickness of .0014 inch or .0007 inch. The Company supplies
both copper-clad laminates and prepregs to its customers, which use these
products as a system to construct multilayer printed circuit boards.
The printed circuit board fabricator processes copper-clad laminates
to form the inner layers of a multilayer printed circuit board. The
fabricator photoimages these laminates with a dry film or liquid photo-
resist. After development of the photoresist, the copper surfaces of the
laminate are etched to form the circuit pattern. The fabricator then
assembles these etched laminates by inserting one or more plies of
dielectric prepreg between each of the inner layer etched laminates and also
between an inner layer etched laminate and the outer layer copper plane, and
then laminating the entire assembly in a press. Prepreg serves as the
insulator between the multiple layers of copper circuitry patterns found in
the multilayer circuit board. When the multilayer configuration is
laminated, these plies of prepreg form an insulating dielectric substrate
supporting and separating the multiple inner and outer planes of copper
circuitry. The fabricator drills vertical through holes or vias in the
multilayer assembly and then plates the through holes or vias to form
vertical conductors between the multiple layers of circuitry patterns.
These through holes or vias combine with the conductor paths on the
horizontal circuitry planes to create a three-dimensional electronic
interconnect system. The outer two layers of copper foil are then imaged
and etched to form the finished multilayer printed circuit board. The
completed multilayer board is a three-dimensional interconnect system with
electronic signals traveling in the horizontal planes of multiple layers of
copper circuitry patterns, as well as the vertical plane through the plated
holes or vias.
The global market for advanced electronic products is growing as a
result of technological change and frequent new product introductions. This
growth is principally attributable to increased sales and more complex
electronic content of newer products, such as cellular phones, pagers,
personal computers and portable computing devices, and greater use of
electronics in other products, such as automobiles. Further, large, almost
completely untapped markets for advanced electronic equipment have emerged
in such areas as India and China and other areas of the Pacific Rim.
Semiconductor manufacturers have introduced successive generations
of more powerful microprocessors and memory and logic devices. Electronic
equipment manufacturers have designed these advanced semiconductors into
more compact and often portable products. High performance computing
devices in these smaller portable platforms require greater reliability,
closer tolerances, higher component and circuit density and increased
overall complexity. As a result, the interconnect industry has developed
smaller, lighter, faster and more cost-effective interconnect systems,
including advanced multilayer printed circuit boards and new types of
semiconductor packaging systems such as ball-grid arrays and multi-chip
modules.
Advanced interconnect systems require higher technology printed
circuit materials to insure the performance of the electronic system and to
improve the manufacturability of the interconnect platform. The growth of
the market for more advanced printed circuit materials has outpaced the
market growth for standard printed circuit materials in recent years.
Printed circuit board fabricators and electronic equipment manufacturers
require advanced printed circuit materials that have increasingly higher
temperature tolerances and more advanced electrical properties in order to
support high speed computing in a miniaturized and often portable environ-
ment.
With the very high density circuit demands of miniaturized high
performance interconnect systems, the uniformity, purity, consistency,
performance predictability, dimensional stability and production tolerances
of printed circuit materials have become successively more critical. High
density printed circuit boards and interconnect systems often involve higher
layer count multilayer circuit boards where the multiple planes of circuitry
and dielectric insulating substrates are very thin (dielectric insulating
substrate layers may be .002 inch or less) and the circuit line and space
geometries in the circuitry plane are very narrow (.003 inch or less). In
addition, advanced surface mount interconnect systems are typically designed
with very small pad sizes and very narrow plated through holes or vias which
electrically connect the multiple layers of circuitry planes. High density
interconnect systems must utilize printed circuit materials whose dimension-
al characteristics and purity are consistently manufactured to very high
tolerance levels in order for the printed circuit board fabricator to attain
and sustain acceptable production yields.
Shorter product life cycles and competitive pressures have induced
electronic equipment manufacturers to bring new products to market and
increase production volume to commercial levels more quickly. These trends
have highlighted the importance of front-end engineering of electronic
products and have increased the level of collaboration among system
designers, fabricators and printed circuit materials suppliers. As the
complexity of electronic products increases, materials suppliers must
provide greater technical support to interconnect systems fabricators on a
timely basis regarding manufacturability and performance of new materials
systems.
Products and Services
The Company produces a broad line of advanced printed circuit
materials used to fabricate complex multilayer printed circuit boards and
other electronic interconnect systems, including backplanes, PC cards and
semiconductor packaging systems. The Company also manufactures semi-
finished multilayer printed circuit board panels for a select group of
customers. The Company's diverse advanced printed circuit materials product
line is designed to address a wide array of end-use applications and
performance requirements.
The Company's product line has been developed internally and through
long-term development projects with its principal suppliers. The Company
focuses its research and development efforts on developing industry leading
product technology to meet the most demanding product requirements and has
designed its product line with a focus on the higher performance, higher
technology end of the materials spectrum. All of the Company's existing
electronic materials products have been introduced since 1990.
Most of the Company's research and development expenditures are
attributable to the efforts of its electronic materials operations. In
response to the rapid technological changes in the electronic materials
business, these expenditures on research and product development have
increased over the past several years.
The Company's products include high-temperature modified epoxies,
bismaleimide triazine epoxies ("BT epoxy"), non-MDA polyimides, enhanced
polyimides, high performance epoxy Thermount(R) materials ("Thermount" is a
registered trademark of E.I. duPont de Nemours & Co.), cyanate esters and
polytetrafluoroethylene ("PTFE") materials.
During the 1996 and 1997 fiscal years, the Company introduced
several new high technology electronic materials products, including:
. N4000-13 - Nelco's high-temperature product with advanced electrical
properties for high-speed computing and telecommunications applica-
tions, which is being marketed;
. N5000-30 and N5000-32 - Nelco's advanced BT-epoxy plastic laminate chip
packaging materials for complex microprocessor cavity boards and
plastic ball grid arrays and pin grid arrays, which are being sampled
and tested by North American and European customers, and are currently
entering the market;
. N4000-X-1 - Nelco's advanced new proprietary plastic laminate chip
packaging material, which is being tested and sampled by leading
customers in North America, Asia and Europe.
. N4500-6T - Nelco's high-temperature, high speed, non-woven Thermount(R)
reinforced material suitable for advanced microvia and laservia
applications, which is being marketed; and
. Metclad's PTFE - Metclad's woven, metal-backed PTFE laminate substrate
for microwave circuitry applications, which is being marketed in
Europe.
In addition to prepreg and copper-clad laminate printed circuit
materials products, the Company also manufactures semi-finished multilayer
printed circuit board panels as a value-added service for a limited number
of its key customers. Production of the Company's semi-finished multilayer
product involves several additional manufacturing steps beginning with the
photoimaging and etching of the copper-clad laminate product into the
circuitry patterns specified by the customer. These etched laminates form
the inner layers of the multilayer circuit board. The etched inner layers
are then laminated into a multilayer assembly with insulating dielectric
prepreg inserted between the multiple etched inner layers and outer layer
copper planes. The outer planes of copper foil are left in unprocessed
"blank" form and the product is delivered to the customer at this stage in
the process. The fabricator customer then drills and plates the through
holes or vias and finishes the outer layers of circuitry patterns to
complete the product.
The Company has developed long-term relationships with select customers
through broad-based technical support and service, as well as manufacturing
proximity and responsiveness at multiple levels of the customer's organiza-
tion. The Company focuses on developing a thorough understanding of its
customer's business, product lines, processes and technological challenges.
The Company seeks customers which are industry leaders committed to
maintaining and improving their industry leadership positions and which are
committed to long-term relationships with their suppliers. The Company also
seeks business opportunities with the more advanced printed circuit
fabricators and electronic equipment manufacturers which are interested in
the full value of products and services provided by their suppliers. The
Company believes its proactive and timely support in assisting its customers
with the integration of advanced materials technology into new product
designs further strengthens its relationships with its customers.
The Company's emphasis on service and close relationship with its
customers is reflected in its relatively short lead times. The Company has
designed its manufacturing processes and service organizations to provide
the customer with its printed circuit materials products on a just-in-time
basis.
The Company has located its advanced printed circuit materials
manufacturing operations in strategic locations intended to serve specific
regional markets. By situating its facilities in close geographical
proximity to its customers, the Company is able to rapidly adjust its
manufacturing processes to meet customers' new requirements and respond
quickly to customers' technical needs. The Company has full technical
staffs based at each of its manufacturing locations, which allows the rapid
dispatch of technical personnel to a customer's facility to assist the
customer in quickly solving design, process, production or manufacturing
problems.
Customers and End Markets
The Company's customers for its advanced electronic materials include
the leading independent printed circuit board fabricators and major
electronic equipment manufacturers in the computer, telecommunications,
transportation, aerospace and instrumentation industries located throughout
North America, Europe and Asia. The Company seeks to align itself with the
larger, more technologically-advanced and better capitalized independent
printed circuit board fabricators and major electronic equipment manufactur-
ers which are industry leaders committed to maintaining and improving their
industry leadership positions and to building long-term relationships with
their suppliers. The Company's selling effort typically involves several
stages and relies on the talents of Company personnel at different levels,
from management to sales personnel and quality engineers. The Company's
strategy emphasizes the use of multiple facilities established in market
areas in close proximity to its customers.
During the Company's 1997 fiscal year, more than 10% of the Company's
sales were made to Delco Electronics Corporation, a subsidiary of General
Motors Corp. Delco Electronics has purchased a significant amount of
product from the Company for more than three years, and the Company believes
its relations with this customer are strong and that this customer will
continue to make significant purchases of printed circuit materials product
from the Company in the immediate future. Although the Company's electronic
materials segment is not dependent on this single customer, the loss of this
customer could have a material adverse effect on the business of this
segment. Although no other single customer accounted for 10% or more of
total sales of the Company for the 1997 fiscal year and the electronic
materials segment is not dependent on any other single customer, the loss of
a major customer or of a group of this segment's customers could have a
material adverse effect on the business of this segment.
The Company's electronic materials segment's products are marketed by
sales personnel in industrial centers in North America, Europe and Asia.
Such personnel include both salaried employees and independent sales
representatives who work on a commission basis.
Manufacturing
The process for manufacturing multilayer printed circuit materials is
capital intensive and requires sophisticated equipment as well as clean-
room environments. The key steps in the Company's manufacturing process
include: the impregnation of specially designed fiberglass cloth with a
resin system and the partial curing of that resin system; the assembling of
laminates consisting of single or multiple plies of prepreg and copper foil
in a clean-room environment; the vacuum lamination of the copper-clad
assemblies under simultaneous exposure to heat, pressure and vacuum; and the
finishing of the laminates to customer specifications.
Prepreg is manufactured in a treater. A treater is a roll-to-roll
continuous machine which sequences specially designed fiberglass cloth or
other reinforcement fabric into a resin tank and then sequences the resin-
coated cloth through a series of ovens which partially cure the resin system
into the cloth. This partially cured product or prepreg is then sheeted or
paneled and packaged by the Company for sale to customers, or used by the
Company to construct its copper-clad laminates.
The Company manufactures copper-clad laminates by first setting up in
a clean room an assembly of one or more plies of prepreg stacked together
with a sheet of specially manufactured copper foil on the top and bottom of
the assembly. This assembly, together with a large quantity of other
laminate assemblies, is then inserted into a large, multiple opening vacuum
lamination press. The laminate assemblies are then laminated under
simultaneous exposure to heat, pressure and vacuum. After the press cycle
is complete, the laminates are removed from the press and sheeted, paneled
and finished to customer specifications. The product is then inspected and
packaged for shipment to the customer.
The Company manufactures multilayer printed circuit materials at eight
fully integrated facilities located in the United States, Europe and
Southeast Asia. The Company opened its California facility in 1965, its
United Kingdom facility in 1969, its first Arizona and France facilities in
1984, its Singapore facility in 1986 and its second Arizona and France
facilities in 1992. The Company services the North American market
principally through its United States manufacturing facilities, the European
market principally through its manufacturing facilities in the United
Kingdom and France, and the Asian market principally through its Singapore
manufacturing facility. The Company has located its manufacturing
facilities in its important markets. By maintaining full technical and
engineering staffs at each of its manufacturing facilities, the Company is
able to deliver fully-integrated products and services on a timely basis.
During the 1996 fiscal year, the Company expanded its New York State
operations to increase its production capacity for advanced printed circuit
materials principally for the North American market and expanded its Tempe,
Arizona operations to provide enhanced capability and capacity to produce
high density, semi-finished multilayer panels and interconnect systems. It
commenced commercial operations at these expanded facilities during the
early part of its 1997 fiscal year. The Company added to the manufacturing
capacity of its facilities in Arizona and Singapore during the latter part
of its 1997 fiscal year and is planning further expansions of its electronic
materials operations in one or more additional locations during the 1998
fiscal year, particularly in the United States and Asia.
All of the Company's multilayer printed circuit materials manufacturing
facilities are used for manufacturing, engineering and product development,
except for the facility located in Lannemezan, France, which is principally
a product research and development facility, but which in the 1997 fiscal
year introduced a new woven, metal-backed PTFE laminate substrate for
microwave circuitry applications in Europe. All of the Company's printed
circuit materials manufacturing facilities are ISO 9002 certified.
Materials and Sources of Supply
The principal materials used in the manufacture of the Company's
electronic products are specially manufactured copper foil, fiberglass cloth
and synthetic reinforcements, and specially formulated resins and chemicals.
The Company attempts to develop and maintain close working relationships
with suppliers of those materials who have dedicated themselves to complying
with the Company's stringent specifications and technical requirements.
While the Company's philosophy is to work with a limited number of
suppliers, the Company has identified alternate sources of supply for each
of these materials. However, there are a limited number of qualified
suppliers of these materials, substitutes for these materials are not
readily available, and, in the recent past, the industry has experienced
shortages in the market for certain of these materials. While the Company
has not experienced significant problems in the delivery of these materials
and considers its relationships with its suppliers to be strong, a
disruption of the supply of material from one of the Company's principal
suppliers or an inability to obtain essential materials could materially
adversely affect the business, financial condition and results of operations
of the Company. Significant increases in the cost of materials purchased by
the Company could also have a material adverse effect on the Company's
business, financial condition and results of operations if the Company were
unable to pass such price increases through to its customers.
Competition
The multilayer printed circuit materials industry is characterized by
intense competition and ongoing consolidation. The Company's competitors
are primarily divisions or subsidiaries of very large, diversified
multinational manufacturers which are substantially larger and have greater
financial resources than the Company and, to a lesser degree, smaller
regional producers. Because the Company focuses on the higher technology
segment of the electronic materials market, technological innovation,
quality and service, as well as price, are significant competitive factors.
The Company believes that there are approximately ten significant
multilayer printed circuit materials manufacturers in the world and many of
these competitors have or are developing significant presences in the three
major global markets of North America, Europe and Asia. The Company
believes that the multilayer printed circuit materials industry is rapidly
becoming more global and that the remaining smaller regional manufacturers
will find it increasingly difficult to remain competitive. The Company
believes that it is currently one of the world's largest multilayer printed
circuit materials manufacturers and the market leader in North America and
Southeast Asia. The Company further believes it is the only significant
independent manufacturer of multilayer printed circuit materials in the
world today.
The markets in which the Company's electronic materials operations
compete are characterized by rapid technological advances, and the Company's
position in these markets depends largely on its continued ability to
develop technologically advanced and highly specialized products. Although
the Company believes it is an industry technology leader and directs a
significant amount of its time and resources toward maintaining its
technological competitive advantage, there is no assurance that the Company
will be technologically competitive in the future, or that the Company will
continue to develop new products that are technologically competitive.
Engineered Materials and Plumbing Hardware
The Company's engineered materials and plumbing hardware segment is
comprised of its specialty adhesive tape and film, advanced composite
materials and plumbing hardware businesses. Dielectric Polymers, Inc., the
Company's specialty adhesive tape and film business, produces tapes and
bonding films for a variety of applications including joining industrial
components together. FiberCote Industries, Inc., the Company's composites
business, designs and produces engineered advanced composite materials for
the electronics, aerospace and industrial markets. Zin-Plas Corporation
markets plumbing hardware products, which it designs and manufactures
typically from chrome and brass plated zinc and plastic, and markets brass
cast and plastic plumbing hardware products and components.
Marketing and Customers
The Company's engineered materials and plumbing hardware customers,
substantially all of which are located in the United States, include
manufacturers in the electronics, aerospace and industrial industries and
original equipment manufacturers, hardware and plumbing wholesalers and home
improvement centers. All of such products are marketed by sales personnel
including both salaried employees and independent sales representatives who
work on a commission basis.
While no single engineered materials and plumbing hardware customer
accounted for 10% or more of the Company's total sales during the last
fiscal year, the loss of a major customer or of a group of some of the
largest customers of the engineered materials and plumbing hardware segment
could have a material adverse effect upon this segment.
Manufacturing and Sources of Supply
The Company's advanced composite materials manufacturing facility is
located in Waterbury, Connecticut. Holyoke, Massachusetts is the site of
the Company's specialty adhesive tape and film business. Zinc and plastic
plumbing hardware products are manufactured and assembled at the Company's
facilities in Grand Rapids and Comstock Park, Michigan. The Company's brass
cast plumbing hardware products are designed by the Company and manufactured
by a prominent Mexican faucet manufacturer under a long-term contract
between the Company and this manufacturer.
The Company designs and manufactures its advanced composite materials
and industrial tapes and films to its own specifications and to the
specifications of its customers. Product development efforts are devoted
toward the conforming of the Company's advanced composites to the specifica-
tions of, and the obtaining of approvals from, the Company's customers. The
materials used in the manufacture of these engineered materials include
chemicals, films, resins, fiberglass, plastics, and other fabricated
materials and adhesives. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for many of these materials
are not readily available, the Company has experienced no difficulties in
obtaining such materials.
The Company designs and manufactures its plumbing hardware to its own
specifications and to the specifications of original equipment manufactur-
ers, using combinations of materials and product designs that are developed
by its personnel. The Company's product development efforts relating to its
plumbing hardware business operations are directed toward the development of
new decorative plumbing hardware product designs and new materials to be
used in the manufacture of plumbing products. This requires market
research, industrial design, engineering and testing for ease of installa-
tion and durability. The Company usually combines chrome-plated zinc and
plastic moldings for its products.
The principal materials used in the manufacture of the Company's
plumbing hardware products consist of zinc castings, plastics, plating
materials, and other component parts. The Company purchases these materials
from several suppliers. Although satisfactory substitutes for these
materials are not readily available, the Company has experienced no
difficulties in obtaining such materials. The Company purchases brass
castings from one supplier and the Company has a long-term contract with
this supplier.
Competition
The Company has many competitors in the engineered materials and
plumbing hardware segment, including some major corporations which have
substantially greater financial resources than the Company. The Company
competes for business on the basis of product performance and development,
product qualification and approval, the ability to manufacture and deliver
products in accordance with customers' needs and requirements, and price.
The Company's plumbing hardware business can be affected by fluctuations in
the housing industry.
Backlog
The Company records an item as backlog when it receives a purchase
order specifying the number of units to be purchased, the purchase price,
specifications and other customary terms and conditions. At May 2, 1997,
the unfilled portion of all purchase orders believed to be firm was
approximately $21,524,000, compared to $18,917,000 at May 3, 1996. Backlog
of the Company's two industry segments at May 2, 1997, compared to May 3,
1996, was as follows:
May 2, 1997 May 3, 1996
Electronic Materials $13,784,000 $ 9,747,000
Engineered Materials and
Plumbing Hardware 7,740,000 9,170,000
Total $21,524,000 $18,917,000
Various factors contribute to the size of the Company's backlog.
Accordingly, the foregoing information may not be indicative of the
Company's results of operations for any period subsequent to the fiscal year
ended March 2, 1997.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto.
In the Company's opinion, some of these patents and trademarks are important
to its products. Generally, however, the Company does not believe that an
inability to obtain new, or to defend existing, patents and trademarks would
have a material adverse effect on the Company.
Employees
At March 2, 1997, the Company had approximately 2,340 employees. Of
these employees, 2,060 were engaged in the Company's electronic materials
operations, 260 in its engineered materials and plumbing hardware operations
and 20 consisted of executive personnel and general administrative staff.
Approximately 2% of the Company's employees, all of whom are engaged in the
plumbing hardware operations, are subject to collective bargaining
agreements. Management considers its labor relations to be satisfactory.
Environmental Matters
The Company is subject to stringent environmental regulation of its
use, storage, treatment and disposal of hazardous materials and the release
of emissions into the environment. The Company believes that it currently
is in substantial compliance with the applicable federal, state and local
environmental laws and regulations to which it is subject and that
continuing compliance therewith will not have a material effect on its
capital expenditures, earnings or competitive position. The Company does
not currently anticipate making material capital expenditures for environ-
mental control facilities for its existing manufacturing operations during
the remainder of its current fiscal year or its succeeding fiscal year.
However, developments, such as the enactment or adoption of even more
stringent environmental laws and regulations, could conceivably result in
substantial additional costs to the Company.
The Company and certain of its subsidiaries have been named by the
Environmental Protection Agency (the "EPA") or a comparable state agency
under the Comprehensive Environmental Response, Compensation and Liability
Act (the "Superfund Act") or similar state law as potentially responsible
parties in connection with alleged releases of hazardous substances at nine
sites. In addition, a subsidiary of the Company has received cost recovery
claims under the Superfund Act from other private parties involving three
other sites and has received requests from the EPA under the Superfund Act
for information with respect to its involvement at two other sites. Under
the Superfund Act and similar state laws, all parties who may have
contributed any waste to a hazardous waste disposal site or contaminated
area identified by the EPA or comparable state agency may be jointly and
severally liable for the cost of cleanup. Generally, these sites are
locations at which numerous persons disposed of hazardous waste. In the
case of the Company's subsidiaries, generally the waste was removed from
their manufacturing facilities and disposed at the waste sites by various
companies which contracted with the subsidiaries to provide waste disposal
services. Neither the Company nor any of its subsidiaries have been accused
of or charged with any wrongdoing or illegal acts in connection with any
such sites. The Company believes it maintains an effective and comprehen-
sive environmental compliance program. Management believes the ultimate
disposition of known environmental matters will not have a material adverse
effect upon the Company.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Environmental Matters" included in Item 7 of this
Report and Note 11 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report.
Item 2. Properties.
The following chart indicates the significant properties owned and
leased by the Company, the industry segment which uses the properties, and
the location and size of each such property. All of such properties, except
for the Lake Success, New York property, are used principally as manufactur-
ing, warehouse and assembly facilities.
<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
Singapore Leased Electronic Materials 48,000
Singapore Leased Electronic Materials 10,000
Grand Rapids, MI Owned Plumbing Hardware 165,000
Comstock Park, MI Leased Plumbing Hardware 39,000
Holyoke, MA Leased Engineered Materials- 34,000
Specialty Adhesive
Tapes and Films
Waterbury, CT Leased Engineered Materials- 100,000
Advanced Composites
</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 2, 1997.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant.
Name Title Age
Jerry Shore Chairman of the Board and a 71
Director
Brian E. Shore Chief Executive Officer, President 45
and a Director
E. Phillip Smoot Executive Vice President and a 59
Director
Susan J. Denenholz Vice President-Planning and Analysis 44
Jerry Shore has served the Company in the capacities stated above
for more than the past five years. He also served as President of the
Company for more than five years until March 4, 1996 and as Chief Executive
Officer of the Company for more than five years until November 19, 1996.
Brian Shore has served as a Director of the Company for more than
the past five years. Brian Shore was elected a Vice President of the
Company in January 1993, Executive Vice President in May 1994, President
effective March 4, 1996, the first day of the Company's last fiscal year,
and Chief Executive Officer in November 1996. Brian Shore also served as
General Counsel of the Company from April 1988 until April 1994.
Mr. Smoot has served the Company in the capacities stated above for
more than the past five years.
Ms. Denenholz became Vice President-Planning and Analysis in
December 1996. Prior to December 1996, she was employed by Dun & Bradstreet
Corporation, as Assistant Vice President, Acquisitions from 1992, Director,
Acquisitions Analysis, from 1982 to 1992 and Manager, Business Analysis from
1979 to 1982. From 1975 to 1979, she was employed by RCA Corporation. Ms.
Denenholz is a certified public accountant and a member of the New York
State Bar.
There are no family relationships between the directors or executive
officers of the Company, except that Brian Shore is the son of Jerry Shore.
The term of office of each executive officer of the Company expires
upon the election and qualification of his or her successor.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder Matters.
The Company's Common Stock is listed and trades on the New York
Stock Exchange (trading symbol PKE). (The Common Stock also trades on the
Midwest Stock Exchange.) The following table sets forth, for each of the
quarterly periods indicated, the high and low sales prices for the Common
Stock as reported on the New York Stock Exchange Composite Tape and
dividends declared on the Common Stock, all as adjusted for the two-for-one
stock split in the form of a stock dividend distributed August 15, 1995 to
shareholders of record at the close of business on July 24, 1995.
For the Fiscal Year Stock Price Dividends
Ended March 2, 1997 High Low Declared
First Quarter $33 3/8 $21 3/4 $.08
Second Quarter 24 5/8 16 3/4 $.08
Third Quarter 24 17 1/2 $.08
Fourth Quarter 26 1/2 20 7/8 $.08
For the Fiscal Year Stock Price Dividends
Ended March 3, 1996 High Low Declared
First Quarter $20 1/16 $16 7/8 $.06
Second Quarter 31 1/2 17 1/8 $.06
Third Quarter 34 1/8 28 $.08
Fourth Quarter 37 7/8 28 3/8 $.08
As of May 2, 1997, there were 2,434 holders of record of Common
Stock.
The Company expects, for the immediate future, to continue to pay
regular cash dividends.
Item 6. Selected Financial Data.
The following selected consolidated financial data of Park and its
subsidiaries is qualified by reference to, and should be read in conjunction
with, the consolidated financial statements, related notes, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere herein. Insofar as such consolidated financial
information relates to the five fiscal years ended March 2, 1997 and is as
of the end of such periods, it is derived from the consolidated financial
statements for such periods and as of such dates audited by Ernst & Young
LLP, independent Certified Public Accountants, for the four fiscal years
ended March 2, 1997 and Deloitte & Touche LLP, independent Certified Public
Accountants, for the fiscal year ended February 28, 1993. The consolidated
financial statements as of March 2, 1997 and March 3, 1996 and for the three
years ended March 2, 1997, together with the auditors' reports for the three
years ended March 2, 1997, appear elsewhere in this Report.
Item 6
<TABLE>
<CAPTION>
Fiscal Year Ended
Mar. 2, Mar. 3, Feb. 26, Feb. 27, Feb. 28,
1997 1996 1995 1994 1993
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS INFORMATION:
Net sales $334,490 $312,966 $253,022 $208,410 $175,176
Cost of sales 275,372 242,655 196,917 168,175 149,145
Gross profit 59,118 70,311 56,105 40,235 26,031
Selling, general and administrative
expenses 34,366 35,236 29,995 25,930 22,865
Profit from operations 24,752 35,075 26,110 14,305 3,166
Other income (expense):
Interest and other income, net 7,653 2,285 1,822 947 1,967
Interest expense (5,508) (96) (431) (2,407) (2,058)
Total other income 2,145 2,189 1,391 (1,460) (91)
Earnings before income taxes 26,897 37,264 27,501 12,845 3,075
Income tax provision 8,338 12,366 10,156 4,783 810
Net earnings $ 18,559 $ 24,898 $ 17,345 $ 8,062 $ 2,265
Earnings per share:
Primary $ 1.61 $ 2.11 $ 1.59 $ 1.01 $ .25
Fully diluted $ 1.59 $ 2.10 $ 1.52 $ .84 $ .25
Weighted average number of common
and common equivalent shares
outstanding:
Primary 11,551 11,794 10,858 7,986 9,068
Fully diluted 13,932 11,860 11,570 11,454 9,068
Cash dividends per common share $ .32 $ .28 $ .20 $ .16 $ .16
BALANCE SHEET INFORMATION:
Working capital $165,004 $160,965 $ 55,035 $ 45,867 $ 45,811
Total assets 307,862 298,975 162,051 140,750 129,009
Long-term debt 100,000 100,000 23 32,861 33,957
Stockholders' equity 143,355 134,427 112,048 61,454 60,700
</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, semiconductor packages and other electronic interconnect systems.
The Company's customers for its advanced printed circuit materials include
leading independent circuit board fabricators and large electronic equipment
manufacturers in the computer, telecommunications, transportation, aerospace
and instrumentation industries. The Company's electronic materials
operations accounted for approximately 86% of net sales worldwide and more
than 89% of operating profit in each of the last three fiscal years. The
Company's foreign electronic materials operations accounted for approximate-
ly 29% of net sales worldwide for each of the last two fiscal years and
approximately 24% for the 1995 fiscal year.
Park is also engaged in the engineered materials and plumbing
hardware business, which consists of the Company's specialty adhesive tape
business, its advanced composite business and its plumbing hardware
business, all of which operate as independent business units. This segment
accounted for approximately 14% of the Company's total net sales worldwide
and less than 11% of operating profit in each of the last three fiscal
years.
The Company's sales growth during the last three fiscal years has
been led by strong growth in sales by its North American and Asian
electronic materials operations. During the last two fiscal years,
increased sales by the Company's European operations have also contributed
to this growth. The Company's ongoing efforts to expand its higher
technology, higher margin product lines have contributed to the growth of
the Company's sales of electronic materials during this period. The Company
introduced several new electronic materials products during the 1996 and
1997 fiscal years.
Sales volume of the Company's electronic materials segment has
increased during each of the last three fiscal years. However, growth of
the Company's electronic materials business was interrupted in the first
quarter of the 1997 fiscal year by an abrupt and unexpected weakening of the
market for the Company's products which continued until the fourth quarter
when the market strengthened. In addition, growth of the Company's
electronic materials business was constrained during the 1996 fiscal year
and the fourth quarter of the 1997 fiscal year by the Company's available
manufacturing capacity. During the 1996 fiscal year, the Company expanded
its manufacturing capacity in New York and Arizona and commenced commercial
operations in both locations during the early part of the 1997 fiscal year.
The Company further expanded the manufacturing capacity of its facilities in
Arizona and Singapore during the later part of the 1997 fiscal year and is
planning additional expansions of its electronic materials operations in the
1998 fiscal year.
Fiscal Year 1997 Compared with Fiscal Year 1996:
The Company's electronic materials business was responsible for the
decline in the Company's results of operations for the fiscal year ended
March 2, 1997. The North American, European and Asian markets for sophisti-
cated printed circuit materials experienced weakness during the first half
of the 1997 fiscal year which continued into the third quarter in the North
American and European markets. The Company believes this weakness was
principally attributable to an industry-wide inventory correction that began
in the first quarter.
During the 1997 fiscal year, the Company's electronic materials
business experienced inefficiencies caused by operating its facilities at
levels significantly lower than their designed manufacturing capacity in the
first three quarters and faced price pressure from its customers resulting
in an inability to pass along raw material cost increases which it received
earlier in the current year. These factors adversely affected the Company's
margins. The Company's performance during the 1997 fiscal year was also
adversely affected by significant disruptions of the Company's business with
its largest customer, Delco Electronics Corporation, caused by the Canadian
Auto Workers' and United Auto Workers' strikes against General Motors in the
first and third quarters of the fiscal year. The improvement in the
Company's margins in the second quarter over the first quarter was achieved
from internal operating adjustments in response to the industry downturn
that occurred in the first quarter and the return of Delco Electronics to
more normal business levels after the aforementioned strikes. The
improvement in the Company's margins in the fourth quarter over the third
quarter resulted from the return of Delco Electronics to more normal
business levels after the aforementioned strikes and the strengthening of
the market for the Company's products in the fourth quarter.
Operating results of the Company's engineered materials and plumbing
hardware business improved considerably during the 1997 fiscal year and
accounted for approximately 11% of the Company's total operating profit.
Results of Operations
Sales for the fiscal year ended March 2, 1997 increased 7% to $334.5
million from $313.0 million for the fiscal year ended March 3, 1996. Sales
of the electronic materials business for the 1997 fiscal year were $291.1
million, or 87% of total sales worldwide, compared with $274.9 million, or
88% of total sales worldwide, for the 1996 fiscal year. This 6% increase in
sales of electronic materials was principally the result of higher volume of
electronic materials shipped and an increase in sales of higher technology
products. Sales of the engineered materials and plumbing hardware business
for the 1997 fiscal year increased 14% to $43.3 million from $38.1 million
for the 1996 fiscal year due primarily to increased sales in the specialty
adhesive tape and advanced composite materials businesses resulting from new
products and higher volumes in both businesses.
The Company's foreign operations accounted for $99.5 million of sales,
or 30% of the Company's total sales worldwide, during the 1997 fiscal year
compared with $91.7 million of sales, or 29% of total sales worldwide,
during the 1996 fiscal year. Sales by the Company's foreign operations
during the 1997 fiscal year increased 9% from the 1996 fiscal year. While
sales by each of the Company's foreign operations were higher in the 1997
fiscal year compared with the 1996 fiscal year, the increase in sales by
foreign operations was principally due to an increase in sales by the
Company's Asian operations. A further expansion of the Company's Singapore
manufacturing facility is planned during the Company's 1998 fiscal year.
The gross margin for the Company's worldwide operations was 17.7%
during the 1997 fiscal year compared with 22.5% for the 1996 fiscal year.
The decline in the gross margin was attributable to inefficiencies resulting
from dramatic volume fluctuations during the year, the impact of disruptions
to the Company's business with its largest customer, Delco Electronics
Corporation, due to strikes against General Motors, selling price pressure
and operating certain facilities at levels lower than their designed
capacity, which were partially offset by the continuing growth in sales of
higher technology, higher margin products.
Selling, general and administrative expenses, measured as a percentage
of sales, were 10.3% during the 1997 fiscal year compared with 11.3% during
the 1996 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales and lower incentive payments due to lower operating
profits.
For the reasons set forth above, profit from operations for the 1997
fiscal year decreased 29% to $24.8 million from $35.1 million for the 1996
fiscal year.
Interest and other income, principally investment income, increased
235% to $7.7 million for the 1997 fiscal year from $2.3 million for the 1996
fiscal year. Interest expense for the 1997 fiscal year was $5.5 million
compared with $0.1 million during the 1996 fiscal year. The increases in
investment income and interest expense were attributable to the increase in
cash available for investment and the additional interest expense resulting
from the Company's issuance of $100 million principal amount of 5.5%
Convertible Subordinated Notes due 2006 at the end of the 1996 fiscal year.
The Company's investments were primarily short-term taxable instruments and
government securities.
The Company's effective income tax rate for the 1997 fiscal year was
31.0% compared with 33.2% for the 1996 fiscal year. This decrease in the
effective tax rate was primarily the result of favorable foreign tax rate
differentials.
Net earnings for the 1997 fiscal year were $18.6 million compared to
$24.9 million for the 1996 fiscal year. Primary and fully diluted earnings
per share decreased to $1.61 and $1.59, respectively, for the 1997 fiscal
year from $2.11 and $2.10, respectively, for the 1996 fiscal year. This
decrease in net earnings and earnings per share was primarily attributable
to the decrease in the profit from operations.
Fiscal Year 1996 Compared with Fiscal Year 1995:
The Company's electronic materials business was responsible for the
improvement in the Company's results of operations for the fiscal year ended
March 3, 1996. The North American and Asian markets for sophisticated
printed circuit materials were strong during the 1996 fiscal year, and the
Company's electronic materials operations located in these regions performed
well as a result. While the market in Europe for sophisticated printed
circuit materials was not as strong as in North America or Asia, it improved
over the prior fiscal year, and the Company's European operations benefitted
from this improvement.
During the 1996 fiscal year, the Company's electronic materials
business incurred raw material cost increases and additional costs
associated with the Company's major expansion projects in Newburgh, New York
and Tempe, Arizona. In addition, the electronic materials business
experienced temporary inefficiencies caused by operating certain facilities
at levels in excess of their designed manufacturing capacity. These cost
increases and temporary operating inefficiencies adversely affected the
Company's gross margins. However, the Company was able to offset such
effects by improving its overall operating efficiencies, in part, by
consolidating functions, by continuing to reduce manufacturing waste and
improve yields, and by improving the overall productivity of its workforce.
In addition, the Company redesigned product in order to reduce material
costs. The Company was also able to offset these cost increases and
inefficiencies through its ongoing efforts to expand its higher technology,
higher margin product lines.
Operating results of the Company's engineered materials and plumbing
hardware business improved slightly but were not significant during the 1996
fiscal year.
Results of Operations
Sales for the fiscal year ended March 3, 1996 increased 24% to $313.0
million from $253.0 million for the fiscal year ended February 26, 1995.
Sales of the electronic materials business for the 1996 fiscal year were
$274.9 million, or 88% of total sales worldwide, compared with $218.3
million, or 86% of total sales worldwide, for the 1995 fiscal year. This
26% increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped and an increase in sales of
higher technology products. Sales of the engineered materials and plumbing
hardware business for the 1996 fiscal year increased 10% to $38.1 million
from $34.7 million for the 1995 fiscal year due primarily to increased sales
in the specialty adhesive tape and plumbing hardware businesses resulting
from new products and higher volumes.
The Company's foreign operations accounted for $91.7 million of sales,
or 29% of the Company's total sales worldwide, during the 1996 fiscal year
compared with $61.9 million of sales, or 24% of total sales worldwide,
during the 1995 fiscal year. Sales by the Company's foreign operations
during the 1996 fiscal year increased 48% from the 1995 fiscal year. While
sales by each of the Company's foreign operations were higher in the 1996
fiscal year compared with the 1995 fiscal year, the increase in sales by
foreign operations was principally due to an increase in sales by the
Company's Asian operations. An expansion of the Company's Singapore
manufacturing facility was completed at the end of the Company's 1995 fiscal
year.
The gross margin for the Company's worldwide operations was 22.5%
during the 1996 fiscal year compared with 22.2% for the 1995 fiscal year.
The improvement in the gross margin was attributable to the increase in
sales volume over the prior fiscal year, the continuing growth in sales of
higher technology, higher margin products and improved operating efficien-
cies. This improvement was offset in part by higher raw material costs,
costs associated with the start-up of the new facilities in New York and
Arizona, and inefficiencies caused by operating certain facilities at levels
in excess of designed capacity.
Selling, general and administrative expenses, measured as a percentage
of sales, were 11.3% during the 1996 fiscal year compared with 11.9% during
the 1995 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales.
For the reasons set forth above, profit from operations for the 1996
fiscal year increased 34% to $35.1 million from $26.1 million for the 1995
fiscal year.
Interest and other income, principally investment income, increased
25% to $2.3 million for the 1996 fiscal year from $1.8 million for the 1995
fiscal year. The increase in investment income was attributable to the
increase in the prevailing interest rates during the current year and to the
increase in cash available for investment. The Company's investments were
primarily short-term taxable instruments and government securities.
Interest expense for the 1996 fiscal year was minimal compared with $0.4
million during the 1995 fiscal year. During the first quarter of the prior
fiscal year, the Company called its 7.25% Convertible Subordinated
Debentures for redemption; as a result, nearly all of such Debentures
outstanding at the beginning of the prior fiscal year were converted into
Common Stock during that fiscal year's first quarter, which eliminated the
Company's long-term debt and the associated interest expense.
The Company's effective income tax rate for the 1996 fiscal year was
33.2% compared with 36.9% for the 1995 fiscal year. This decrease in the
effective tax rate was primarily the result of favorable foreign tax rate
differentials.
Net earnings for the 1996 fiscal year increased 44% to $24.9 million
from $17.3 million for the 1995 fiscal year. Primary and fully diluted
earnings per share increased to $2.11 and $2.10, respectively, for the 1996
fiscal year from $1.59 and $1.52, respectively, for the 1995 fiscal year.
This increase in net earnings and earnings per share was primarily
attributable to the increase in the profit from operations, the effects of
the conversion of the Debentures and the lower effective tax rate.
Liquidity and Capital Resources:
At March 2, 1997, the Company's cash and temporary investments were
$144.6 million compared with $143.2 million at March 3, 1996, the end of the
Company's 1996 fiscal year. The increase in the Company's cash and
investment position at March 2, 1997 was attributable to cash provided from
operating activities in excess of investments in property, plant and
equipment, as discussed below. The Company's working capital was $165.0
million at March 2, 1997 compared with $161.0 million at March 3, 1996. The
increase at March 2, 1997 compared with March 3, 1996 was due to the
increases in cash and receivables, offset in part by lower inventories. The
increase in receivables at March 2, 1997 compared with March 3, 1996 was due
principally to increased sales; the decrease in inventories for the same
period was due to the utilization of raw materials accumulated in the 1996
fiscal year to ensure adequate supply of such materials. The Company's
current ratio (the ratio of current assets to current liabilities) was 4.0
to 1 at March 2, 1997 compared with 3.8 to 1 at March 3, 1996.
During the 1997 fiscal year, the Company generated funds from
operations of $29.2 million and expended $18.7 million for the purchase of
property, plant and equipment. Cash provided by net earnings before
depreciation and amortization of $30.1 million was reduced by a net increase
in non-cash working capital items, resulting in $29.2 million of cash
provided from operating activities. A significant portion of the 1997
fiscal year's capital expenditures related to installation of additional
capacity at the Company's electronic materials facilities in Tempe, Arizona
and Singapore. These expansions will increase the Company's capacity and
capability for the production of sophisticated printed circuit materials.
Expenditures for property, plant and equipment were $18.7 million, $24.5
million and $17.5 million in the 1997, 1996 and 1995 fiscal years, respec-
tively. The Company expects the level of capital expenditures in the 1998
fiscal year to be in excess of the expenditures in the 1997 fiscal year.
The Company is planning further expansions of its electronic materials
operations, particularly in the United States and Asia.
At March 2, 1997, the Company's only long-term debt was the 5.5%
Convertible Subordinated Notes due 2006 (the "Notes") issued at the end of
the 1996 fiscal year. The Company believes its financial resources will be
sufficient, for the foreseeable future, to provide for continued investment
in property, plant and equipment and for general corporate purposes. Such
resources, including the proceeds from the Notes, would also be available
for appropriate acquisitions and other expansions of the Company's business.
Environmental Matters:
The Company is subject to various federal, state and local government
requirements relating to the protection of the environment. The Company
believes that, as a general matter, its policies, practices and procedures
are properly designed to prevent unreasonable risk of environmental damage
and that its handling, manufacture, use and disposal of hazardous or toxic
substances are in accord with environmental laws and regulations. However,
mainly because of past operations and operations of predecessor companies,
which were generally in compliance with applicable laws at the time of the
operations in question, the Company, like other companies engaged in similar
businesses, is a party to claims by government agencies and third parties
and has incurred remedial response and voluntary cleanup costs associated
with environmental matters. Additional claims and costs involving past
environmental matters may continue to arise in the future. It is the
Company's policy to record appropriate liabilities for such matters when
remedial efforts are probable and the costs can be reasonably estimated.
In the 1997, 1996 and 1995 fiscal years, the Company charged
approximately $0.2 million, $0.1 million and $0.2 million, respectively,
against pretax income for remedial response and voluntary cleanup costs
(including legal fees). While annual expenditures have generally been
constant from year to year, and may increase over time, the Company expects
it will be able to fund such expenditures from cash flow from operations.
The timing of expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to be utilized
and agreements with other parties. At March 2, 1997, the recorded liability
in accrued liabilities for environmental matters was $1.2 million.
Management does not expect that environmental matters will have a
material adverse effect on the liquidity, capital resources, business or
consolidated financial position of the Company. See Note 11 of the Notes to
Consolidated Financial Statements included in Item 8 of this Report for a
discussion of the Company's commitments and contingencies, including those
related to environmental matters.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a new
"safe harbor" for forward-looking statements to encourage companies to
provide prospective information about their companies without fear of
litigation so long as those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
projected in the statement. Accordingly, the Company hereby identifies the
following important factors which could cause the Company's actual results
to differ materially from any such results which might be projected,
forecast, estimated or budgeted by the Company in forward-looking state-
ments.
. The Company's business is dependent on certain aspects of the
electronics industry, which is a cyclical industry and which has
experienced recurring downturns. The downturns, such as occurred in
the first quarter of the Company's fiscal year ended March 2, 1997,
can be unexpected and have often reduced demand for, and prices of,
electronic materials.
. The Company's operating results are affected by a number of factors,
including various factors beyond the Company's control. Such factors
include economic conditions in the electronics industry, the timing of
customer orders, product prices, process yields, the mix of products
sold and maintenance-related shutdowns of facilities. Operating
results also can be influenced by development and introduction of new
products and the costs associated with the start-up of new facilities.
. Rapid technological advances in semiconductors and electronic
equipment have placed rigorous demands on the electronic materials
manufactured by the Company and used in printed circuit board
production. The Company's operating results will be affected by the
Company's ability to maintain and increase its technological and
manufacturing capability and expertise in this rapidly changing
industry.
. The electronic materials industry is intensely competitive and the
Company competes worldwide in the market for materials used in the
production of complex multilayer printed circuit boards. The
Company's competitors are substantially larger and have greater
financial resources than the Company, and the Company's operating
results will be affected by its ability to maintain its competitive
position in the industry.
. There are a limited number of qualified suppliers of the principal
materials used by the Company in its manufacture of electronic
materials products. Substitutes for these products are not readily
available, and in the recent past there have been shortages in the
market for certain of these materials.
. The Company's customer base is concentrated, in part, because the
Company's business strategy has been to develop long-term relation-
ships with a select group of customers. During the Company's fiscal
year ended March 2, 1997, the Company's ten largest customers
accounted for approximately 46% of net sales. The Company expects
that sales to a relatively small number of customers will continue to
account for a significant portion of its net sales for the foreseeable
future. A loss of one or more of such key customers could affect the
Company's profitability.
. The Company typically does not obtain long-term purchase orders or
commitments. Instead, it relies primarily on continual communication
with its customers to anticipate the future volume of purchase orders.
A variety of conditions, both specific to the individual customer and
generally affecting the customer's industry, can cause a customer to
reduce or delay orders previously anticipated by the Company.
. The Company, from time to time, is engaged in the expansion of certain
of its manufacturing facilities for electronic materials. The
anticipated costs of such expansions cannot be determined with
precision and may vary materially from those budgeted. In addition,
such expansions will increase the Company's fixed costs. The
Company's future profitability depends upon its ability to utilize its
manufacturing capacity in an effective manner.
. The Company's business is capital intensive and, in addition, the
introduction of new technologies could substantially increase the
Company's capital expenditures. In order to remain competitive the
Company must continue to make significant investments in capital
equipment and expansion of operations. This may require that the
Company continue to be able to access capital on terms acceptable to
the Company.
. The Company may acquire businesses, product lines or technologies that
expand or complement those of the Company. The integration and
management of an acquired company or business may strain the Company's
management resources and technical, financial and operating systems.
In addition, implementation of acquisitions can result in large one-
time charges and costs. A given acquisition, if consummated, may
materially affect the Company's business, financial condition and
results of operations.
. The Company's international operations are subject to risks, including
unexpected changes in regulatory requirements, exchange rates, tariffs
and other barriers, political and economic instability and potentially
adverse tax consequences.
. A portion of the sales and costs of the Company's international
operations are denominated in currencies other than the U.S. dollar
and may be affected by fluctuations in currency exchange rates.
. The Company's success is dependent upon its relationship with key
management and technical personnel.
. The Company's future success depends in part upon its intellectual
property which the Company seeks to protect through a combination of
contract provisions, trade secret protections, copyrights and patents.
. The Company's production processes require the use, storage, treatment
and disposal of certain materials which are considered hazardous under
applicable environmental laws and the Company is subject to a variety
of regulatory requirements relating to the handling of such materials
and the release of emissions and effluents into the environment.
Other possible developments, such as the enactment or adoption of
additional environmental laws, could result in substantial costs to
the Company.
. The market price of the Company's securities can be subject to
fluctuations in response to quarter to quarter variations in operating
results, changes in analysts' earnings estimates, market conditions in
the electronic materials industry, as well as general economic
conditions and other factors external to the Company.
. The Company's results could be affected by changes in the Company's
accounting policies and practices or changes in the Company's
organization, compensation and benefit plans, or changes in the
Company's material agreements or understandings with third parties.
Item 8. Financial Statements and Supplementary Data.
The Company's Financial Statements begin on the next page.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York
We have audited the accompanying consolidated balance sheets of Park
Electrochemical Corp. and subsidiaries as of March 2, 1997 and March 3, 1996
and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended March 2,
1997. Our audits also included the financial statement schedule listed in
the Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Park Electrochemical Corp. and subsidiaries as of March 2, 1997
and March 3, 1996 and the consolidated results of their operations and their
cash flows for each of the three years in the period ended March 2, 1997, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
April 18, 1997
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
<CAPTION>
March 2, March 3,
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 42,321 $ 75,970
Marketable securities (Note 2) 102,232 67,243
Accounts receivable, less allowance for
doubtful accounts of $1,746 and $1,857,
respectively 50,314 42,821
Inventories (Note 3) 20,458 27,712
Prepaid expenses and other current
assets (Note 7) 5,089 4,026
Total current assets 220,414 217,772
Property, plant and equipment, at cost, less
accumulated depreciation and amortization
(Note 4) 83,391 76,439
Other assets (Notes 7 and 10) 4,057 4,764
Total $307,862 $298,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,892 $ 35,924
Accrued liabilities (Note 5) 18,565 16,941
Income taxes payable 3,953 3,942
Total current liabilities 55,410 56,807
Long-term debt (Note 6) 100,000 100,000
Deferred income taxes (Note 7) 7,963 6,324
Deferred pension liability (Note 10) 1,134 1,417
Commitments and contingencies (Notes 10 and 11)
Stockholders' equity (Notes 6, 8, 9 and 10):
Preferred stock, $1 par value per share--
authorized, 500,000 shares; issued, none - -
Common stock, $.10 par value per share--
authorized, 30,000,000; issued, 13,580,018
shares 1,358 1,358
Additional paid-in capital 51,290 50,958
Retained earnings 108,804 93,892
Currency translation adjustments 831 1,328
Pension liability adjustment (850) (1,001)
Unrealized losses on investments (11) (30)
161,422 146,505
Less treasury stock, at cost, 2,307,765 and
2,033,704 shares, respectively (18,067) (12,078)
Total stockholders' equity 143,355 134,427
Total $307,862 $298,975
<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>
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
<S> <C> <C> <C>
Net sales $334,490 $312,966 $253,022
Cost of sales 275,372 242,655 196,917
Gross profit 59,118 70,311 56,105
Selling, general and administrative
expenses 34,366 35,236 29,995
Profit from operations 24,752 35,075 26,110
Other income (expense):
Interest and other income, net 7,653 2,285 1,822
Interest expense (Note 6) (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes 26,897 37,264 27,501
Income tax provision (Note 7) 8,338 12,366 10,156
Net earnings $ 18,559 $ 24,898 $ 17,345
Earnings per share (Note 9):
Primary $1.61 $2.11 $1.59
Fully diluted $1.59 $2.10 $1.52
<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 27, 1994 10,407,650 $1,041 $17,444 $ 57,098 $ 177 $(1,148) $ - 2,301,284 $(13,158)
Net earnings 17,345
Exchange rate changes 1,368
Change in pension
liability adjustment 176
Market revaluation (139)
Stock options exercised 696 (212,700) 1,220
Conversion of debentures 3,172,368 317 32,588
Cash dividends ($.20 per
share) (2,227)
Purchase of treasury stock 47,832 (750)
Balance, February 26, 1995 13,580,018 1,358 50,728 72,216 1,545 (972) (139) 2,136,416 (12,688)
Net earnings 24,898
Exchange rate changes (217)
Change in pension
liability adjustment (29)
Market revaluation 109
Stock options exercised 230 (102,726) 610
Cash dividends ($.28 per
share) (3,222)
Purchase of treasury stock 14 -
Balance, March 3, 1996 13,580,018 1,358 50,958 93,892 1,328 (1,001) (30) 2,033,704 (12,078)
Net earnings 18,559
Exchange rate changes (497)
Change in pension
liability adjustment 151
Market revaluation 19
Stock options exercised 332 (84,868) 547
Cash dividends ($.32 per
share) (3,647)
Purchase of treasury stock 358,929 (6,536)
Balance, March 2, 1997 13,580,018 $1,358 $51,290 $108,804 $ 831 $ (850) $ (11) 2,307,765 $(18,067)
<FN>
See notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 18,559 $ 24,898 $ 17,345
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 11,584 9,849 8,951
Provision for doubtful accounts receivable (306) (495) (44)
(Gain) loss on sale of marketable securities (16) (38) 17
Provision for deferred income taxes 1,596 1,425 355
Accrued interest in connection with
Debenture conversion - - 389
Other, net 65 64 (89)
Changes in operating assets and liabilities:
(Increase) in accounts receivable (7,612) (9,277) (3,536)
Decrease (increase) in inventories 7,202 (11,671) 249
(Increase) in prepaid expenses and
other current assets (1,456) (1,057) (77)
Decrease (increase) in other assets 122 (42) 25
(Decrease) increase in accounts payable (2,528) 11,409 (620)
Increase in accrued liabilities 1,700 1,108 3,719
Increase in income taxes payable 286 1,260 277
Net cash provided by operating activities 29,196 27,433 26,961
Cash flows from investing activities:
Purchases of property, plant and equipment, net (18,735) (24,510) (17,523)
Purchases of marketable securities (137,897) (74,881) (11,161)
Proceeds from sales of marketable securities 103,330 22,952 19,827
Net cash used in investing activities (53,302) (76,439) (8,857)
Cash flows from financing activities:
Convertible notes offering - 100,000 -
Convertible notes issuance costs - (3,250) -
Repayments of borrowings - - (84)
Dividends paid (3,647) (3,222) (2,227)
Proceeds from exercise of stock options 604 697 1,499
Purchase of treasury stock (6,535) - (750)
Other - 4 (100)
Net cash (used in) provided by
financing activities (9,578) 94,229 (1,662)
(Decrease) increase in cash and cash equivalents
before effect of exchange rate changes (33,684) 45,223 16,442
Effect of exchange rate changes on
cash and cash equivalents 35 (56) 226
(Decrease) increase in cash and cash equivalents (33,649) 45,167 16,668
Cash and cash equivalents, beginning of year 75,970 30,803 14,135
Cash and cash equivalents, end of year $ 42,321 $ 75,970 $ 30,803
<FN>
See notes to consolidated financial statements.
</TABLE>
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended March 2, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Park Electrochemical Corp. ("Park"), through its subsidiaries
(collectively, the "Company"), is a leading global designer and producer
of advanced electronic materials used to fabricate complex multilayer
printed circuit boards, semiconductor packages and other electronic
interconnect systems. The Company's multilayer printed circuit board
materials include copper-clad laminates, prepregs and semi-finished
multilayer printed circuit board panels. Multilayer printed circuit
boards and interconnect systems are used in virtually all advanced
electronic equipment to direct, sequence and control electronic signals
between semiconductor devices and passive components. The Company also
designs and manufactures specialty adhesive tapes, advanced composite
materials, microwave circuitry materials and plumbing hardware for the
electronics, aerospace, industrial and plumbing markets.
a. Principles of Consolidation - The consolidated financial statements
include the accounts of Park and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions
have been eliminated.
b. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
c. Accounting Period - The Company's fiscal year is the 52 or 53 week
period ending the Sunday nearest to the last day of February. The
1997, 1996 and 1995 fiscal years ended on March 2, 1997, March 3, 1996
and February 26, 1995, respectively. Fiscal 1997 and 1995 each
included 52 weeks; fiscal 1996 included 53 weeks.
d. Marketable Securities - All marketable securities are classified as
available-for-sale and are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of
stockholders' equity. Realized gains and losses, amortization of
premiums and discounts, and interest and dividend income are included
in other income. The cost of securities sold is based on the specific
identification method.
e. Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time product is
shipped to the customer.
g. Depreciation and Amortization - Depreciation and amortization are
computed principally by the straight-line method over the estimated
useful lives of the related assets or, with respect to leasehold
improvements, the term of the lease, if shorter.
h. Deferred Charges - Costs incurred in connection with the issuance of
debt financing are deferred and included in other assets and
amortized, using the effective interest method, over the respective
debt repayment period.
i. Income Taxes - Deferred income taxes are provided for temporary
differences in the reporting of certain items, primarily depreciation,
for income tax purposes as compared with financial accounting
purposes.
United States ("U.S.") Federal income taxes have not been provided on
the undistributed earnings (approximately $23,800,000 at March 2,
1997) of the Company's foreign subsidiaries, since it is management's
practice and intent to reinvest such earnings in the operations of
these subsidiaries.
j. Foreign Currency Translation - Assets and liabilities of foreign
subsidiaries using currencies other than the U.S. dollar as their
functional currency are translated into U.S. dollars at year-end
exchange rates and income and expense items are translated at average
exchange rates for the period. Gains and losses resulting from
translation are recorded as currency translation adjustments in
stockholders' equity.
k. Consolidated Statements of Cash Flows - The Company considers all
money market securities and investments with maturities at the date of
purchase of 90 days or less to be cash equivalents.
Supplemental cash flow information:
<TABLE>
<CAPTION> Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Cash paid during the year for:
Interest $2,792,000 $ - $ 42,000
Income taxes 6,570,000 9,701,000 9,712,000
</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 2, 1997:
U.S. Treasury and other
government securities $ 35,423,000 $19,000 $47,000 $ 35,395,000
U.S. corporate debt
securities 66,822,000 20,000 40,000 66,802,000
Total debt securities 102,245,000 39,000 87,000 102,197,000
Equity securities 4,000 31,000 - 35,000
$102,249,000 $70,000 $87,000 $102,232,000
March 3, 1996:
U.S. Treasury and other
government securities $ 50,602,000 $32,000 $62,000 $ 50,572,000
U.S. corporate debt
securities 16,680,000 7,000 22,000 16,665,000
Total debt securities 67,282,000 39,000 84,000 67,237,000
Equity securities 6,000 - - 6,000
$ 67,288,000 $39,000 $84,000 $ 67,243,000
</TABLE>
The gross realized gains on sales of available-for-sale securities
totalled $39,000 for 1997 and $50,000 for 1996, and the gross realized
losses totalled $23,000, $12,000 and $17,000 for 1997, 1996 and 1995,
respectively.
The amortized cost and estimated fair value of the debt and marketable
equity securities at March 2, 1997, by contractual maturity, are shown
below:
<TABLE>
<CAPTION> Estimated
Fair
Cost Value
<S> <C> <C>
Due in one year or less $ 82,007,000 $ 81,972,000
Due after one year through five years 20,238,000 20,225,000
102,245,000 102,197,000
Equity securities 4,000 35,000
$102,249,000 $102,232,000
</TABLE>
<TABLE>
3. INVENTORIES
<CAPTION>
March 2, March 3,
1997 1996
<S> <C> <C>
Raw materials $ 8,459,000 $13,040,000
Work-in-process 4,037,000 4,280,000
Finished goods 7,173,000 9,674,000
Manufacturing supplies 789,000 718,000
$20,458,000 $27,712,000
</TABLE>
<TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
<CAPTION>
March 2, March 3,
1997 1996
<S> <C> <C>
Land, buildings and improvements $ 30,983,000 $ 27,054,000
Machinery, equipment, furniture
and fixtures 134,774,000 121,661,000
165,757,000 148,715,000
Less accumulated depreciation
and amortization 82,366,000 72,276,000
$ 83,391,000 $ 76,439,000
</TABLE>
Depreciation and amortization expense relating to property, plant and
equipment amounted to $11,146,000, $9,382,000 and $8,501,000 for fiscal
1997, 1996 and 1995, respectively. Interest expense capitalized to
property, plant and equipment amounted to $260,000 for fiscal 1997.
<TABLE>
5. ACCRUED LIABILITIES
<CAPTION> March 2, March 3,
1997 1996
<S> <C> <C>
Payroll and commissions $ 4,239,000 $ 5,040,000
Taxes, other than income taxes 899,000 1,014,000
Interest 2,781,000 -
Other 10,646,000 10,887,000
$18,565,000 $16,941,000
</TABLE>
6. LONG-TERM DEBT
On February 28, 1996, the Company issued $100,000,000 principal amount
of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") with
interest payable semiannually on March 1 and September 1 of each year,
commencing September 1, 1996. The Notes are unsecured and subordinated
to other long-term debt and are convertible at the option of the holder
at any time prior to maturity, unless previously redeemed or
repurchased, into shares of the Company's common stock at $42.188 per
share, subject to adjustment under certain conditions. The Notes are
not redeemable at the option of the Company prior to March 1, 1999; at
any time on or after such date, the Notes will be redeemable at the
option of the Company, in whole or in part, initially at 102.75% of the
principal amount of such Notes redeemed and thereafter at prices
declining to 100% on March 1, 2001, together with accrued interest. At
March 2, 1997 and March 3, 1996, the fair value of the Notes
approximated $90,625,000 and $100,000,000, respectively.
Foreign lines of credit totalled $5,400,000 at March 2, 1997, all of
which remains available to the subsidiaries.
7. INCOME TAXES
<TABLE>
The income tax provision includes the following:
<CAPTION>
Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Current:
Federal $6,150,000 $ 9,980,000 $ 8,798,000
State and local 592,000 961,000 1,003,000
6,742,000 10,941,000 9,801,000
Deferred:
Federal 863,000 655,000 50,000
State and local 150,000 60,000 40,000
Foreign 583,000 710,000 265,000
1,596,000 1,425,000 355,000
$8,338,000 $12,366,000 $10,156,000
</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
1997 1996 1995
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 1.8 1.8 2.5
Foreign tax rate differentials (7.8) (4.6) (1.5)
Other, net 2.0 1.0 .9
31.0% 33.2% 36.9%
The Company has foreign net operating loss carryforwards of
approximately $14,400,000, most of which were acquired in fiscal 1993
when the Company purchased 100% of the capital stock of Metclad, S.A.
("Metclad"), a French corporation located in Lannemezan, France.
Metclad has recently commenced operation, in commercial volumes, for the
production of PTFE laminates used in wireless communication
applications. Accordingly, long-term deferred tax assets arising from
these net operating loss carryforwards were valued at $0 at both March
2, 1997 and March 3, 1996, net of valuation reserves of approximately
$5,000,000 and $5,900,000, respectively. None of the acquired net
operating loss carryforwards relate to goodwill or other intangible
assets. Approximately $2,700,000 of the foreign net operating loss
carryforwards expire in varying amounts from fiscal 1998 through fiscal
2002; the remainder have an indefinite expiration.
At March 2, 1997 and March 3, 1996, current deferred tax assets of
$1,135,000 and $1,082,000, respectively, which were primarily
attributable to expenses not currently deductible for tax purposes, were
included in other current assets. The long-term deferred tax
liabilities consisted primarily of timing differences relating to
depreciation.
8. STOCKHOLDERS' EQUITY
a. Stock Split and Number of Authorized Shares - On July 12, 1995, the
Company's Board of Directors voted a two-for-one stock split in the
form of a 100% common stock dividend. The stock dividend was
distributed August 15, 1995, to shareholders of record on July 24,
1995. All share and per share data for prior periods have been
retroactively restated to reflect the stock split. In addition, on
July 12, 1995, the Company's stockholders approved an increase in
the number of authorized shares of common stock from 15,000,000 to
30,000,000 shares.
b. Stock Options - Under the stock option plans approved by the
Company's stockholders, key employees may be granted options to
purchase shares of common stock exercisable at prices not less than
the fair market value at the date of grant. Options become
exercisable 25% one year from the date of grant, with an additional
25% exercisable each succeeding year. The options expire 10 years
from the date of grant.
On July 14, 1992, the Company's stockholders approved the adoption
of a 1992 stock option plan (the "1992 Plan") pursuant to which
options to acquire 600,000 shares of the Company's common stock are
available for grant to key employees. On July 17, 1996, the
Company's stockholders approved an amendment to the 1992 Plan which
increased the number of shares of the Company's common stock
authorized for issuance under such Plan by 550,000 shares to
1,150,000 shares. The purchase price for common stock to be
acquired, upon the exercise of options, will be no less than 100% of
the fair market value of such stock at the date the options are
granted. The 1992 Plan will expire in March, 2002.
In October 1995, Statement of Financial Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued and
requires companies to either recognize compensation expense for
grants of stock options and other equity based instruments, or
provide pro forma disclosure of net income and earnings per share in
the notes to the financial statements. The Company has elected the
disclosure provision of SFAS 123, and continues to apply Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations in accounting for
the option plans. Under APB 25, because the exercise price of the
granted options is not less than the market price at the date of the
grant, no compensation expense is recognized.
The weighted average fair value for options was estimated at the
date of grant using the Black-Scholes option pricing model to be
$7.78 for fiscal 1997 and $5.40 for fiscal 1996, with the following
weighted average assumptions for fiscal 1997 and 1996, respectively:
risk free interest rate of 6%; expected volatility factors of 34%
and 31%; expected dividend yield of 2%; and estimated option lives
of 4.6 years. For the purpose of pro forma disclosures, the effect
of applying SFAS 123 on net income and earnings per share for fiscal
1997 and 1996 would approximate the amounts shown below (in
thousands, except EPS data):
1997 1996
As Pro As Pro
Reported forma Reported forma
Net income $18,559 $18,330 $24,898 $24,805
EPS-primary $1.61 $1.59 $2.11 $2.11
EPS-fully diluted $1.59 $1.57 $2.10 $2.10
<TABLE>
Information with respect to the Company's stock option plans
follows:
<CAPTION> Weighted
Average
Range of Outstanding Exercise
Exercise Prices Options Price
<S> <C> <C> <C>
Balance, February 26, 1995 $ 5.50 - $17.00 504,718 $ 8.63
Granted 18.31 - 27.19 124,000 19.03
Exercised 5.50 - 13.13 (102,726) 6.79
Cancelled 5.50 - 18.13 (6,374) 12.80
Balance, March 3, 1996 5.50 - 27.19 519,618 11.43
Granted 23.75 - 24.63 111,675 24.55
Exercised 5.50 - 18.31 (84,868) 7.11
Cancelled 7.38 - 27.19 (26,450) 20.68
Balance, March 2, 1997 $ 5.50 - $24.63 519,975 $14.48
Exercisable, March 2, 1997 $ 5.50 - $18.31 231,950 $ 9.89
</TABLE>
<TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options.
<CAPTION>
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life(Years) Price Exercisable Price
<S> <C> <C> <C> <C> <C>
$ 5.50 - $ 9.99 187,900 5.50 $ 7.02 148,925 $ 6.93
10.00 - 19.99 224,250 7.75 15.88 83,025 15.19
20.00 - 25.00 107,825 9.25 24.54 - -
519,975 231,950
</TABLE>
Stock options available for future grant under the 1992 Plan at March 2,
1997 and March 3, 1996 were 603,881 and 136,356, respectively.
c. Treasury Stock - The Company repurchased 349,102, 14 and 24 shares of
its common stock under authorizations of the Board of Directors
during fiscal 1997, 1996 and 1995, respectively.
d. Stockholders' Rights Plan - On February 2, 1989, the Company adopted
a stockholders' rights plan designed to protect stockholder interests
in the event the Company is confronted with coercive or unfair
takeover tactics. Under the terms of the plan, as amended on July
12, 1995, each share of the Company's common stock held of record on
February 15, 1989 or issued thereafter received one right. In the
event that a person has acquired, or has the right to acquire, 15%
(25% in certain cases) or more of the then outstanding common stock
of the Company (an "Acquiring Person") or tenders for 15% or more of
the then outstanding common stock of the Company, such rights will
become exercisable, unless the Board of Directors otherwise
determines. Upon becoming exercisable as aforesaid, each right will
entitle the holder thereof to purchase one one-hundredth of a share
of Series A Preferred Stock for $75, subject to adjustment (the
"Purchase Price"). In the event that any person becomes an Acquiring
Person, each holder of an unexercised exercisable right, other than
an Acquiring Person, shall have the right to purchase, at a price
equal to the then current Purchase Price, such number of shares of
the Company's common stock as shall equal the then current Purchase
Price divided by 50% of the then market price per share of the
Company's common stock. In addition, if after a person becomes an
Acquiring Person, the Company engages in any of certain business
combination transactions as specified in the plan, the Company will
take all action to ensure that, and will not consummate any such
business combination unless, each holder of an unexercised
exercisable right, other than an Acquiring Person, shall have the
right to purchase, at a price equal to the then current Purchase
Price, such number of shares of common stock of the other party to
the transaction for each right held by such holder as shall equal the
then current Purchase Price divided by 50% of the then market price
per share of such other party's common stock. The Company may redeem
the rights for a nominal consideration at any time, and after any
person becomes an Acquiring Person, but before any person becomes the
beneficial owner of 50% or more of the outstanding common stock of
the Company, the Company may exchange all or part of the rights for
shares of the Company's common stock at a one-for-one exchange ratio.
Unless redeemed, exchanged or exercised earlier, all rights expire on
July 12, 2005.
e. Reserved Common Shares - At March 2, 1997, 2,370,342 shares of common
stock were reserved for issuance upon conversion of the Notes and
1,123,856 shares were reserved for issuance upon exercise of stock
options.
9. EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
number of common and common equivalent shares outstanding during the
period.
The weighted average number of common and common equivalent shares used
to compute earnings per share are as follows:
<TABLE>
<CAPTION> Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Primary 11,551,000 11,794,000 10,858,000
Fully diluted 13,932,000 11,860,000 11,570,000
</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
$1,775,000, $2,329,000 and $2,297,000 for fiscal 1997, 1996 and 1995,
respectively. Contributions are discretionary and may not exceed the
amount allowable as a tax deduction under the Internal Revenue Code.
In addition, the Company sponsors a 401(k) savings plan; commencing
in fiscal 1996, the contributions of employees of certain
subsidiaries were partially matched by the Company, amounting to
$554,000 and $499,000 in fiscal 1997 and 1996, respectively.
b. Pension Plans - A subsidiary of the Company has two pension plans,
one of which is inactive, covering its union employees. The pension
plans are noncontributory defined benefit plans. The Company's
funding policy is to contribute annually the amounts necessary to
satisfy applicable funding standards.
In accordance with SFAS No. 87, the Company records its deferred
pension liability related to its two defined benefit pension plans,
which amounted to $1,134,000 and $1,417,000 at March 2, 1997 and
March 3, 1996, respectively. The effect on the Company's
consolidated financial statements in recording the liability was to
recognize an asset (included in other assets) of $284,000 and
$416,000 at March 2, 1997 and March 3, 1996, respectively, and to
record a corresponding reduction of stockholders' equity of $850,000
and $1,001,000 at those same dates.
Net pension cost includes the following components:
<TABLE>
<CAPTION>
Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Service cost--benefits earned
during the period $ 50,000 $ 51,000 $ 65,000
Interest cost on projected
benefit obligation 289,000 299,000 279,000
Return on plan assets--actual (155,000) (400,000) (24,000)
Net amortization and deferral 35,000 354,000 9,000
Effect of curtailment 75,000 - -
Net periodic pension cost $294,000 $304,000 $329,000
</TABLE>
<TABLE>
The funded status of the pension plans follows:
<CAPTION>
March 2, March 3,
1997 1996
<S> <C> <C>
Accumulated benefit obligation
(including vested benefit
obligation of $3,893,000
and $4,028,000, respectively) $3,931,000 $4,043,000
Projected benefit obligation $3,931,000 $4,043,000
Plan assets at fair value 2,937,000 2,616,000
Excess of projected benefit obligation
over plan assets 994,000 1,427,000
Unrecognized net loss (850,000) (1,001,000)
Unrecognized prior service cost (135,000) (237,000)
Unrecognized initial net obligation
being amortized over 15 years (149,000) (179,000)
Accrued pension (asset) liability $ (140,000) $ 10,000
</TABLE>
The projected benefit obligation was determined using an assumed
discount rate of 7.75% and 7.5% for fiscal 1997 and 1996,
respectively, and the assumed long-term rate of return on plan assets
was 8% for both fiscal years. Projected wage increases are not
applicable as benefits pursuant to the plans are based upon years of
service without regard to levels of compensation.
At March 2, 1997, plan assets were invested in U.S. government
securities, corporate debt securities, mutual funds and money market
funds.
11. COMMITMENTS AND CONTINGENCIES
a. Lease Commitments - The Company conducts certain of its operations
from leased facilities, which include several manufacturing plants,
warehouses and offices, and land leases. The leases on facilities are
for terms of up to 10 years, the latest of which expires in 2005.
Many of the leases contain renewal options for periods ranging from
one to ten years and require the Company to pay real estate taxes and
other operating costs. The latest land lease expiration is 2013 and
this land lease contains renewal options of up to 35 years.
These noncancelable operating leases have the following payment
schedule:
Fiscal Year Amount
1998 $2,079,000
1999 1,592,000
2000 1,370,000
2001 1,081,000
2002 905,000
Thereafter 2,817,000
$9,844,000
Rental expense, inclusive of real estate taxes and other costs,
amounted to $2,620,000, $2,259,000 and $2,226,000 for fiscal 1997,
1996 and 1995, respectively.
b. Environmental Contingencies - The Company and certain of its subsid-
iaries have been named by the Environmental Protection Agency (the
"EPA") or a comparable state agency under the Comprehensive Environ-
mental Response, Compensation and Liability Act (the "Superfund Act")
or similar state law as potentially responsible parties in connection
with alleged releases of hazardous substances at nine sites. In
addition, a subsidiary of the Company has received cost recovery
claims under the Superfund Act from other private parties involving
three other sites, and has received requests from the EPA under the
Superfund Act for information with respect to its involvement at two
other sites.
Under the Superfund Act and similar state laws, all parties who may
have contributed any waste to a hazardous waste disposal site or
contaminated area identified by the EPA or comparable state agency may
be jointly and severally liable for the cost of cleanup. Generally,
these sites are locations at which numerous persons disposed of
hazardous waste. In the case of the Company's subsidiaries, generally
the waste was removed from their manufacturing facilities and disposed
at waste sites by various companies which contracted with the
subsidiaries to provide waste disposal services. Neither the Company
nor any of its subsidiaries have been accused of or charged with any
wrongdoing or illegal acts in connection with any such sites. The
Company believes it maintains an effective and comprehensive
environmental compliance program.
The insurance carriers that provided general liability insurance
coverage to the Company and its subsidiaries for the years during
which the Company's subsidiaries' waste was disposed at these sites
have agreed to pay, or reimburse the Company and its subsidiaries for,
100% of their legal defense and remediation costs associated with
three of these sites, 35% of such costs associated with one of these
sites and 25% of such costs associated with another three of these
sites.
The total costs incurred by the Company and its subsidiaries in
connection with these sites, including legal fees incurred by the
Company and its subsidiaries and their assessed share of remediation
costs and excluding amounts paid or reimbursed by insurance carriers,
were approximately $0.2 million during each of the 1997, 1996 and 1995
fiscal years. At March 2, 1997, the recorded liability in other
liabilities for environmental matters was $1.2 million.
Included in cost of sales are charges for actual expenditures and
accruals, based on estimates, for certain environmental matters
described above. The Company accrues estimated costs associated with
known environmental matters, when such costs can be reasonably
estimated and when the outcome appears probable. Management believes
the ultimate disposition of known environmental matters will not have
a material adverse effect on the liquidity, capital resources,
business or consolidated financial position of the Company. However,
one or more of such environmental matters could have a significant
negative impact on the Company's consolidated financial results for a
particular reporting period.
12. BUSINESS SEGMENTS
The Company has two major business segments: electronic materials and
engineered materials and plumbing hardware. The Company's electronic
materials products are marketed primarily to major independent printed
circuit board fabricators and to large electronic original equipment
manufacturers ("OEMs") that are located throughout North America, Europe
and Asia. The Company's engineered materials and plumbing hardware
customers, the majority of which are located in the United States, include
OEMs, independent firms and distributors in the electronics, aerospace,
industrial and plumbing industries.
Financial information concerning the Company's business segments follows
(in thousands):
<TABLE>
<CAPTION> Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Sales to unaffiliated customers:
Electronic materials $291,146 $274,903 $218,288
Engineered materials and
plumbing hardware 43,344 38,063 34,734
Net sales $334,490 $312,966 $253,022
Operating profit(1):
Electronic materials $ 25,298 $ 37,699 $ 28,710
Engineered materials and
plumbing hardware 3,026 1,466 1,226
Total operating profit 28,324 39,165 29,936
General corporate expense (3,572) (4,090) (3,826)
Interest and other income, net 7,653 2,285 1,822
Interest expense (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes $ 26,897 $ 37,264 $ 27,501
Identifiable assets(2):
Electronic materials $153,653 $146,549 $104,478
Engineered materials and
plumbing hardware 14,111 13,260 12,588
167,764 159,809 117,066
Corporate assets 140,098 139,166 44,985
Total assets $307,862 $298,975 $162,051
Depreciation and amortization:
Electronic materials $ 10,789 $ 9,013 $ 8,133
Engineered materials and
plumbing hardware 774 813 793
11,563 9,826 8,926
Corporate depreciation 21 23 25
Total depreciation and
amortization $ 11,584 $ 9,849 $ 8,951
Capital expenditures:
Electronic materials $ 18,030 $ 23,852 $ 16,302
Engineered materials and
plumbing hardware 795 689 1,472
18,825 24,541 17,774
Corporate capital expenditures 26 21 30
Total capital expenditures $ 18,851 $ 24,562 $ 17,804
<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 operations by geographic
area follows (in thousands):
<TABLE>
Fiscal Year
1997 1996 1995
<S> <C> <C> <C>
Sales:
North America $235,773 $221,975 $191,652
Europe 48,421 47,368 34,540
Asia 50,296 43,623 26,830
$334,490 $312,966 $253,022
Operating income:
North America $ 21,550 $ 33,206 $ 28,366
Rest of World 6,774 5,959 1,570
$ 28,324 $ 39,165 $ 29,936
Identifiable assets:
North America $245,596 $241,191 $118,076
Europe 33,751 31,291 24,526
Asia 28,515 26,493 19,449
$307,862 $298,975 $162,051
</TABLE>
13. CUSTOMER AND SUPPLIER CONCENTRATIONS
a. Customers - Sales to Delco Electronics Corporation, a subsidiary of
General Motors Corp., were 17.3%, 17.1% and 21.8% of the Company's
consolidated sales for fiscal 1997, 1996 and 1995, respectively.
The Company believes its relations with Delco Electronics to be very
satisfactory and further believes Delco Electronics will continue to
make significant purchases in the immediate future. Although the
Company's electronic materials segment is not dependent on this
single customer, the loss of this customer could have a material
adverse effect on the business of this segment.
Furthermore, while no other customer accounts for 10% or more of the
total sales of the Company in fiscal 1997 and the Company is not
dependent on any other single customer, the loss of a major customer
or of a group of customers within each significant business segment
could have a material adverse effect on the Company's business.
b. Sources of Supply - The principal materials used in the manufacture
of the Company's electronic materials products are specially
manufactured copper foil, fiberglass cloth and synthetic
reinforcements, and specially formulated resins and chemicals.
Although there are a limited number of qualified suppliers of these
materials, the Company has nevertheless identified alternate sources
of supply for each of the aforementioned materials. While the
Company has not experienced significant problems in the delivery of
these materials and considers its relationships with its suppliers
to be strong, a disruption of the supply of material from a
principal supplier could adversely affect the electronic materials
segment's business. Furthermore, substitutes for the aforesaid
materials are not readily available and an inability to obtain
essential materials, if prolonged, could materially adversely affect
the business of the electronic materials segment.
14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
[CAPTION]
<TABLE>
Quarter
First Second Third Fourth
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Fiscal 1997:
Net sales $75,406 $81,974 $88,972 $88,138
Gross profit 11,832 14,854 15,385 17,047
Net earnings 3,125 4,681 4,888 5,865
Earnings per share:
Primary $.26 $.40 $.43 $.51
Fully diluted $.26 $.40 $.42 $.49
Weighted average common and
common equivalent shares
outstanding:
Primary 11,829 11,590 11,444 11,477
Fully diluted 11,829 13,960 13,835 13,849
Fiscal 1996:
Net sales $75,412 $69,937 $81,866 $85,751
Gross profit 17,717 15,209 18,397 18,988
Net earnings 6,024 5,366 6,467 7,041
Earnings per share:
Primary $.51 $.45 $.55 $.59
Fully diluted $.51 $.45 $.55 $.59
Weighted average common and
common equivalent shares
outstanding:
Primary 11,708 11,801 11,857 11,881
Fully diluted 11,708 11,829 11,857 12,002
</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 1997 Annual Meeting of Shareholders to be filed pursuant
to Regulation 14A.
Item 11. Executive Compensation.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1997 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1997 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1997 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Page
Schedules, and Reports on Form 8-K.
(a) Documents filed as a part of this report
(1) Financial Statements:
The following Consolidated Financial
Statements of the Company are
included in Part II, Item 8:
Report of Ernst & Young LLP,
independent auditors 24
Balance sheets 25
Statements of earnings 26
Statements of stockholders' equity 27
Statements of cash flows 28
Notes to consolidated financial
statements (1-14) 29
(2) Financial Statement Schedules:
Schedule II - Valuation and qualifying
accounts 51
All other schedules have been omitted because
they are inapplicable or not required, or the
information is included elsewhere in the
financial statements or notes thereto.
<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 consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.01 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.02 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) regarding real
property located at 1411 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(c) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
Exhibit
Number Description
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 (see Exhibit 10.05 hereto) between
Kiln Technique (Private) Limited and the Jurong Town Corporation
regarding real property located at 4 Gul Crescent, Jurong,
Singapore. (Reference is made to Exhibit 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 between the Company and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
hereto) between the Company and Jerry Shore. (Reference is made
to Exhibit 10.07(c) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 Lease dated April 15, 1988 between FiberCote Industries, Inc.
(lease was initially entered into by USP Composites, Inc., which
subsequently changed its name to FiberCote Industries, Inc.) and
Geoffrey Etherington, II regarding real property located at 172
East Aurora Street, Waterbury, Connecticut. (Reference is made
to Exhibit 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(a) Letter dated January 8, 1996 from Neltec, Inc. to NZ Properties,
Inc. exercising its option to extend the Lease dated December
12, 1990 (see Exhibit 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.16(a) Tenancy Agreement dated November 3, 1995 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore.
10.17 Lease Contract dated February 26, 1988 between the New York
State Department of Transportation and the Edgewater Stewart
Company regarding real property located at 15 Governor Drive in
the Stewart International Airport Industrial Park, New Windsor,
New York. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(a) Assignment and Assumption of Lease dated February 16, 1995
between New England Laminates Co., Inc. and The Edgewater
Stewart Company regarding the assignment of the Lease Contract
(see Exhibit 10.17 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(b) Lease Amendment No. 1 dated February 17, 1995 between New
England Laminates Co., Inc. and the New York State Department of
Transportation to Lease Contract dated February 26, 1988 (see
Exhibit 10.17 hereto) regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended March 2, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 28, 1997 PARK ELECTROCHEMICAL CORP.
By:/s/Brian E. Shore
Brian E. Shore,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Brian E. Shore Chief Executive Officer,
Brian E. Shore President and Director
(principal executive and May 28, 1997
financial officer)
/s/Murray O. Stamer Corporate Controller
Murray O. Stamer (principal accounting
officer) May 28, 1997
/s/E. Phillip Smoot Director
E. Phillip Smoot May 28, 1997
/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 28, 1997
/s/Anthony Chiesa Director
Anthony Chiesa May 28, 1997
/s/Lloyd Frank Director
Lloyd Frank May 28, 1997
/s/Norman M. Schneider Director
Norman M. Schneider May 28, 1997
<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>
52 weeks ended March 2, 1997 $1,857,000 $(306,000) $ 204,000 $ (9,000) $1,746,000
53 weeks ended March 3, 1996 $2,490,000 $(495,000) $(128,000) $(10,000) $1,857,000
52 weeks ended February 26, 1995 $2,673,000 $ (44,000) $(186,000) $ 47,000 $2,490,000
<FN>
(A) Uncollectible accounts, net of recoveries.
</TABLE>
=================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
EXHIBITS
filed with
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 2, 1997
___________________
PARK ELECTROCHEMICAL CORP.
=================================================
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
4.01 Amended and Restated Rights Agreement, dated as of July 12,
1995, between the Company and Registrar and Transfer Company, as
Rights Agent, relating to the Company's Preferred Stock Purchase
Rights. (Reference is made to Exhibit 1 to Amendment No. 1 on
Form 8-A/A to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.01 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.02 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) regarding real
property located at 1411 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(c) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
Exhibit
Number Description
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 (see Exhibit 10.05 hereto) between
Kiln Technique (Private) Limited and the Jurong Town Corporation
regarding real property located at 4 Gul Crescent, Jurong,
Singapore. (Reference is made to Exhibit 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 between the Company and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
hereto) between the Company and Jerry Shore. (Reference is made
to Exhibit 10.07(c) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 Lease dated April 15, 1988 between FiberCote Industries, Inc.
(lease was initially entered into by USP Composites, Inc., which
subsequently changed its name to FiberCote Industries, Inc.) and
Geoffrey Etherington, II regarding real property located at 172
East Aurora Street, Waterbury, Connecticut. (Reference is made
to Exhibit 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(a) Letter dated January 8, 1996 from Neltec, Inc. to NZ Properties,
Inc. exercising its option to extend the Lease dated December
12, 1990 (see Exhibit 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.16(a) Tenancy Agreement dated November 3, 1995 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore.
10.17 Lease Contract dated February 26, 1988 between the New York
State Department of Transportation and the Edgewater Stewart
Company regarding real property located at 15 Governor Drive in
the Stewart International Airport Industrial Park, New Windsor,
New York. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(a) Assignment and Assumption of Lease dated February 16, 1995
between New England Laminates Co., Inc. and The Edgewater
Stewart Company regarding the assignment of the Lease Contract
(see Exhibit 10.17 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(b) Lease Amendment No. 1 dated February 17, 1995 between New
England Laminates Co., Inc. and the New York State Department of
Transportation to Lease Contract dated February 26, 1988 (see
Exhibit 10.17 hereto) regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
EXHIBIT 10.03(b)
THIRD ADDENDUM TO LEASE
This Third Addendum to Lease by and between TCLW/Fullerton, a California
general partnership ("Landlord") and Nelco Products, Inc., a Delaware
corporation ("Tenant") shall amend that certain Lease Agreement dated August
16, 1983 and shall amend the First Addendum to Lease known as Exhibit "C"
dated August 16, 1983 and shall amend the second Addendum to Lease and the
Addendum to Lease known as Exhibit "E" dated January 26, 1987.
For purposes of this Addendum the existing leased premises at 1411 and 1421
E. Orangethorpe Avenue shall be called "1411" and the additional leased
premises at 1431 E. Orangethorpe Avenue shall be called !1431". The space
at "1411" and "1431", together shall be called "Premises".
64. Demised Premises. Commencing April 1, 1991 Tenant shall increase its
current space of 57,702 square feet ("1411") to include the adjacent
space of approximately 14,160 square feet ("1431"), as further
outlined in Exhibit "G" attached.
65. Extension of 1411 E. Orangethorpe Avenue Lease. In consideration for
the terms and conditions of the leasing of "1431", Tenant shall
execute the attached Fourth Addendum to Lease thereby exercising its
option to extend the existing Lease at 1411 E. Orangethorpe Avenue.
66. Lease Term. The Lease term with respect to "1431" shall be for seven
(7) years and six (6) months commencing on April 1, 1991 and ending on
September 30, 1998.
67. Rent Schedule. The rent with respect to "1431" shall be at the same
rate per square feet as is paid on the 57,702 square feet at "1411".
For example, if the monthly rent paid at "1411", after the April 1,
1991 (Adjustment Date) increase was increased to $.42 per square feet
($21,776.22 x 1.1125/57,702 square feet) the monthly rent for "1431"
would be $5,945.04. The final rental rate will depend on the CPI rate
used on the Adjustment Date. This example uses an annual rate of
4.5%.
The rental rate on any Option to Extend will be increased pro rata to
recognize the additional square feet leased at "1431".
68. Option to Extend. While this Lease is in full force and effect Tenant
shall have the option to extend the term for the Lease on the entire
Premises for two further terms of sixty (60) months provided that
Tenant is not in default of any of the terms, covenants, and
conditions of Lease.
69. Tenant's Proportionate Share. Tenant's Proportionate Share as
referenced in Paragraph 60 of the Lease shall be increased to 75.88%:
(Total building area = 94,702 square feet; leased premises "1431" and
"1411" equal 71,862 square feet).
70. Tenant Improvements. Tenant shall be leasing the premises at "1431"
in an "as is" condition with the exception that Landlord shall provide
an opening in the demising wall separating "1411" from "1431". As
shown on Exhibit G to Third Addendum to Lease.
The Lease term shall commence and all Tenant's obligations under this
Lease, including payment of rent, shall commence on April 1, 1991,
regardless of the status of the above work to be performed by
Landlord. Landlord agrees to diligently pursue and complete such
work.
67A. Regardless of anything contained herein to the contrary, the Rent with
respect to "1431" for April 1991 and May 1991 shall be abated. The
total Rent Concession offered to Tenant is approximately $11,890.00.
71. Parking. Tenant shall be granted an additional eighteen (18) parking
spaces, in common.
72. Copies of notices referred to in Paragraph 43(d) of the Lease
Agreement shall be sent to:
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
All other terms and conditions of the Lease shall remain in full force
and effect for the leased premises at "1431".
LANDLORD:
TCLW/FULLERTON,
a California general partnership
By:
Its:
Date:
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By:
Its:
Date:
FOURTH ADDENDUM TO LEASE
This Fourth Addendum to Lease is to be attached to and form a part of the
Lease (which together with any amendments, modifications and extensions
thereof is hereinafter called the Lease), made the 16th day of August,
1983, by and between TCLW/Fullerton, a California general partnership
("Landlord") and Nelco Products, Inc., a Delaware corporation ("Tenant")
covering the premises known as 1411 (including 1421 and 1431) E.
Orangethorpe Avenue, Fullerton, California.
1. Extension Term: The Lease is hereby renewed and extended for a
further term of sixty (60) months to commence on the 1st day of October,
1993 and to end of the 30th day of September, 1998, on the condition that
Landlord and Tenant comply with all the provisions of the covenants and
agreements contained in the Lease.
2. Monthly Rental: A Consumer Price Index adjustment shall be
substituted for the "fair market rental value" rent adjustment in
Paragraph 51(b).
2.1 The method for calculating the rent for the option period is
described in Paragraphs 2.2 and 2.3.
2.2 The index for computing the rent for the period beginning
October 1, 1993 (Adjustment Date) shall be the average of the
following two indices published by the United States Department of
Labor, Bureau of Labor Statistics (1982-84 - 100): (I) the Consumer
Price Index for Urban Wage Earners and Clerical Workers for the Los
Angeles-Long Beach-Anaheim Metropolitan Area (hereinafter referred
to as "CPI-W"), and (ii) the Consumer Price Index for All Urban
Consumers for the Los Angeles-Long Beach-Anaheim Metropolitan Area
(hereinafter referred to as "CPI-U"), which are in effect on April
1, 1991 ("Beginning Index"). The average of the CPI-W and CPI-U
published most immediately preceding the Adjustment Date ("Extension
Index") shall be compared with the Beginning index. If the Index as
now constituted, compiled and published, shall be revised or cease
to be compiled and published during the term hereof, then the Bureau
of Labor Statistics shall be requested to furnish a statement
converting the index to a figure that would be comparable in another
index published by the Bureau of Labor Statistics and such other
index shall be used in computing the adjustment in the Basic Rent
provided herein. Should the parties not be able to secure the
appropriate conversion or adjustment, they shall agree on some other
index serving the same purpose to adjust the Basic Rent as provided
herein.
2.3 The Rent payable during the 30 month period following the
Adjustment Date shall be the amount equal to the Rent payable during
the previous thirty (30) month period of the Term multiplied by a
fraction, the numerator of which is the Extension Index and the
denominator of which is the Beginning Index, provided however that
the percentage increase described above shall average not less than
3% nor more than 8% per year, and further that the rent for the
adjusted period shall never be less than the rent for the prior
period.
2.4 The monthly rental set on October 1, 1993 shall become the
"Base Date" referenced in Paragraph 50 and shall be the basis for
future adjustments as described in Paragraphs 50 and 51.
The parties hereto have signed this extension agreement this
day of , 1990.
LANDLORD:
TCLW/FULLERTON,
a California general partnership
By:
Its: General Partner
Date:
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By:
Its:
Date:
[exh1003b]
EXHIBIT 10.06(c)
FIRST AMENDMENT TO
PARK ELECTROCHEMICAL CORP.
1992 STOCK OPTION PLAN
The Park Electrochemical Corp. 1992 Stock Option Plan (the "Plan") is hereby
amended as follows:
1. The first sentence of Paragraph 2 of the Plan is hereby amended and
restated in its entirety to read as follows:
"Options may be granted under the Plan to purchase in the aggregate
not more than 1,150,000 shares of Common Stock, par value $.10 per
share, of the Company ("Common Stock"), which shares may, in the
discretion of the Board of Directors, consist either in whole or in
part of authorized but unissued shares of Common Stock or shares of
Common Stock held in the treasury of the Company."
2. Paragraph 4 is hereby amended by adding to the end thereof the
sentence to read as follows:
"Commencing in the Company's fiscal year ending March 2, 1997, no
Participant may, in any such fiscal year, receive Options relating to
Shares which in the aggregate exceed the greater of (i) 50% of the
total number of Shares granted pursuant to the Plan in any such year
or (ii) 100,000 Shares."
3. Ratification. Except as expressly set forth in this First Amendment
to the Plan, the Plan is hereby ratified and confirmed without
modification.
4. Effective Date. The effective date of this Amendment to the Plan
shall be May 14, 1996.
[EXH1006c]
EXHIBIT 10.07(b)
THIS AMENDMENT NO. 2, made and entered into as of the 5th day of
December 1996, by and between PARK ELECTROCHEMICAL CORP., a New York
corporation (hereinafter called the "Company"), having an office at 5 Dakota
Drive, Lake Success, New York 11042, and JERRY SHORE (hereinafter called
"Shore"), residing at Lighthouse Road, Sands Point, Long Island, New York
(the "Amendment").
WITNESSETH
WHEREAS, the Company and Shore have previously executed and delivered
an Amended and Restated Employment Agreement, dated as of February 28, 1994
(the "Original Agreement"), and an Amendment No. 1 thereto, dated as of
March 1, 1995 ("Amendment No. 1"), relating to the employment of Shore by
the Company; and
WHEREAS, the Company and Shore wish to modify certain of the terms and
conditions of the Original Agreement and Amendment No. 1 as hereinafter set
forth;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Paragraph (a) on Page 2 of Amendment No. 1 is hereby deleted in
its entirety, and the following is inserted in lieu thereof:
"(a) "Payment Date" shall mean the earliest of (1) the date
which is 30 days after the effective date of Shore's retirement
from full-time employment with the Company, (2) the date which
is 30 days after the date of Shore's death, (3) the date which
is 30 days after the date of Shore's "disability" (as defined in
the Original Agreement) or (4) the date which is 10 days after
the date of the Company's receipt of Shore's written request for
the payment to be made by the Company to Shore pursuant to
Section 1 of Amendment No. 1."
2. Entire Agreement. This Amendment and the Original Agreement and
Amendment No. 1 together constitute the entire agreement between the parties
with respect to the subject matter hereof, and may not be modified or
amended except by an instrument in writing signed by the parties hereto.
3. Successors and Assigns. This Amendment and all of its terms and
conditions shall be binding upon, and shall inure to the benefit of the
parties hereto and their respective heirs, legal representatives and
successors. This Amendment is personal and shall not be assignable by Shore
or the Company except that, in the event of any consolidation with or merger
into any other corporation by the Company or the sale or distribution of all
or a substantial part of the assets of the Company to another corporation,
the surviving or acquiring corporation shall assume this Amendment and
become obligated to perform all of the terms and conditions hereof and
Shore's obligations hereunder shall continue in favor of such corporation.
4. Notices. All notices and other communications required or
permitted to be given hereunder shall be given in accordance with Section 14
of the Original Agreement.
5. No Waiver. No waiver of any breach or default hereunder shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach
or default of the same or similar nature.
6. Governing Law. This Amendment shall in all respects be
construed and enforced in accordance with, and governed by, the laws of the
State of New York which would be applicable to contracts made and to be
performed in New York.
IN WITNESS WHEREOF, the parties hereunto have duly executed this
Amendment as of the date first above written.
PARK ELECTROCHEMICAL CORP.
By:
Brian E. Shore
President and Chief Executive Officer
By:
Jerry Shore
APPROVED:
EXECUTIVE COMPENSATION COMMITTEE
Lloyd Frank
Norman Schneider
Anthony Chiesa
[exh1007b]
EXHIBIT 10.10(a)
ZIN-PLAS
P.O. BOX Q GRAND RAPIDS, MICHIGAN 49501 616/784-6100
A Subsidiary of Park Electrochemical Corporation
Gerald W. McGrath
President
October 17, 1996
Mr. Philip L. Johnson
Phil Johnson Sales and Associates
30 North Park Street NW
P.O. Box 216
Comstock Park, Michigan 49321-0216
Dear Phil:
This letter serves as an amendment to our original lease of October 1, 1991.
Zin-Plas Corporation, is granted a one year extension commencing on January
1, 1997. The rate shall bear a 7% increase and reflect a monthly rental
rate of $6635.00 per month.
All other terms and conditions of that lease shall remain in place.
Gerald W. McGrath Witness
Zin-Plas Corporation
Witness
Philip L. Johnson Witness
DBA Johnson Development
Witness
[Exh1010a]
EXHIBIT 10.13
STANDARD INDUSTRIAL LEASE - NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12,
1990, is made by and between NZ Properties, Inc., an Arizona Corporation
(herein called "Lessor") and Neltec, Inc., a Delaware Corporation, a
wholly owned subsidiary of Park Electrochemical Corporation (herein called
"Lessor").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from
Lessor for the term, at the rental, and upon all of the conditions set
forth herein, that certain real property situated in the County of
Maricopa State of Arizona commonly known as 1420 W. 12th Place, Tempe and
described as an approximately 37,908 square foot building situated on
approximately 116,310 square feet and as shows on Exhibit A attached
hereto.
Said real property including the land and all improvements therein, is
herein called "the Premises".
3. Term.
3.1 Term. The term of this Lease shall be for sixty-six (66) months
commencing on December 1, 1990 and ending on May 31, 1996 unless sooner
terminated pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease or the obligations of
Lessee hereunder or extend the term hereof, but in such case, Lessee shall
not be obligated to pay rent until possession of the Premises is tendered
to Lessee, provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days from said commencement
date, Lessee may, at Lessee's option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder, provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this
Lease hereunder shall terminate and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions
hereof, such occupancy shall not advance the termination date, and Lessee
shall pay rent for such period at the initial monthly rates set forth
below.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of $ (see Addendum to Lease, Paragraph 54), in advance, on the
first day of each month of the term hereof. Lessee shall pay Lessor upon
the execution hereof $8,718.84* as rent for June 1991 beginning June 1,
1991. All rental payments are subject to the additional payment of rental
tax currently 6.5% *plus rental tax currently 6.5%.
Rent for any period during the term hereof which is for less than one
month shall be a pro rate portion of the monthly installment. Rent shall
be payable in lawful money of the United States to Lessor at the address
stated herein or to such other persons or at such other places as Lessor
may designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $11,372.40 as security for Lessee's faithful performance of
Lessee's obligations hereunder, if Lessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision
of this Lease, Lessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Lessor may become obligated by reason of
Lessor may suffer thereby. If Lessor so uses or applies all or any
portion of said deposit, Lessee shall within ten (10) days after written
demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's
failure to do so shall be a material breach of this Lease. If the monthly
rent shall, from time to time, increase during the term of this Lease,
Lessee shall thereupon deposit with Lessor additional security deposit so
that the amount of security deposit held by Lessor shall at all times bear
the same proportion to current rent as the original security deposit bears
to the original monthly rent set forth in paragraph 4 hereof. Lessor
shall not be required to keep said deposit separate from its general
accounts. If Lessee performs all of Lessee's obligations hereunder, said
deposit, or so much thereof as has not theretofore been applied by Lessor,
shall be returned, without payment of interest or other increment for its
use to Lessee (or, at Lessor's option, to the last assignee, if any, of
Lessee's interest hereunder) at the expiration of the term hereof, and
after Lessee has vacated the Premises. No trust relationship is created
herein between lessor and Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for General
offices and manufacturing of electronic circuitry and materials and
related products or any other use which is reasonably comparable and for
no other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state existing on
the date that the Lease term commences, but without regard to the use for
which Lessee will use the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or
ordinance in effect on such Lease term commencement date, in the event it
is determined that this warranty has been violated, then it shall be the
obligation of the Lessor, after written notice from lessee, to promptly,
at Lessor's sole cost and expense, rectify any such violation. In the
event Lessee does not give to Lessor written notice of the violation of
this warranty within six months from the date that the Lease term
commences, the correction of same shall be the obligation of the Lessee at
Lessee's sole cost. The warranty contained in this paragraph 6.2(a) shall
be of no force or effect if, prior to the date of this lease, Lessee was
the owner or occupant of the Premises, and, in such event, Lessee shall
correct any such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and
requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises. Lessee shall not use nor
permit the use of the Premises in any manner that will tend to create
waste or a nuisance or, if there shall be more than one tenant in the
building containing the Premises, shall tend to disturb such other
tenants.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and free of debris
on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air
conditioning, heating, and loading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the event that it
is determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting
forth with specificity the nature of the violation, to promptly, at
Lessor's sole cost, rectify such violation. Lessee's failure to give such
written notice to Lessor within thirty (30) days after the Lease
commencement date shall cause the conclusive presumption that Lessor has
complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect it prior
to the date of this Lease, Lessee was the owner or occupant of the
Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the
Premises in their condition existing as of the Lease commencement date or
the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use of the
Premises, and any covenants or restrictions of record. and accepts this
Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto. Lessee acknowledges that neither Lessor nor
Lessor's agent has made any representation or warranty as to the present
or future suitability of the Premises for the conduct of Lessee's
business.
7. Maintenance, Repairs and Alterations.
7.1 Lessee's Obligations. Lessee shall keep in good order, condition and
repair the Premises and every part thereof, structural and nonstructural,
(whether or not such portion of the Premises requiring repair, or the
means of repairing the same are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements or the age of such portion of
the Premises) including, without limiting the generality of the foregoing,
all plumbing, heating, air conditioning, (Lessee shall procure and
maintain, at Lessee's expense, an air conditioning system maintenance
contract) ventilating, electrical, lighting facilities and equipment
within the Premises, fixtues, walls (interior and exterior), foundations,
ceiling, roofs (interior or exterior), floors, windows, doors, plate glass
and skylights located within the Premises, and all landscaping, driveways,
parking lots, fences and signs located on the premises and sidewalks and
parkways adjacent to the premises - See Addendum to Lease, paragraph 57.
7.2 Surrender. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as when received, ordinary wear and tear excepted, clean and
free of debris. Lessee shall repair any damage to the Premises occasioned
by the installation or removal of Lessee's trade fixtures, furnishings and
equipment notwithstanding anything to the contrary other than as stated in
this Lease. lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures space heaters, air-conditioning,
plumbing and fencing on the premises in good operating condition.
7.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations
under this Paragraph 7, or under any other paragraph of this Lease, Lessor
may at its option (but shall not be required to) enter upon the Premises
after ten (10) days prior written notice to Lessee (except in the case of
an emergency, in which case no notice shall be required), perform such
obligations on Lessee's behalf and put the same in good order, condition
and repair, and the cost thereof together with interest thereon at the
maximum rate then allowable by law shall become due and payable as
additional rental to Lessor together with Lessee's next rental
installment.
7.4 Lessor's Obligations. Except for the obligations of lessor under
Paragraph 6.2(a) (relating to Lessor's warranty), Paragraph 9 (relating to
destruction of the Premises) and under Paragraph 14 (relating to
condemnation of the Premises), it is intended by the parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises not the building located thereon nor the equipment
therein, whether structural or non structural, all of which obligations
are intended to be that of the Lessee under Paragraph 7.1 hereof. Lessee
expressly waives the benefit of any statute now or hereinafter in effect
which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
premises in good order, condition and repair.
7.5 Alterations and Additions. See Addendum to Lease, Paragraph 57.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or
about the Premises, See Addendum to Lease, Paragraph 59, during the term
of this Lease. In any event, whether or not in excess of $2,500 in
cumultive cost, Lessee shall make no change or alteration to the exterior
of the Premises, nor the exterior of the building(s) on the Premises
without Lessor's prior written consent. As used in this Paragraph 7.5 the
term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distrivbution systems, lighting fixtures,
space heaters, air conditioning, plumbing, and fencing. Lessor may
require that Lessee remove any or all of said alterations, improvements,
additions or Utility Installations at the expiration of the term, and
restore the premises to their prior condition. Lessor may require Lessee
to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liabilty for
mechanic's and materialmen's liens and to insure completion of the work.
Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of lessor, lessor may require
that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in,
or about the Premises that Lessee shall desire to make and which requires
the consent of the Lessor shall be presented to Lessor in written form,
with proposed detailed plans. If Lessor shall give its consent, the
consent shall be deemed conditioned upon Lessee acquiring a permit to do
so from appropriate governmental agencies, the furnishing of a copy
thereof to Lessor prior to the commencement of the work and the compliance
by Lessee of all conditions of said permit in a prompt and expeditious
manner. See Addendum to Lease, Paragraph 50.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lesse at or for use
in the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises, and Lessor shall have the right
to post notices of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend
itself and Lessor against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, upon the condition that if
Lessor shall require, lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises free from the effect of such lien or claim. In addition, Lessor
may require Lessee to pay Lessor's reasonable attorneys fees and costs in
participating in such action if Lessor shall decide it is to its best
interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph
7.5(a), all alterations, improvements, additions and Utility Installations
(whether or not such utility Installations constitute trade fixtures of
Lessee), which may be made on the Premises, shall become the property of
Lessor and remain upon and be surrendered with the Premises at the
expiration of the term. Notwithstanding the provisions of this Paragraph
7.5(d), Lessee's machinery and equipment, other than that which is affixed
to the Premises so that it cannot be removed without material damage to
the Premises, shall remain the property of lessee and may be removed by
Lessee subject to the provisions of Paragraph 7.2. See Addendum to Lease,
Paragraph 61.
8. Insurance Indemnity. See Addendum to Lease, Paragraph 61.
8.1 Insuring Party. As used in this Paragraph 8, the term "insuring
party" shall mean the party who has the obligation to obtain the Property
Insurance required hereunder. The insuring party shall be designated in
Paragraph 46 hereof. In the event Lessor is the insuring party, Lessor
shall also maintain the liability insurance described in paragraph 8.2
hereof, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee under said paragraph 8.2, but lessor shall not be
required to name Lessee as an additional insured on such policy. Whether
the insuring party is the Lessor or the Lessee, Lessee shall, as
additional rent for the Premises, pay the cost of all insurance required
hereunder, except for that portion of the cost attributable to Lessor's
liability insurance coverage in excess of $1,000,000 per occurrence. If
lessor is the insuring party Lessee shall, within ten (10) days following
demand by Lessor, reimburse Lessor for the cost of the insurance so
obtained.
8.2 Liability Insurance. Lessee shall, at Lessee's expense obtain and
keep in force during the term of this Lease a policy of Combined Single
Limit, Bodily Injury and Property Damage insurance insuring Lessor and
lessee against any liability arising out of the ownership, use, occupancy
or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be a combined single limit policy in an amount not less
than $1,000,000 per occurrence. The policy shall insure performance by
Lessee of the indemnity provisions of this Paragraph 8. The limits of
said insurance shall not, however, limit the liability of Lessee
hereunder.
8.3 Property Insurance.
(a) The insuring party shall obtain and keep in force during the term of
this lease a policy or policies of insurance covering loss or damage to
the Premises, in the amount of the full replacement value thereof, as the
same may exist from time to time, which replacement value is now
$1,000,000.00, but in no event less than the total amount required by
lenders having liens on the premises, against all perils included within
the the classification of fire, extended coverage, vandalism, malicious
mischief, flood (in the event same is required by a lender having a lien
on the Premises), and special extended perils ("all risk" as such term is
used in the insurance industry). Said insurance shall provde for payment
of loss thereunder to Lessor or to the holders of mortgages or deeds of
trust on the premises. The insuring party shall, in addition, obtain and
keep in force during the term of this lease a policy of rental value
insurance covering a period of one year, with loss payable to Lessor,
which insurance shall also cover all real estate taxes and insurance costs
for said period. A stipulated value or agreed amount endoresement
deleting the coinsurance provision of the policy shall be procured with
said insurance as well as an automatic increase in insurance endorsement
causing the increase in annual property insurance coverage by 2% per
quarter. If the insuring party shall fail to procure and maintain said
insurqnce the other party may, but shall not be required to, procure and
maintain the same, but at the expense of Lessee. If such insurqance
coverage has a deductible clause, the deductible amount shall not exceed
$1,000 per occurrence, and lessee shall be liable for such deductible
amount.
(b) If the Premises are part of a larger building, or if the Premises are
part of a larger building, or if the Premises are part of a group of
buildings owned by Lessor which are adjacent to the Premises, then Lessee
shall pay for any increase in the property insurance of such other
building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure
Lessee's fixtures, equipment or tenant improvements unless the tenant
improvements have become a part of the Premises under paragraph 7, hereof.
But if Lessee is the insuring party the Lessee shall insure its fixtures,
equipment and tenant improvements.
8.4 Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or
such other rating as may be required by a lender having a lien on the
Premises, as set forth in the most current issue of "Best's Insurance
Guide". The insuring party shall deliver to the other party copies of
policies of such insurance or certificates evidencing the existence and
amounts of such insurnace with loss payable clauses as required by this
paragraph 8. No such policy shall be cancellable or subject to reduction
of coverage or other modification except after thirty (30) days' prior
written notice to Lessor. If Lessee is the insurance party lessee shall,
at lest thirty (30) days prior to the expiration of such policies, furnish
Lessor with renewals or "binders" thereof, of Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee upon demand. Lessee shall not do or permit to be done
anything which shall invalidate the insurance policies referred to in
Paragraph 8.3. If Lessee does or permits to be done anything which shall
increase the cost of the insurance policies referred to in Paragraph 3,
then Lessee shall forthwith upon Lessor's demand reimburse Lessor for any
additional premiums attributable to any act or omission or operation of
Lessee causing such increase in the cost of insurance. If Lessor is the
insuring party, and if the insurance policies maintained hereunder cover
other improvements in addition to the Premises, Lessor shall deliver to
Lessee a written statement setting forth the amount of any such insurance
cost increase and showing in reasonable detail the manner in which it has
been computed.
8.6 Indemnity. Lessee shall indemnify and hold harmless lessor from and
against any and all claims arising from Lessee's use of the Premises, or
from the conduct of lessee's business or from any activity, work or things
done, permitted or suffered by Lessee in or about the Premises or
elsewhere and shall further indemnify and hold harmless lessor from and
against any and all claims arising from any breach or default in the
performance of any obligation on Lessee's part to be performed under the
terms of this Lease, or arising from any negligence of the Lessee, or any
of lessee's agents, contractors, or employees, and from and against all
costs, attorney's fees, expenses and liabilities incurred in the defense
of any such calim or any action or proceeding brought thereon, and in case
any action or proceeding be brought against Lessor by reason of any such
consideration to Lessor, hereby assumes all risk of damage to property or
injury to person, in, upon or about the Premises arising from any cause
and Lessee hereby waives all claims in respect thereof against Lessor.
See Addendum to Lease, Paragraph 57.
8.7 Exemption of lessor from Liability. lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, ware, merchandise or other property
of Lessee. Lessee's employees, invitees, customers, or any other person
in or about the Premises, nor shall Lessor be liable for injury to the
person or Lessee, lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity,
gas, water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the
said damage or injury results from conditions arising upon the Premises or
upon other portions of the building of which the Premises are a part, or
from other sources or places and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible to
Lessee, Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the Premises
are located. See Addendum to Lease, Paragraph 57.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or destruction to
the Premises to the extent that the cost of repair is less than 50% of the
then replacement cost of the Premises. "Premises BuildingPartial Damage"
shall herein mean damage or destruction to the building of which the
Premises are a part to the extent that the cost of repair is less than 50%
of the then replacement cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or destruction
to the Premises to the extent that the cost of repair is 50% or more of
the then replacement cost of the Premises. "Premises Building Total
Destruction" shall herein mean damage or destruction to the building of
which the Premises are a part to the extent that the cost of repair is 50%
or more of the ten replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 Part. Damage-Insured Loss. Subject to the provisions of paragraphs
9.4, 9.5 and 9.6, if at any time during the term of this Lease there is
damage which is an Insured Loss and which falls into the classification of
Premises Partial Damage or Premises Building Partial Damage, then Lessor
shall, at Lessor's expense, repair such damage, but not lessee's fixtures,
equipment or tenant improvements unless the same have become a part of the
Premises pursuant to Paragraph 7.5 hereof as soon as reasonably possible
and this Lease shall continue in full force and effect. Notwithstanding
the above, if the Lessee is the insuring party, and if the insurance
proceeds received by Lessor are not sufficient to effect such repair,
Lessor shall give notice to Lessee of the amount required in addition to
the insurance proceeds received to effect such repair. Lessee shall
contribute the required amount to Lessor within ten days after Lessee has
received notice from Lessor of the shortage in the insurance. When Lessee
shall contribute such amount to Lessor, Lessor shall make such repairs as
soon as reasonably possible and this Lease shall continue in full force
and effect. Lessee shall in no event have any right to reimbusement for
any such amounts so contributed.
9.3 Partial Damage-Uninsured Loss. Subject to the provisions of
Paragraph 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is not an Insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee's expense) (to the extent
caused by the negligent or willful acts of Lessee), Lessor may at Lessor's
option either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30) days
after the date of the occurrence of such damage of Lessor's intention to
cancel and terminate this Lease, as of the date of the occurrence of such
damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this lease
shall continue in full force and effect, and Lessee shall proceed to make
such repairs as soon as reasonably possible. If Lessee does not give such
notice within such 10-day period this Lease shall be cancelled and
terminated as of the date of the occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction
required by any authorized public authority), which falls into the
classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of
such total destruction.
9.5 Damage near End of Term.
(a) If at any time during the last six months of the term of this Lease
there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option
cancel and terminate this Lease as of the date of occurrence of such
damage by giving written notice to Lessee of Lessor's election to do so
within 30 days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no lter than 20 days after the
occurrence of an Insured Loss falling within the classification of
Premises Partical Damage during the last six months of the term of this
Lease. If Lessee duly exercises such option during said 20 day period,
Lessor shall, at Lessor's expense, repair such damage as soon as
reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option during said 20 day
period, then Lessor may at Lessor's option terminate and cancel this Lease
as of the expiration of said 20 day period by giving written notice to
Lessee of lessor's election to do so within 10 days after the expiration
of said 20 day period, notwithstanding any term or provision in the grant
of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and Lessor
or Lessee repairs or restores the Premises pursuant to the provisions of
this Paragraph 9, the rent payable hereunder for the period during which
such damage, reapir or restoration continues shall be abated in proportion
to the degree to which Lessee's use of the Premises is impaired. Except
for abatement of rent, if any, Lessee shall have no claim against Lessor
for any damage suffered by reason of any such damage, destruction, repair
or restoration. See Addendum to Lease, Paragraph 58.
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may
at Lessee's option cancel and terminate this Lease by giving Lessor
written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease
shall terminate as of the date of such notice. See Addendum to Lease,
Paragraph 58.
9.7 Termination-Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes which
relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessee shall pay the real property tax, as
defined in paragraph 10.2, applicable to the Premises during the term of
this Lease. All such payments shall be made at least ten (10) days prior
to the delinquency date of such payment. Lessee shall promptly furnish
Lessor with satisfactory evidence that such taxes have been paid. If any
such taxed paid by Lessee shall cover any period of time prior to or after
the expiration of the term hereof, Lessee's share of such taxes shall be
equitably prorated to cover only the period of time within the tax fiscal
year during which this Lease shall be in effect, and Lessor shall
reimburse Lessee to the extent required. If Lessee shall fail to pay any
such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent
installment together with interest at the maximum rate then allowable by
law.
10.2 Definition of "Real Property Tax". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the Premises by
any authority having the direct or indirect power to tax, including any
city, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof, as against
any legal or equitable interest of Lessor in the Premises or in the real
property of which the Premises are a part, as against Lessor's right to
rent or other income therefrom, and as against Lessor's business of
leasing the Premises. The term "real property tax" shall also include any
tax, fee, levy, assessment or charge (i) in substitution of, partially or
totally, any tax, fee, levy, assessment or charge hereinabove included
within the definition of "real property tax," or (ii) the nature of which
was hereinbefore included within the definition of "real property tax," or
(iii) which is imposed for a service or right not charged prior to June 1,
1978, or, if previously charged, has been increased since June 1, 1978, or
(iv) which is imposed as a result of a transfer, either partial or total,
of Lessor's interest in the Premises or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason
of such transfer, or (v) which is imposed by reason of this transaction,
any modifications or changes hereto, or any transfers hereof.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property
taxes for all of the land and improvements included within the tax parcel
assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.4 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within 10 days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas heat, light, power,
telephone and other utilities and services supplied to the Premises,
together with any taxes theron. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion to be
determined by Lessor of all charges jointly metered with other premises.
12. Assignment and Subletting.
12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer
or encumber all or any part of Lessee's interest in this Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to lessee's request for
consent hereunder in a timely manner and any attempted assignment,
transfer, mortgage, encumbrance or subletting without such consent shall
be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled
by or is under common control with Lessee, or to any corporation resulting
from the merger or consolidation with Lessee, or to any person or entity
which acquires all the assets of Lessee as a going concern of the business
that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Lessee under this Lease. Any such
assignment shall not, in any way, affect or limit the liabilty of Lessee
under the terms of this Lease even if after such assignment or subletting
the terms of this Lease are materially changed or altered without the
consent of Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no subletting
or assignment shall release Lessee of Lessee's obligation or alter the
primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. This acceptance of rent
by Lessor from any other person shall not be deemed to be a waiver by
Lessor of any provision hereof. Consent to one assignment or subletting
shall not be deemed consent to any subsequent assignment or subletting.
In the event of default by an assignee of Lessee or any successor of
Lessee, in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies
against said assignee. Lessor may consent to subsequent assignments or
subletting of this Lease or amendments or modifications to this Lease with
assignees of Lessee, without notifying Lessee, or any successor of Lessee,
and without obtaining its or their consent thereto and such action shall
not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting
of if Lessee shall request the consent of Lessor for any act Lessee
proposes to do then Lessee shall pay Lessor's reasonable attorneys fees
incurred in connection therewith, such attorneys fees not to exceed
$350.00 for each such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and wen due, where
such failure shall continue for a period of three business days after
written notice thereof from Lessor to Lessee. In the event that Lessor
serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable
Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also
constitute the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in Paragraph (b) above, where such failure
shall continue for a period of 30 days after written notice thereof from
Lessor to Lessee; provided, however, that if the nature of Lessee's
default is such that more than 30 days are reasonably required for its
cure, then Lessee shall not be deemed to be in default if Lessee commenced
such cure within said 30-day period and thereafter diligently prosecutes
such cure to completion.
(d) (i) The making by Lessee of any general arrangement or assignment for
the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C. 101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the premises or
of Lessee's interest in this Lease, where such seizure is not discharged
within 30 days. Provided, however, in the event that any provision of the
Paragraph 13.1(d) is contrary to any applicable law, such provision shall
be of no force or effect.
(e) The discovery of Lessor that any financial statement given to Lessor
by Lessee, or any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the
cost of recovering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorney's fees, and any real estate commission actually paid; the worth
at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent for the balance of the term after the time
of such award exceeds the amount of such rental loss for the same period
that Lessee proves could be reasonably avoided; that portion of the
leasing commission paid by Lessor pursuant to Paragraph 15 applicable to
the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to
recover the rend as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are
located. unpaid installments of rent and other unpaid monetary
obligations of Lessee under the terms of this Lease shall bear interest
from the date due at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee
to Lessor and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has failed to
perform such obligation; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days are required for
performance then Lessor shall not be in default if Lessor commences
performance within such 30-day period and thereafter diligently prosecutes
the same to completion.
13.4 Late Charges. Less here by acknowledges that late payment by Lessee
to Lessor of rent and other sums dues hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and last charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due
from Lessee shall not be received by Lessor or Lessor's designee within
ten (10) days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a late charge
equal to 6% of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of last payment by Lessee. Acceptance of such late
charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder. In the event that
a late charge is payable hereunder, whether or not collected, for three
(3) consecutive installments of rent, then rent shall automatically become
due and payable quarterly in advance, rather than monthly, notwithstanding
Paragraph 4 or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall
pay to Lessor, if Lessor shall so request, in addition to any other
payments and insurance expenses on the Premises which are payable by
Lessee under the terms of this Lease. Such fund shall be established to
insure payment when due, before delinquency, of any or all such real
property taxes and insurance premiums. If the amounts paid to Lessor by
Lessee under the provisions of this paragraph are insufficient to
discharge the obligations of Lessee to pay such real property taxes and
insurance premiums as the same become due, Lessee shall pay to Lessor,
upon Lessor's demand, such additional sums necessary to pay such
obligations. All moneys paid to Lessor under this paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In
the event of a default in the obligations of Lessee to perform under this
Lease, then any balance remaining from funds paid to Lessor under the
provisions of this paragraph may, at the option of Lessor, be applied to
the payment of any monetary default of Lessee in lieu of being applied to
the payment of real property tax and insurance premiums.
14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain, or sold under the threat of the exercise of
said power (all of which are herein called "condemnation"), this Lease
shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than
10% of the floor area of the building on the Premises, or more than 25% of
the land area of the Premises which is not occupied by any building, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten (10) days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within
ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with
the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced
in the proportion that the floor area of the building taken bears to the
total floor area of the building situated on the Premises. No reduction
of rent shall occur if the only area taken is that which does not have a
building located thereon. Any award for the taking of all or any part of
the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value
of the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any award for loss of
or damage to Lessee's trade fixtures and removable personal property. In
the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay
any amount in excess of such severance damages required to complete such
repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall pay to
Grubb & Ellis Company Licensed real estate broker(s), a fee as set forth
in a separate agreement between Lessor and said broker(s) for brokerage
services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as defined
in Paragraph 32.1 of this Lease, which is granted to Lessee under any
rights to the Premises or other premises described in this Lease which are
substantially similar to what Lessee would have acquired had an Option
herein granted to Lessee been exercised, or if Lessee remains in
possession of the Premises after the expiration of the term of this Lease
after having failed to exercise an Option, or if said broker(s) are the
procuring cause of any other lease or sale entered into between the
parties pertaining to the Premises and/or any adjacent property in which
Lessor has an interest, then as to any of said transactions, Lessor shall
pay said broker(s) a fee in accordance with the schedule of said broker(s)
in effect at the time of execution of this Lease.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease, as so modified, is in
full force and effect) and the date to which the rent and other charges
are paid in advance, if any, and (ii) acknowledging that there are not, to
Lessee's knowledge, any uncured defaults on the part of Lessor hereunder,
or specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of
the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be conclusive
upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor; (ii) that there are
no uncured defaults in Lessor's performance; and (iii) that not more than
one month's rent has been paid in advance or such failure may be
considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall
include the past three years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or
purchaser in confidence and shall be used only for the purposes herein set
forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a Lessee's
interest in a ground lease of the Premises, and except as expressly
provided in Paragraph 15, in the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers
then the grantor) shall be relieved from and after the date of such
transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or the then
grantor at the time of such transfer, in which Lessee has an interest,
shall be delivered to the grantee, provided further that such transferee
has accepted in writing this Lease Agreement. The obligations contained
in this Lease to be performed by Lessor shall, subject as aforesaid, be
binding on Lessor's successors and assigns, only during their respective
periods of ownership.
18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest
at the maximum rate then allowable by law from the date due. Payment of
such interest shall not excuse or cure any default by Lessee under this
Lease, provided however, that interest shall not be payable on late
charges incurred by Lessee nor on any amounts upon which late charges are
paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under
the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein.
No prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise
stated in this Lease, Lessee hereby acknowledges that neither the real
estate broker(s) listed in Paragraph 15 hereof nor any cooperating
broker(s) on this transaction nor the Lessor or any employees or agents of
any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of
said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use
and adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this Lease
except as otherwise specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery or by certified
mail, and if given personally or by mail, shall be deemed sufficiently
given if addressed to Lessee or to Lessor at the address noted below the
signature of the respective parties, as the case may be. Either party may
by notice to the other specify a different address for notice purposes
except that upon Lessee's taking possession of the Premises, the Premises
shall constitute Lessee's address for notice purposes. A copy of all
notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as
Lessor may from time to time hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor and Lessee or any provision hereof
shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Lessor and Lessee of the same or any other provision.
Lessor and Lessee consent to, or approval of, any act shall not be deemed
to render unnecessary the obtaining of Lessor's and Lessee's consent to or
approval of any subsequent act by Lessor and Lessee. The acceptance of
rent hereunder by Lessor and Lessee shall not be a waiver of any preceding
breach by Lessor and Lessee of any provision hereof, other than the
failure of Lessor and Lessee to pay the particular rent so accepted,
regardless of Lessor's and Lessee's knowledge of such preceding breach at
the time of acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of
this Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in
possession of the Premises or any part thereof after the expiration of the
term hereof, such occupancy shall be a tenancy from month to month upon
all the provisions of this Lease pertaining to the obligations of Lessee,
but all options and rights of first refusal, if any, granted under the
terms of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. Covenants and Conditions. Each provision of the Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the
provisions of Paragraph 17, this Lease shall bind the parties, their
personal representatives, successors and assigns. This Lease shall be
governed by the laws of the State wherein the premises are located.
30. Subordination.
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation or security now
or hereafter placed upon the real property of which the Premises are a
part and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions
thereof. Notwithstanding such subordination, Lessee's right to quite
possession of the Premises shall not be disturbed if Lessee is not in
material default and so long as Lessee shall pay the rent and be in
substantial compliance with all of the provisions of the Lease, unless
this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior
to the lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Lessee, this Lease shall be deemed prior to such
mortgage, deed of trust, or ground lease, whether this Lease is dated
prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's
failure to execute such documents within 10 days after written demand
shall constitute a material default by Lessee hereunder, or, at Lessor's
option, Lessor shall execute such documents on behalf of Lessee as
Lessee's attorney-in-fact. Lessee does hereby make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's
name, place and stead, to execute such documents in accordance with this
Paragraph 30(b).
31. Attorney's Fees. If either party or the broker(s) named herein
brings an action to enforce the terms hereof or declare rights hereunder,
the prevailing party in any such action, on trial or appeal, shall be
entitled to his reasonable attorney's fees to be paid by the losing party
as fixed by the court. The provisions of this Paragraph 31 shall inure to
the benefit of the broker named herein who seeks to enforce a right
hereunder.
32. Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the
same, showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, improvements or additions to the
Premises or to the building of which they are a part as Lessor may deem
necessary or desirable. See Addendum to Lease, Paragraph 61. Lessor may
at any time place on or about the Premises any ordinary "For Sale" signs
and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without
first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant
such consent.
34. Signs. Lessee shall be allowed to place signage upon the Premises so
long as all such signage is in compliance with all applicable codes and
regulations. Lessor shall be provided copies of all sign applications.
35. Merger. The voluntary or other surrender of the Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work
a merger, and shall, at the option of Lessor, terminate all or any
existing subtenancies or may, at the option of Lessor, operate as an
assignment to Lessor of any or all of such subtenancies.
36. Consents. Except for Paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent
shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease,
said guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions
of Lessee's part to be observed and performed hereunder, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease. The individuals executing this Lease on
behalf of Lessor represent and warrant to Lessee that they are fully
authorized and legally capable of executing this Lease on behalf of Lessor
and that such execution is binding upon all parties holding an ownership
interest in the Premises.
39. Options.
39.1 Definition. As used in this Paragraph the word "Options" has the
following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any Lease that Lessee
has on other property of Lessor; (2) the option or right of first refusal
to lease the premises or the right of first offer to lease the Premises or
the right of first refusal to lease other property of Lessor or the right
of first offer to lease other property of Lessor; (3) the right or option
to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises or the
right or option to purchase other property of Lessor, or the right of
first refusal to purchase other property of Lessor or the right of first
offer to purchase other property of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned voluntarily or
involuntarily by or to any person or entity other than Lessee, provided
however, the Option may be exercised by or assigned to any Lessee
Affiliate as defined in Paragraph 12.2 of this Lease. The Options herein
granted to Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple options
to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option notwithstanding any
provision in the grant of Option to the contrary: (i) during the time
commencing from the date Lessor gives to Lessee a notice of default
pursuant to Paragraph 13.1(b) or 13.1(c) and continuing until the default
alleged in said notice of default is cured; or (ii) during the period of
time commencing on the day after a monetary obligation to Lessor is due
from Lessee and unpaid (without any necessity for notice thereof to
Lessee) continuing until the obligation is paid; or (iii) at any time
after an event of default described in Paragraphs 13.1(1), 13.1(d), or
13.1(e) (without any necessity of Lessor to give notice of such default to
Lessee); or (iv) in the event that Lessor has given to Lessee three or
more notices of default under Paragraph 13.1(b), where a late charge has
become payable under Paragraph 13.4 for each of such defaults, or
Paragraph 13.1(c), whether or not the defaults are cured, during the 12
month period prior to the time that Lessee intends to exercise the subject
Option.
(b) The period of time within which an Option may be exercised shall not
be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during
the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of 30 days after such obligation becomes
due (without any necessity of Lessor to give notice thereof to Lessee); or
(ii) Lessee fails to commence to cure a default specified in Paragraph
13.1(c) within 30 days after the date that Lessor gives notice to Lessee
of such default and/or Lessee fails thereafter to diligently prosecute
said cure to completion; or (iii) Lessee commits a default described in
Paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to
give notice of such default to Lessee); or (iv) Lessor gives to Lessee
three or more notices of default under Paragraph 13.1(b), where a late
charge becomes payable under Paragraph 13.4 for each such default, or
Paragraph 13.1(c), whether or not the defaults are cured.
40. Multiple Tenant Building. In the event that the premises are part of
a larger building or group of buildings then Lessee agrees that it will
abide by, keep and observe all reasonable rules and regulations which
Lessor may make from time to time for the management, safety, care and
cleanliness of the building and grounds, the parking of vehicles and the
preservation of good order therein as well as for the convenience of other
occupants and tenants of the building. The violations of any such rules
and regulations shall be deemed a material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard service or
other security measures, and that Lessor shall have no obligation
whatsoever to provide same. Lessee assumes all responsibility for the
protection of Lessee, its agents and invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time,
to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
restrictions, so long as such easements, rights dedications, Maps and
restrictions do not unreasonable interfere with the use of the Premises by
Lessee. Lessee shall sign any of the aforementioned documents upon
request of Lessor and failure to d so shall constitute a material breach
of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one party to the other under
the provisions hereof, the party against whom the obligation to pay the
money is asserted shall have the right to make payment "under protest" and
such payment shall not be regarded as voluntary payment, and there shall
survive the right on the part of said party to institute suit for recovery
of such sum. If it shall be adjudged that there was no legal obligation
on the part of said party to pay such sum or any part thereof, said party
shall be entitled to recover such sum or so much thereof as it was not
legally required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity, if Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after
execution of this Lease, deliver to Lessor evidence of such authority
satisfactory to Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Insuring Party. The insuring party under this lease shall be the
Lessee.
47. Addendum. Attached hereto is an addendum or addenda containing
Paragraphs 49 through 62 which constitutes a part of this Lease. Addendum
to Lease and Exhibits A and B are attached to and made a part of this
Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE
THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR
AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL
ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR
OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
The parties hereto have executed this Lease at the place on the
dates specified immediately adjacent to their respective
signatures.
Executed at NZ Properties, Inc.
on By
Address By s/E.M. Bedewi, Sr. VP
Treasurer
NZ PROPERTIES, INC. "LESSOR" (Corporate Seal)
Executed at Neltec, Inc., a wholly owned subsidiary of
Park Electrochemical Corp.
on By
Address By
NELTEC, INC. a wholly owned subsidiary of Park Electrochemical
Corporation.
NOTE: These forms are often modified to meet changing requirements of law
and needs of the industry. Always write or call to make sure you are
utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION; 345 So. Figueroa St. M-1; Los Angeles CA 90071
(213) 687-8777
ADDENDUM TO LEASE
Between NZ Properties, Inc., an Arizona Corporation, Lessor and Neltec,
Inc., a Delaware Corporation, a Wholly Owned Subsidiary of Park
Electrochemical Corp., Lessee, dated November 26, 1990.
49. Improvements:
a. Lessor shall provide Lessee with an allowance of $151,632.00 to be
used solely for the purpose of performing those improvements to Premises
which Lessee determines to be necessary for the operation of Lessee's
business. Such allowance shall be disbursed to Lessee upon Lessee's
presentation of receipts and lien wavers to Lessor for work performed or
goods purchased.
b. Lessee shall be permitted to construct an enclosed, elevated portion
of building extending above existing roof by approximately 15 to 20 feet
and measuring approximately 40 feet by 40 feet and located in interior
portion of building. All structural work shall be performed by a licensed
general contractor and shall comply with all applicable codes and
regulations.
c. Lessee shall be permitted to bring natural gas service to premises
which shall be at Lessee's expense.
d. Lessor shall remove all debris and miscellaneous parts and equipment
from rear, fenced yard at Lessor's expense.
50. Phase I Environmental Study: Lessor shall provide, at Lessor's
expense, a current Phase I Environmental Audit which shall be completed no
later than December 15, 1990, and a copy of which shall be provided
Lessee.
51. Contingency: The proposed lease shall be subject to Lessee's
obtaining all required licenses and permits required to operate Lessee's
business and to modify premises as Lessee requires. Lessee shall have one
hundred twenty (120) days from the lease commencement date to obtain such
licenses and permits. Lessee's failure to obtain such licenses and
permits within the prescribed period shall result in allowing Lessee at
Lessee's option, the right to cancel this lease by providing Lessor with
thirty (30) days advance written notice. In the event of such
cancellation, Lessee shall, at Lessee's expense and Lessor's option: (a)
return premises to its original condition; or (b) reimburse Lessor for
Lessor's expenses to date associated with the improvement allowance
contained in Paragraph 49 of this Addendum to Lease. In addition, in the
event Lessee elects to cancel this Lease at any time after the lease has
been in effect for sixty (60) days and prior to the prescribed 120 day
period, Lessee shall also pay to Lessor rental equal to two months rent
based upon the monthly rental of $12,232.67 plus rental tax.
52. First Right of Refusal to Purchase: Lessee shall be provided the
first right of refusal to purchase subject property so long as Lessee is
not in material default of this lease for a period not to exceed the first
ten (10) years of Lessee's occupancy after which time Lessee shall no
longer retain such right. During the period such right is in force, in
the event Lessor receives a signed bona fide purchase contract for the
purchase of premises from a third party which is acceptable to Lessor,
prior to Lessor's accepting such purchase contract, Lessor shall first
submit a copy of such purchase contract to Lessee for Lessee's approval or
disapproval. Lessee shall have three business days from Lessee's receipt
to accept such purchase contract and Lessee's failure to accept such
purchase contract within the prescribed period shall result in Lessee's
losing such right to accept such purchase contract and Lessor shall then
have the right to enter into such purchase contract with such third party.
53. Right of First Offer: So long as Lessee is not in material default
of this Lease, Lessee shall have the right of first offer throughout the
initial term of this lease and the option periods contained herein.
Lessor shall notify Lessee at any time or times Lessor elects to make
premises available for sale prior to Lessor's making such information
public.
54. Rental and Rental Adjustments: The monthly rental shall be as
follows:
Period Monthly Rental
12/01/90 thru 05/31/91 None
06/01/91 thru 11/30/91 $ 8,718.84
12/01/91 thru 11/30/93 $11,372.40
Beginning in the thirty-seventh (37th) month of the initial term and in
the first and thirty-first month of each renewal period the monthly rental
shall be adjusted by a percentage equal to the percentage of change in the
All Urban Consumer Price Index (CPI-U) as compiled and published monthly
by the U.S. Department of Labor by using November, 1990 as the base
period. The difference in the Index between the base period and the month
ending immediately preceding each scheduled adjustment date as a
percentage shall be applied toward the then current rental to establish
the rental until the next scheduled adjustment date.
No such adjustments, however, shall be greater than an average of 6% per
annum increase nor less than that rental for the immediately preceding
period. Due to the delay between the scheduled rental adjustment date and
the date the Index information is made available, the rental shall remain
the same as that rental for the period immediately preceding the scheduled
rental adjustment date until such time as Lessor notified Lessee of such
change in rental as a result of any change in the Index. Lessor shall
notify Lessee within thirty days of such change following the release of
such Index information and shall include any back rental due extending
back to the scheduled rental adjustment date.
55. Options to Renew: So long as Lessee is not in material default of
this Lease and, as consideration of Lessee's payment of rent, Lessee shall
have three (3) five (5) year options to renew this Lease which shall
commence consecutively with the termination of the Lease term. The terms
and conditions for such renewal periods shall be the same as those
contained in this Lease except that the rental shall be adjusted as set
forth in Paragraph 54 of this Addendum. To exercise each option to renew,
Lessee shall provide Lessor with a minimum of 120 days advance written
notice prior to the termination date of the then current lease term or
extension period.
56. Hazardous Substances:
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, chemical, material
or waste whose presence, nature, quantity, and/or intensity of existence,
use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with the other materials expected to be
on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii) regulated
or monitored by any governmental authority, or (iii) a basis for liability
of Lessor to any governmental agency or third party under any applicable
statute or common law theory. Hazardous Substance shall include, but not
be limited to, hydrocarbons, petroleum, gasoline, crude oil or any
products, by-products or fractions thereof. Lessee shall not engage in
any activity in, on or about the Premises which constitutes a Reportable
Use (as hereinafter defined) of Hazardous Substances without the
substantial compliance in a timely manner (at Lessee's sole cost and
expense) with all Applicable Law (as defined in Paragraph 56(c).
"Reportable Use" shall mean (i) the installation or use of any above or
below ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority.
Reportable Use shall also include Lessee's being responsible for the
presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Law requires that a notice be given to
persons entering or occupying the Premises or neighboring properties.
(b) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or
damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, permits and attorney's and consultant's fees arising out of or
involving any hazardous Substance or storage tank brought onto the
Premises by or for Lessee or under Lessee's control. Lessee's obligations
under this Paragraph 6 shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation (including
reasonable consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination
of this Lease. No termination, cancellation or release agreement entered
into by Lessor and Lessee shall release Lessee from its obligations under
this Lease with respect to Hazardous Substances or storage tanks, unless
specifically so agreed by Lessor in writing at the time of such agreement.
(c) Lessee's Compliance with the Law. Except as otherwise provided in
this Lease, Lessee shall, at Lessee's sole cost and expense, fully,
diligently and in a timely manner, comply with all "Applicable Law", which
term is used in this Lease to include all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, relating in any manner to the Premises (including but not limited
to matters pertaining to (i) industrial hygiene, (ii) environmental
conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage,
spill or release of any Hazardous Substance or storage tank), now in
effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee
shall, within five (5) days after receipt of Lessor's written request,
provide Lessor with copies of all documents and information, including,
but not limited to, permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any
Applicable Law specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint
pertaining to or involving failure by Lessee or the Premises to comply
with any Applicable Law.
(d) Inspection; Compliance. Lessor and Lessor's Lender(s) as defined
in Paragraph 8.3(a) shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times, and
upon reasonable notice, for the purpose of inspecting the condition of the
Premises and for verifying compliance by Lessee with this Lease and all
Applicable Laws (as defined in Paragraph 56.3), and to employ experts
and/or consultants in connection therewith and/or to advise Lessor with
respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
hazardous Substance or storage tank on or from the Premises. The costs
and expenses of any such inspections shall be paid by the party requesting
same, unless a material default or Breach of this Lease, violation of
Applicable Law, or a contamination, caused or materially contributed to by
Lessee is found to exist or be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing or imminent violation or contamination. In any such case, Lessee
shall upon request reimburse Lessor or Lessor's Lender, as the case maybe,
for the reasonable costs and expenses of such inspections.
57. Lessor's Representation: Lessor hereby represents and warrants that,
prior to the time Lessee begins its modifications to the building, all
structural aspects of the Premises shall be in sound condition and in good
repair. Notwithstanding the provisions of paragraph 7.1, Lessee shall not
be required to make any repairs to the Premises which are required as a
result of the breach, by Lessor, of the foregoing representation and
warrantee. Notwithstanding the provisions of Paragraph 7.4, Lessor shall
be obligated to effect such repairs and maintenance to the Premises which
are required as a result of the breach, by Lessor, of the foregoing
representation and warrantee. Notwithstanding the provisions of the last
sentence of Paragraph 8.6, Lessee assumes no risk and waives no claim with
respect to any damage or injury which results from the breach, by Lessor,
of the foregoing representation and warrantee. Notwithstanding the
provisions of Paragraph 8.7, Lessor shall not be relieved from any
liability relating to the matters described in Paragraph 8.7, provided
that such matters or circumstances result from or are attributable to the
breach, by Lessor, of the foregoing representation and warrantee.
Notwithstanding the last sentence of Paragraph 9.6, lessor shall not be
relieved of any claim of Lessee with respect to any such damage,
destruction, repair or restoration referred to in such sentence, provided
that such matters result from or are attributable to the breach, by
Lessor, of the foregoing representation and warrantee.
58. If Lessor shall be obligated to repair or restore the Premises under
the provisions of Paragraph 9 and Lessor cannot reasonably assure Lessee
that such repair or restoration shall be substantially completed within
ninety (90) days after such obligations first accrued, Lessee may at
Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event, this Lease shall terminate as of
the date of such notice. For purposes of this Paragraph, repairs or
restorations shall be considered to be substantially completed if and when
Lessee can reasonably operate and conduct its business in the portion of
the Premises which were damaged.
59. The following shall be made a part of Paragraph 7.5(a) of this Lease
to be inserted as shown:
except for the alterations, improvements, additions or utility
installations contemplated by Paragraph 49 hereof or as generally
contemplated by the schedule of exterior, interior and structural
modifications annexed hereto as Exhibit "B" and made a part hereof, and
except for non-structural alterations not exceeding $25,000 in cumulative
costs per calendar year.
60. The following shall be made a part of Paragraph 7.5(b) of this Lease
to be inserted as shown at the end of the paragraph:
In any case, lessor may not unreasonably withhold its consent to any
alterations, improvements, additions or utility installations, whether
structural or otherwise, proposed by Lessee.
61. The following shall be made a part of Paragraph 7.5(d) to be inserted
as shown at the end of the paragraph:
Notwithstanding the foregoing, lessee may in all cases remove any and all
machinery and equipment (whether or not affixed to Premises) provided that
Lessee repair to Lessor's reasonable satisfaction any and all damage
caused by such removal.
62. The following shall be made a part of Paragraph 32 or this Lease as
shown:
, provided that except under emergency circumstances, lessor shall provide
Lessee with two business days advance notice of any such entry.
LESSOR: LESSEE:
NZ Properties, Inc. Neltec, Inc., a Wholly Owned Subsidiary of
Park Electrochemical Corporation
/s/ E.M. Bedewi /s/ Allen Levine
E.M. Bedewi Vice President
Senior Vice President
and Treasurer
EXHIBIT B
The following is a description of the current modifications plans for the
facility at 1420 W. 12th Place, Tempe, AZ.
EXTERIOR MODIFICATIONS:
1. All exterior glass and the main entrance door is to be replaced with
new. All glass and door locations will remain unchanged.
2. The existing landscaping will be upgraded by adding new bushes and
gravel. Also some of the mature trees will be replaced with new ones
since the existing trees have grown close to the building.
3. Some minor architectural changes may be made to the facade if these
changes can be effected without altering the basic structure of the
building.
4. The rear yard chain link fence may be replaced with a block wall.
INTERIOR MODIFICATIONS:
1. All existing offices will be demolished. This area will be rebuilt
with a second story to allow for future growth.
2. A maintenance shop and lunchroom will be constructed to the east of
the offices and will also have a second story for expansion.
3. The balance of the area will be divided into separate manufacturing
areas, each having its own function and character. The areas to be
included are:
. Glass and copper storage
. Treater Bay
. Treater control room
. Resin mix and storage room
. Hot oil room
. Prepreg storage room
. B-Sales rooms
. Lay-up rooms
. Set-up rooms
. Shear/inspection/Shipping and receiving
. Gowning rooms
STRUCTURAL MODIFICATIONS:
1. The approximately 1,000 square foot resin mix room will require that
the floor be removed and re-poured at a level 18" below grade. This will
allow for state of the art passive secondary containment of all mixed
chemicals.
2. The heavy weight of the treater will require that the approximately
3,000 square foot treater bay floor be removed and re-poured at a
thickness of 18" to allow for the heavy load of the machine. The new
floor will be at grade level.
3. To accommodate the height of the treater and a room mounted thermal
oxidizer, the treat bay will consist of a structural steel base with half
of the bay extending 40 feet up, and the other half supporting the thermal
oxidizer.
4. The outdoor loading dock may have to be relocated to accommodate
product flow.
MECHANICAL, ELECTRICAL, and PLUMBING MODIFICATIONS:
1. Several rooftop air-conditions systems will be required to facilitate
the environmental needs of the facility. These system include at lease
one 50 ton unit as well as several 10 ton units.
2. The facility will require complete plumbing distribution systems for
compressed air, resin transfer, cooling water, hot oil distribution,
natural gas, and other minor processes.
3. The facility will require a complete electrical distribution system as
would by typical for a facility as described here. The service entrance
section will be about 1600 amps at 480 volts A.C., 3 phase.
[EXH1013]
EXHIBIT 10.13(a)
NELCO
HITEC
January 8, 1996
Suzanne Drake
c/o: NZ Properties, Inc-Director of Operations
NEW MEXICO AND ARIZONA LAND COMPANY
3033 North Forty-Fourth Street, Suite 270
Phoenix, Arizona 85018
Dear Suzanne,
Pursuant To Paragraph 55 of the Lease dated December 12, 1990 between
NZ Properties, Inc. (as Lessor) and NelTec, Inc. (as Lessee) for the
premises commonly known as 1420 West 12th Place, Tempe, Arizona, 85281,
NelTec, Inc. hereby notifies NZ Properties, Inc. that it is exercising
its option to renew the Lease for a period of five (5) years commencing
on June 1, 1996 and ending on May 31, 2001.
Please advise us as to the amount of the rental adjustment applicable
to the renewal period once you are able to make that determination
following the availability of the appropriate information. Until such
time as we receive such notification we will continue to pay monthly
rental in the same amount presently in effect.
Please call to discuss any questions pertaining to this renewal, and
I look forward to hearing from you soon.
Sincerely,
NELTEC,INC.
Mac Smith
General Manager
cc: Steve Gilhuley, Park Electrochemical
Phil Smoot, Nelco International Corporation
Tom Spooner, Nelco International Corporation
MS/jam
[exh1013a]
1420 W. 12th Place - Tempe, Arizona 85281
(602) 967-5600 - FAX: (602) 967-6192
EXHIBIT 10.14(e)
DIELECTRIC POLYMERS, INC.
218 RACE STREET, HOLYOKE, MASSACHUSETTS 01040
413-532-3288
FAX 413-533-9316
July 31, 1996
Mr. Daniel C. Moriarity
President
Holyoke Supply Company, Inc.
P.O. Box 789
218 Race Street
Holyoke, MA 01040
Dear Dan,
Pursuant to Article II, Section 2 of the Indenture of Lease dated November
1, 1984, as extended by an Extension of Lease dated May 30, 1986, a Second
Extension of Lease dated as of May 30, 1991, an Amendment to Second
Extension of Lease dated May 19, 1994, and a 1995 Extension to Amendment to
Second Extension of Lease effective May 19, 1995, between Holyoke Supply
Company, Inc. ("Landlord") and Dielectric Polymers, Inc. ("Tenant"), the
Tenant hereby notifies the Landlord that the Tenant is exercising its right
and option to extend said lease Indenture for a term of six (6) months
expiring May 31, 1997.
Please acknowledge your receipt of this notice by signing the enclosed copy
of this letter and returning it to the undersigned.
Very truly yours,
DIELECTRIC POLYMERS, INC.
Joseph E. Melenkivitz
Controller
Receipt of notice acknowledged
HOLYOKE SUPPLY COMPANY, INC.
Daniel C. Moriarity
President
[exh1014e]
EXHIBIT 10.14(f)
1997 EXTENSION TO AMENDMENT TO SECOND EXTENSION OF LEASE
This 1997 Extension to Amendment to Second Extension of Lease (the
"Second Amendment") is made effective on the date of signing by both parties
by and between HOLYOKE SUPPLY COMPANY, INC., a Massachusetts corporation
with its principal place of business at 200-220 Race Street, Holyoke,
Massachusetts 01040 (hereinafter referred to as "Landlord"), of the one
part, and DIELECTRIC POLYMERS, INC., a Massachusetts corporation having its
principal place of business at 218 Race Street, Holyoke, Massachusetts 01040
(hereinafter referred to as "Tenant"), of the other part.
WHEREAS, the parties hereto are parties under an Indenture of Lease dated
November 1, 1984 (the "Indenture") as extended in accordance with its terms
by an Extension of Lease dated May 30, 1986 (the "Extension") a Second
Extension of Lease dated as of May 30, 1991 (the "Second Extension"); an
Amendment to Second Extension of Lease dated May 19, 1994 (the "Amendment");
and a 1995 Extension to Amendment to Second Extension of Lease dated October
19, 1995 (the "1995 Extension"); and
WHEREAS, pursuant to the 1995 Extension, the lease term expires on May
31, 1997, pursuant to Tenant's exercise of its option to extend the lease
term for six months from November 30, 1996; and
WHEREAS, the parties have agreed to extend the term of the lease for a
period of six (6) months, through November 30, 1997, and to provide a
six-month option to extend the lease;
NOW THEREFORE, the Landlord and Tenant hereby agree that all the
provisions of the Indenture, Extension, Second Extension, Amendment and the
1995 Extension (collectively the "Lease") are incorporated herein by
reference and shall remain in full force and effect through November 30,
1997 except as modified as follows:
1. Article I, Section 1 is amended in part to provide that the
premises demised to the Tenant on the Third Floor of building #1 at 200 Race
Street shall consist of the 17,000 square feet occupied by the Tenant at the
date of this Agreement.
2. Article II, Section 1 is amended in part to provide that the lease
shall be extended for a term of six (6) months, beginning June 1, 1997 and
ending November 30, 1997.
3. Article II, Section 2 is amended to provide that if the Tenant is
not in material default in any respect under the Lease at the time of its
giving of the notice described below, it shall have the right and option to
extend said lease for a term of six (6) months expiring May 31, 1998, on all
the same terms and conditions, including rent as set forth on paragraph 4
below. The Tenant, if it desires to exercise this option, shall do so by
giving the Landlord notice in writing of its intention to do so at least
ninety (90) days prior to December 1, 1997, such notice to be delivered by
certified mail, return receipt requested, at Landlord's principal place of
business. Except as otherwise provided, the term of this Lease shall be
automatically extended upon Landlord's receipt of Tenant's extension notice.
Tenant shall be in material default if there exists an "Event of Default" as
defined under Article XII, Section 1 of the Indenture.
4. Article III, Section 1 is amended to provide that rent for
Tenant's use of the entire Third Floor of the premises (17,000 square feet)
during the extended term shall be ONE DOLLAR and FIFTEEN CENTS ($1.15) per
square foot or NINETEEN THOUSAND FIVE HUNDRED FIFTY DOLLARS ($19,550) per
year payable in equal monthly installments of $1,629.17 in advance on the
first day of each and every month during the extended term and
proportionately at said rate for any partial month. The parties acknowledge
and confirm that the Tenant also continues to lease the entire Fourth Floor
of the premises on the terms described in paragraph 4 of the 1995 Extension.
5. Landlord and Tenant agree that all remaining provisions of said
Lease shall remain in full force and effect through the extended term except
to the extent that said terms are inconsistent with the provisions of this
Agreement.
WITNESS the execution hereof, under seal, in any number of counterpart
copies, each of which counterpart copy shall be deemed to be an original for
all purposes as of the day and year first written above.
DIELECTRIC POLYMERS, INC., TENANT
Dated: 3/26/97 By: /s/Lawrence G. Kuntz
Its: President
HOLYOKE SUPPLY COMPANY, INC.,
LANDLORD
Dated: 3/24/97 By: /s/Daniel C. Moriarity
President
[exh1014f]
EXHIBIT 10.15(a)
FIRST AMENDMENT TO LEASE
I. PARTIES
THIS FIRST AMENDMENT dated July 8, 1996, is executed by and between
Presidio Associates L.P., a California limited Partnership, Successor
in the interest to CMD Southwest, Inc. ("Landlord") and Nelco
Technology, Inc., a corporation organized and existing by and pursuant
to the laws of the state of Arizona ("Tenant") for the Demised
Premises located at 1135 West Geneva Drive, Tempe, Arizona.
II. RECITALS
Landlord and Tenant, being parties to that certain Lease dated January
8, 1992, hereby express their mutual desire and intent to extend the
terms of the Lease and amend by this writing those terms, covenants
and conditions contained in Sections 201 TERM, 301 RENTAL, and in
Schedule 3 OPTION FOR ADDITIONAL LAND and Schedule 4 FIRST OPTION TO
EXTEND TERM.
Ill. AMENDMENTS
Section 201 TERM. The Term of this Lease shall hereby be extended for
an additional period of five (5) years commencing on January 8, 1997
and ending on January 7, 2002, as set forth in Schedule 4: First
Option to Extend Term (attached hereto as Exhibit "A").
Section 301 RENTAL. Rental shall mean the Annual Net Basic Rent Tenant
agrees to pay Landlord at such place as Landlord may designate without
deduction, offset, prior notice or demand, and Landlord agrees to
accept:
Annual Net Basic Rent during the first three (3) years of the
First Option Term the sum of FIFTY THOUSAND SEVEN HUNDRED
NINETY-ONE and 00/100 DOLLARS ($50,791.00); and
Annual Net Basic Rent during the last two (2) years of the First
Option Term" as set forth in Schedule 4: Rental During First
Extension of Term, of the Lease dated January 8, 1992 (attached
hereto as Exhibit "A").
All Rental shall be payable in advance on the first day of each month
during the Term of this Lease as extended, commencing on the first
(1st) day of each month.
Schedule 3 OPTION FOR ADDITIONAL LAND. Landlord and Tenant agree that
Tenant's right to purchase or lease Option Land, as set forth in
Schedule 3: Option For Additional Land (attached hereto as Exhibit
"B") has expired, and is null and void and of no further force and
effect.
Schedule 4 FIRST OPTION TO EXTEND TERM. Landlord and Tenant agree
that Tenant is hereby exercising it's First Option To Extend Term.
Tenant has delivered irrevocable written notice to Landlord at least
six (6) months prior to the expiration of the existing Lease Term in
the letter dated June 17, 1996, Certified Mail No. P 866 160 516.
IV. INCORPORATION
Except as modified herein, all other terms and conditions of the Lease
between the parties above described, as attached hereto, shall
continue in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
as of the day and year first above written.
LANDLORD: TENANT:
Presidio Associates, L.P., Nelco Technology, Inc.,
a California Limited Partnership,
as Manager for the Tenants in Common
/s/ Malcolm E. Smith
Marc R. Brutten, President Malcolm E. Smith
Phoenix/Metro Investment Corporation, Vice President
its Agent
[exh1015a]
EXHIBIT 10.16(a)
JTC(L)3995/748 Pt 1/AN/SL
TENANCY AGREEMENT RELATING TO PRIVATE LOT A12839
AT NO.36 GUL LANE
BETWEEN
JURONG TOWN CORPORATION
AND
NELCO PRODUCTS PTE LTD
TENANCY AGREEMENT-FOR A
STANDARD FACTORY
PRIVATE LOT A12839 IN TUAS
(RENEWAL)
THIS AGREEMENT is made the 3rd day of November 1995
Between JURONG TOWN CORPORATION incorporated under the Jurong Town
Corporation Act, having its Head Office at Jurong Town Hall, 301 Jurong
Town Hall Road, Singapore 609431 (hereinafter called "the Landlord") of
the one part and NELCO PRODUCTS PTE LTD a company incorporated in
Singapore and having its registered office at
79 Robinson Road
#116-03
CPF Building
Singapore 068897
(hereinafter called "the Tenant" which expression shall where the context
so admits include its successors-in-title and permitted assigns) of the
other part.
WITNESSETH as follows:
1 The Landlord hereby lets and the Tenant hereby takes ALL that piece
of land known as Private Lot A12839 also known as Government Survey Lot
1849 Mukim No. 7 Tuas at No.36 Gul Lane, Singapore 629430 as shown on the
plan annexed hereto TOGETHER with the Standard Factory Building Corner
"T8" Type erected thereon (hereinafter referred to as the "said premises")
TOGETHER also with all the fixtures and fittings therein installed and now
belonging to the Landlord for the purposes and upon the terms, covenants
and stipulations hereinafter mentioned for the term of three (3) years
from the lst day of September 1995 (hereinafter referred to as the "said
term") paying therefor during the said term the rent of Dollars twenty-
four thousand, six hundred and twenty-five only ($24,625.00) per month to
be paid clear of all deductions and in advance without demand on the 1st
day of each of the calendar months of the year (i.e., the 1st days of
January, February, March, etc.) the first of such payments to made on the
1st day of September 1995.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid
without any deduction whatsoever.
(2) (i) To pay a cash deposit equal to three (3) months' rent on
or before the execution of this Agreement, or
commencement of the said term whichever is the earlier,
as security against the breach by the Tenant of any of
the terms, covenants, and stipulations of this Agreement
which cash deposit shall be maintained at this figure
during the said term and shall be repayable without
interest on the determination of this tenancy subject
however to appropriate deductions as damages, loss,
costs and expenses in respect of any or all such breach
or breaches.
(ii) In lieu of the aforesaid cash deposit, to provide an
acceptable banker's guarantee for the same equivalent
amount and increased amount, which guarantee shall be
valid and irrevocable for the whole of the said term or
the unexpired portion of the said term, as the case may
be, plus six months after the date of expiry of the said
term and in a form approved by the Landlord, or to
provide such other security as the Landlord may in his
absolute discretion permit or accept.
(3) At all times to use the said premises for the purpose of the
manufacture of laminating materials for printed circuit boards
only and for no other purposes whatever.
(4) To make his own arrangements for and pay all existing and
future charges and outgoings for the supply of all water,
electricity, gas and any water-borne sewerage system charged
by the Public Utilities Board or other relevant governmental
and statutory authorities and payable in respect of the said
premises and, subject to clause 2(7), at his own cost and
expense to install such additional plumbing and sanitary works
for such additional water supply as may be required by him.
(5) To keep the said premises including but not limited to the
drains and sanitary and water apparatus and the Landlord's
fixtures and fittings if any therein and the doors and windows
thereof in good and tenantable repair and condition throughout
the said term (wear due to fair and reasonable use and,
subject to clause 2(6), damage by fire excepted) PROVIDED THAT
the Tenant shall take all reasonable measures and precautions
to ensure that any damage, defect or dilapidation which has
been or at any time shall be occasioned by fair wear and tear
shall not give rise to or cause or contribute to any
substantial damage to the said premises.
(6) To be wholly responsible for all damages and to bear the full
costs of repairs and reinstatement of such damaged buildings,
equipment, fixtures, fittings, drains, wiring and piping above
and below ground level if the cause or causes of such damages
can be traced back to the Tenant's activities.
(7) Not to erect any building or structure on the said premises or
to extend or add to the Factory Building or to make or cause
to be made any alterations in the internal construction or
arrangements or in the external appearance or in the present
scheme of design or decoration of the said premises or to
install or cause to be installed any fixtures or fittings of
any kind or description without first obtaining the consent in
writing of the Landlord and the relevant governmental and
statutory authorities PROVIDED THAT -
(a) on the granting of such consent and without prejudice to
other terms and conditions which may be imposed the
Tenant shall place with the Landlord an additional
deposit equivalent to such additional amount as the
Landlord may deem sufficient as security for the
reinstatement of the said premises to its original state
and condition;
(b) the Tenant shall not use any flammable building
materials for internal partitioning; and
(c) the Tenant shall at all times maintain such buildings,
structures, extensions or additions to the Factory
Building and such fixtures and fittings, including but
nct limited to repairing of the external thereof and in
the event that the Landlord shall include such
buildings, structures, extensions and additions, or any
part thereof in the Landlord's five-yearly Re-decoration
Scheme, the Tenant shall pay the proportionate cost
thereof, such proportion to be calculated by the
Landlord.
(8) Not to assign create a trust sublet grant a licence or part
with or share the possession or occupation of the said
premises or any part thereof or leave the said premises or any
part thereof vacant and unoccupied at any time during the said
term.
(9) Not to do or suffer to be done upon the said premises or any
part thereof anything which is or may, or which in the opinion
of the Landlord is or may at any time be or become a danger,
nuisance or an annoyance to or interference with the
operations, business, enjoyment, quiet or comfort of the
occupants of adjoining premises or inhabitants of the
neighbourhood, but to indemnify the Landlord in relation
thereto PROVIDED THAT the Landlord shall not be responsible to
the Tenant for any loss, damage or inconvenience as a result
of danger, nuisance, annoyance or any interference whatsoever
caused by the occupants of adjoining premises or inhabitants
of the neighbourhood.
(10) Not to use or permit to be used the said premises for any
illegal or immoral purpose.
(11) At his own cost and expense to construct an internal drainage
system to the satisfaction of the Landlord to ensure that all
surface water collected on the said premises is discharged
into the public drains and sewer and will not flow into
adjoining premises, and the tenant shall further ensure that
no silt, oil, chemical, debris or any other waste or matter
shall be discharged into any public drains, sewers or
watercourses.
(12) Not to use, load, unload, keep, or suffer to be loaded,
unloaded, used or stored in the said premises or any part
thereof any liquids, goods, materials or things of an
offensive or explosive or a dangerous, corrosive, toxic or
combustible nature without the prior consent in writing of the
Landlord and to keep the Landlord indemnified against all
loss, damages, claims, costs, expenses, actions and
proceedings in connection with the loading, unloading, use or
storage of such goods, materials and things whether or not the
same is done with the consent of the Landlord.
(13) To permit the Landlord, his agents, servants and surveyors
with or without workmen or others with all necessary
appliances and tools to enter upon the said premises or any
part thereof at all reasonable times for the purpose of
viewing the condition or state of repair thereof or of doing
such works, repairs, and things in connection therewith as the
Landlord may think fit PROVIDED THAT the Landlord may serve
upon the Tenant notice in writing specifying any work or
repairs necessary to be done which are the responsibility of
the Tenant under the terms, covenants or stipulations of this
Agreement and require the Tenant forthwith to execute the same
and the Tenant shall pay the Landlord's reasonable costs and
expenses of survey and attending the preparation of the notice
and if the Tenant shall not within ten days after the service
of such notice proceed diligently and in workmanlike manner
with the execution of such work or repairs then to permit the
Landlord (who shall not be under any obligation so to do) to
enter upon the said premises and execute such work or repairs
and the cost and expenses thereof shall be a debt due from the
Tenant to the Landlord and be forthwith recoverable AND
PROVIDED ALWAYS THAT the Landlord shall not be liable to the
Tenant for any loss, damage or inconvenience caused directly
or indirectly by any such work or repairs.
(14) In complying with Clause 2(13) hereof and if so required by
the Landlord the Tenant shall remove such installation,
machinery or any article as may facilitate or permit the
Landlord to execute the said repairs and works and if the
Tenant shall fail to observe or perform this covenant the
Landlord may remove the same and all costs and expenses
incurred thereby shall be recoverable from the Tenant as a
debt PROVIDED ALWAYS that the Landlord shall not be liable to
the Tenant for any loss, damage or incovenience caused by such
removal.
(15) Not without the prior consent in writing of the Landlord to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon any part
of the exterior of the said premises or of the windows,
external walls or rails or fences thereof any nameplate,
signboard, placard, poster or other advertisement or hoarding.
(16) At all times to maintain the land, garden, grounds and drive-
way of the said premises in good order and condition to the
satisfaction of the Landlord and not to alter the layout
thereof without the prior consent in writing of the Landlord.
(17) During the three (3) months immediately preceding the expiry
of the said term to permit persons with written authority from
the Landlord or the Landlord's agent at reasonable times of
the day to enter upon and view the said premises or any part
thereof.
(18) Subject always to clause 2(8) hereinbefore appearing, to give
to the Landlord written notice of every change of name within
one month from the date of each change.
(19) To pay interest at the rate of eight and a half per cent
(8.5%) per annum or such higher rate as may be determined from
time to time by the Landlord in respect of any outstanding
amount payable under this Agreement from the date such amount
becomes due until payment in full is received by the Landlord.
(20) Not to dump, leave or burn any waste including but not limited
to pollutants in or upon any part of the said premises or the
estates of the Landlord but at the Tenant's own cost and
expense to make good and sufficient provision for and to
ensure the safe and efficient disposal of all such waste to
the requirements and satisfaction of the Landlord and the
relevant governmental and statutory authorities and if the
Tenant shall fail to observe or perform this convenant the
Landlord may (but shall not be under any obligation to do so),
without prejudice to any other rights or remedies the Landlord
may have against the Tenant, carry out or cause to be carried
out such remedial measures as he thinks necessary and all
costs and expenses and works incurred thereby shall forthwith
be recoverable from the Tenant as a debt PROVIDED ALWAYS that
the Landlord shall not be liable to the Tenant for any loss,
damage or inconvenience caused thereby.
(21) Not to do or omit or suffer to be done or omitted any act,
matter or thing in or on the said premises or in respect of
the operations, business, trade or industry carried out or
conducted therein which shall contravene the provisions of any
laws, by-laws, orders, rules or regulations now or hereafter
affecting the same but to comply at his own cost and expense
with all such provisions and at all times hereafter to
indemnify and keep indemnified the Landlord against all
actions, proceedings, costs, expenses, claims, fines, losses,
damages, penalties and demands in respect of any act, matter
or thing done or omitted to be done in contravention of the
such provisions.
(22) During the said term thereof to pay any increase of property
tax which may be imposed whether by way of an increase in the
annual value or an increase in the rate percent.
(23) Not to obstruct, cause or permit any form of obstruction of
any fire-fighting installations and equipment but at all times
to provide sufficient access and passageways thereto. At his
own cost and expense to maintain and keep all fire-fighting
installations and equipment at the said premises (including
the fire alarm system, hose reels and valves) operational and
in good and proper working order at all times and in
connection therewith to install a 13 Amp power switch socket
outlet immediately adjacent to the charger of the battery of
the fire-alarm system, to carry out monthly servicing of such
fire-fighting installations and equipment (including the fire
alarm system, hose reel and valves), and to connect such
system to the nearest Fire Station if required by the
Singapore Fire service.
(24) To maintain the said premises in a neat and tidy condition and
forthwith to comply with the Landlord's direction to remove
and clear any materials, goods or articles of whatever nature
and description from the said premises or such part thereof.
(25) Not to install or use any electrical or mechanical
installations, machines or apparatus that may cause or causes
heavy power surge, high frequency voltage or current, air-
borne noise, vibration or any electrical or mechanical
interference or disturbance whatsoever which may prevent or
prevents in any way the service or use of any communication
system or affects the operation of other equipment,
installations, machinery, apparatus or plants of occupants of
adjoining or neighbouring premises or inhabitants of the
neighbourhood and in connection therewith, to allow the
Landlord or any authorised persons to inspect at all
reasonable times, such installation, machine or apparatus in
the said premises to determine the source of the interference
or disturbance and thereupon, to take suitable measures, at
the Tenant's own cost and expense, to eliminate or reduce such
interference or disturbance to the Landlord's satisfaction, if
it is found by the Landlord or such authorised person that the
Tenant's electrical or mechanical installation, machine or
apparatus is causing or contributing to the said interference
or disturbance.
(26) To indemnify the Landlord against any claims, proceedings,
action, losses, penalties, damages, expenses, costs and
demands which may arise in connection with clause 2(25) above.
(27) To take adequate measures to prevent air pollution, and to
implement at his own cost measures for minimising air or other
forms of pollution when requested by the Landlord or any
relevant governmental or statutory authorities.
(28) To perform and observe all the obligations which the Tenant or
the Landlord of the said premises may be liable to perform or
observe during the said term by any direction, order, notice
or requirement of any governmental and statutory authority and
if the Tenant shall fail to observe or perform this covenant
the Landlord may in its absolute discretion perform the same
and all expenses and costs incurred thereby shall be
recoverable from the Tenant as a debt PROVIDED ALWAYS that the
Landlord shall not be liable to the Tenant for any loss,
damage or inconvenience caused thereby.
(29) Not to use or occupy the said premises for the purpose of a
commercial office or storage unrelated to his approved
activity or usage stated in Clause 2(3) of this Agreement.
(30) Subject to Clause 2(31), to install such protective electrical
devices and equipment, and to carry out such modification work
on the existing fire alarm wirings, fixtures and fittings in
the said premises as shall be necessary to suit the Tenant's
factory operation, including the installation of additional
wirings, fixtures and fittings to the fire alarm system, to
the satisfaction of the Landlord and all at the Tenant's own
expense PROVIDED THAT in addition to Clause 2 (23), the Tenant
shall at his own cost and expense maintain and keep such
protective electrical devices and equipment at all times in
good condition.
(31) Not to increase, supplement, decrease, modify, replace or
interfere with any existing electrical design load, wirings,
apparatus, fixtures or fittings or any fire alarm fixtures or
fittings in or about the said premises without the consent in
writing of the Landlord and the relevant governmental and
statutory authorities having been first obtained PROVIDED THAT
all such work shall be carried out by a licensed electrical
contractor or competent person as approved by the Landlord to
be employed by the Tenant at the cost and expense of the
Tenant AND PROVIDED FURTHER THAT prior to the commencement of
any such electrical or fire alarm installation, replacement,
modification or other work, the Tenant shall submit to the
Landlord for their approval such necessary plans as may be
specified by the Landlord.
(32) Not to do or suffer to be done on or in the said premises
anything whereby the insurances of the same or any part
thereof may be rendered void or voidable or whereby the
premium thereon may be increased and to repay to the Landlord
on demand all sums paid by the Landlord by way of increased
premium and all costs and expenses incurred by the Landlord in
connection with insurance rendered necessary by a breach or
non-observance of this covenant without prejudice to any other
rights and remedies available to the Landlord.
(33) Not to keep or allow to be kept livestock or other animals at
the said premises.
(34) At the Tenant's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and
satisfaction of the Landlord and other relevant governmental
and statutory authorities.
(35) At the determination of the said term by expiry or otherwise
to yield up the said premises and all Landlord's fixtures,
fittings, fastenings and other things thereto anywhere
belonging or appertaining in such good and substantial repair
fair wear and tear excepted as shall be in accordance with the
terms, covenants and stipulations contained in this Agreement
and with the locks and keys complete.
(36) In addition to Clause 2(35) and immediately prior to the
determination of the said term thereof as the case may be to
cleanse and to restore the said premises in all respects to
its original state and condition and if so required in writing
by the Landlord to redecorate including painting the interior
thereof to the satisfaction of the Landlord PROVIDED ALWAYS
THAT if the Tenant shall fail to observe or perform this
covenant the Landlord may in its absolute discretion, and
without prejudice to any other rights and remedies the
Landlord may have against the Tenant, execute any of such
cleansing, restoration and redecoration works and recover the
costs and expenses thereof from the Tenant together with all
rent, tax and other amounts which the Landlord would have been
entitled to receive from the Tenant had the period within
which such cleansing, restoration and redecoration were
effected by the Landlord been added to the said term.
(37) If the Tenant shall at any time be found to have encroached
upon any area beyond the boundaries of the said premises, the
Tenant shall at his own cost and expense, but without
prejudice to any other right or remedy the Landlord may have
against him, immediately or within the time specified (if any)
by the Landlord rectify and remove the encroachment to the
satisfaction of the Landlord and pay to the Landlord such
compensation as may be specified by the Landlord. If,
however, the Landlord in his absolute discretion permits the
Tenant to regularise and retain the encroached area or any
part thereof upon such terms and conditions as may be
stipulated by the Landlord and any other relevant government
and statutory authorities, the Tenant shall pay land rent, tax
and other amounts (if any) on the encroached area with
retrospective effect from the date of commencement of the said
term, and the Tenant shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and client
costs and expense), and all other costs and charges relating
thereto.
(38) If any damage of whatsoever nature or description shall at any
time occur or be caused to the said premises or any part
thereof, to forthwith give to the Landlord written notice of
the damage.
(39) Without prejudice to the generality of Clause 2(28) herein,
the rent and other taxable sums payable by the Tenant under or
in connection with this tenancy shall be exclusive of the
goods and services tax (herein called "tax") chargeable by any
government, statutory or tax authority calculated by reference
to the amount of rent and any other taxable sums received or
receivable by the Landlord from the Tenant and which tax is
payable by the Tenant. The Tenant shall pay the tax and the
Landlord acting as the collecting agent for the government,
statutory or tax authority shall collect the tax from the
Tenant together with the rent hereinbefore reserved without
any deduction and in advance without demand on the 1st day of
each of the calendar months of the year and in the manner and
within the period prescribed in accordance with the applicable
laws and regulations.
(40) Without prejudice to the generality of clause 2(24)
hereinbefore appearing, the Tenant shall not at any time use
the car park in front of the said premises for storing or
stacking any goods, materials, equipment or containers.
(41) At the Tenant's own cost, to properly install and maintain
exit lightings and exit signs at stair cases, exit passageways
and exits of the said premises in accordance with all
requirements of the Building Control Division and other
relevant governmental and statutory authorities.
3 The Landlord hereby agrees with the Tenant as follows:
(1) The Tenant paying the rent hereby reserved and tax and
observing and performing the terms, covenants and stipulations
on the Tenant's part herein contained shall peacefully hold
and enjoy the said premises during the term without any
interruption by the Landlord or any person rightfully claiming
under or in trust for the Landlord.
(2) The Landlord shall, subject to clause 2(7)(c), maintain the
structure of the Factory Building PROVIDED THAT any damage to
the structure other than fair wear and tear and repair arising
therefrom shall be charged to the account of and paid by the
Tenant AND FURTHER PROVIDED THAT the Landlord shall not be
liable for any loss or damage suffered by the Tenant or any
other person by reason directly or indirectly of the state of
the Factory Building and the Tenant hereby indemnifies the
Landlord against all claims, damages, actions, proceedings,
costs and expenses in any way relating thereto or in any way
relating to thebuildings, structures, extensions and additions
hereinbefore mentioned in clause 2(7).
(3) The Landlord shall at all times throughout the said term keep
the structure of the Factory Building insured against loss or
damage by fire and in the event of such loss or damage (unless
resulting directly or indirectly from some act or default of
the Tenant) to rebuild and reinstate the damaged part of the
Factory Building PROVIDED THAT it is expressly agreed and
understood that the term "loss or damage by fire" as used in
this clause do not include any loss or damage caused to the
Tenant's fixtures or fittings or loss due to the Factory
Building being rendered out of commission and in any such
event the Landlord shall not be held liable for any such loss
or damage sustained by the Tenant.
(4) The Landlord shall pay the property tax payable in respect of
the said premises PROVIDED ALWAYS that if the rate of such
property tax shall be increased whether by way of an increase
in the annual value or an increase in the rate per cent then
the Landlord shall not hereunder be liable to pay the said
increase but the Tenant shall pay such increase as provided
under clause 2(22) hereof.
4 PROVIDED ALWAYS and it is expressly agreed as follows:
(1) If the rent hereby reserved or interest, tax, or any part
thereof or any other sum payable herein, or any part thereof
shall at any time remain unpaid for fourteen (14) days after
becoming payable (irrespective of whether formal demand has
been made) or if any of the terms, covenants or stipulations
herein contained on the Tenant's part to be performed or
observed shall not be so performed or observed or if the
Tenant shall make any assignment for the benefit of its
creditors or enter into any arrangement with its creditors by
composition or otherwise or commit any act of bankruptcy or
have a receiving order made against him or suffer any distress
or execution to be levied on its goods or if the Tenant being
a Company shall go into liquidation whether voluntary (save
for the purpose of amalgamation or reconstruction) or
compulsory then and in any of such cases it shall be lawful
for the Landlord at any time thereafter to re-enter upon the
said premises or any part thereof in the name of the whole and
thereupon the tenancy hereby created shall absolutely
determine but without prejudice to any right of action or
remedy of the Landlord in respect of any breach of any terms,
the covenants or stipulations herein contained.
(2) Any notice served under or otherwise in connection with this
Agreement or the tenancy hereby created shall be sufficiently
served on the Tenant if the same is left addressed to the
Tenant upon the said premises or if forwarded to the Tenant at
the said premises by registered post and any notice shall be
sufficiently served on the Landlord if sent to the Landlord's
Head office by registered post. A notice sent by registered
post shall be deemed to be given at the time when in due
course of post it would be delivered at the address to which
it is sent. In the event of any action or proceedings in
respect of the tenancy created herein (including any action
for the recovery of the rent, tax or other sums herein
reserved) the Tenant agrees and accepts that any document
which is not required by written law to be served personally
shall be sufficiently served on the Tenant if addressed to him
at the address specified in this Agreement, or if left posted
upon some conspicuous part of the said premises, or forwarded
to him by post at the principal or last known place of
business of the firm or his registered or principal office if
a body corporate or his last known address if an individual.
(3) The Tenant shall pay all costs, disbursements, fees and
charges, legal or otherwise, including stamp and registration
fees in connection with the preparation stamping and issue of
this Agreement and any prior accompanying or future documents
or deeds supplementary collateral or in any way relating to
this Agreement.
(4) The Tenant shall pay all costs, disbursements and fees, legal
or otherwise, including costs as between Solicitor and Client
in connection with the enforcement of the terms, covenants and
stipulation of this Agreement.
(5) The Tenant accepts the said premises with full knowledge that
the ground/production floor slab, drains, aprons and driveway
are laid directly on the ground with services laid in the
ground and may settle, subside and crack in the event that the
ground in, on or around the said premises consolidates in the
course of time, and the Tenant covenants that he shall at his
own cost and expense and subject to the prior approval in
writing of the Landlord and the relevant governmental and
statutory authorities provide suitable and proper foundation
for all machinery, equipment and installations at the said
premises. The Landlord shall not be liable for any loss,
damage or inconvenience that may be suffered by the Tenant or
any other person in connection with any subsidence or cracking
of the ground/production floor slabs, aprons, drains and
driveways of the said premises.
(6) No waiver expressed or implied by the Landlord of any breach
of any term, covenant or stipulation of the Tenant shall be
construed nor be deemed to operate as a waiver of any other
breach of the same or any other term, covenant or stipulation
and shall not prejudice in any way the rights, powers and
remedies of the Landlord herein contained. Any acceptance of
rent or other moneys shall not be deemed to operate as a
waiver by the Landlord of any right to proceed against the
Tenant of any of his obligations hereunder.
(7) The Landlord shall be under no liability either to the Tenant
or to others who may be permitted to enter or use the said
premises or any part thereof for accidents happening or
injuries sustained or for loss of or damage to property in the
said premises or any part thereof.
(8) Subjact to clause 2(3), the Tenant shall use at least sixty
per centum (60%) of the total floor area of the said premises
for purely industrial activities, and may use the remaining
floor area for ancillary stores and offices, neutral areas,
communal facilities and such other uses as may be approved in
writing by the Landlord and the relevant public and local
authorities PROVIDED THAT the said ancillary offices shall not
exceed twenty-five per centum (25%) of the total floor area.
(9) At any time during but at least three (3) months before the
expiry of the said term or of its extensions, if any, as
aforesaid the Tenant may, by notice in writing, exercise the
option to request the Landlord to grant him a lease (the term
of which shall be determined by the Landlord) of the said
premises including all buildings thereon upon the payment by
the Tenant to the Landlord of such purchase price and annual
land rentals as may be determined by the Landlord at the time
the option is exercised and upon such investment requirements
and terms and conditions as the Landlord may specify which
lease shall commence from the date the option is exercised or
such other date to be determined by the Landlord PROVIDED THAT
the Tenant shall bear and pay all costs, expenses, stamp fees
and other charges in connection with or accruing from the
issue of the lease AND PROVIDED ALWAYS that there shall be no
break between the date of determination of tenancy and the
commencement date of the lease and that there shall not at the
time of the request be any existing breach or non-observance
of any of the terms, stipulations and covenants on the part of
the Tenant to be observed or performed in respect of this
Agreement.
5 In this Agreement where the context so requires or permits, words
importing the singular number or the masculine gender include the
plural number or the feminine gender and words importing persons
include corporations and vice versa, the expression "the Landlord"
shall include its successors-intitle and assigns, the expression
"the Tenant" shall include its successors-in-title and permitted
assigns (if any), where there are two or more persons included in
the expression "the Tenant" covenants expressed to be made by "the
Tenant" shall be deemed to be made by such persons jointly and
severally.
IN WITNESS WHEREOF the parties hereto have hereunto set their hands
and/or seals the day and the year first above written.
SIGNED BY
KOH GEOK TIN
Head (Standard Factories)
Lease Management Department
Buildings Development Group
for and on behalf of the
JURONG TOWN CORPORATION
in the presence of:
ANNIE NG KIN MUI nee AU
SIGNED BY:
Michael A. Hehl
Managing Director
for and on behalf of
NELCO PRODUCTS PTE LTD
in the presence of:
Signature of Witness:.............................. .
Name of Witness: Desmond Ng
Designation: Financial Controller
[exh1016a]
EXHIBIT NO. 11.01
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY-DILUTED EARNINGS PER SHARE
(In thousands, except per share data)
Fiscal year ended
1997 1996 1995
ADJUSTMENT OF NET EARNINGS:
Net earnings $18,559 $24,898 $17,345
Adjustments resulting from assumed
conversion of 5.5% Convertible
Subordinated Notes ("Notes") in fiscal
1997 and 1996 and 7.25% Convertible
Subordinated Debentures ("Debentures")
in fiscal 1995:
Reduction of interest expense and
amortization of deferred debt
financing costs 5,420 81 389
Related tax effect on above (1,897) (28) (136)
Net earnings, as adjusted $22,082 $24,951 $17,598
ADJUSTMENT OF WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Weighted average number of common and
common equivalent shares outstanding 11,551 11,794 10,858
Add weighted average shares
assumed to be issued upon:
Conversion of Notes and Debentures 2,370 32 504
Exercise of stock options at period-end
market price if higher than average
market price for fiscal year 11 34 208
Weighted average number of common
and common equivalent shares
outstanding, as adjusted 13,932 11,860 11,570
FULLY-DILUTED EARNINGS PER SHARE $ 1.59 $ 2.10 $ 1.52
[exh1101]
EXHIBIT 22.01
SUBSIDIARIES OF PARK ELECTROCHEMICAL CORP.
The following table lists Park's subsidiaries and the jurisdiction in
which each such subsidiary is organized.
Jurisdiction of
Name Incorporation
Dielectric Polymers, Inc. Massachusetts
FiberCote Industries, Inc. Connecticut
Grand Rapids Die Casting Corp. Michigan
Metclad S.A. France
Nelco International Corporation Delaware
Nelco GmbH West Germany
Nelco Products, Inc. Delaware
Nelco Products Pte. Ltd. Singapore
Nelco S.A. France
Nelco Technology, Inc. Arizona
Neltec, Inc. Delaware
Neluk, Inc. Delaware
New England Laminates Co., Inc. New York
New England Laminates (U.K.) Ltd. England
Park Advanced Product Development Corp. New York
Technocharge Limited England
Zin-Plas Corporation Michigan
Zin-Plas of Canada, Inc. Canada
Zin-Plas Marketing and Business
Development Corporation Michigan
[exh2201]
EXHIBIT 24.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration
Statements Nos. 33-3777, 33-16650, 33-55383, 33-63956 and 333-12463 of our
report dated April 18, 1997, with respect to the consolidated financial
statements and schedule of Park Electrochemical Corp. included in the
Annual Report on Form 10-K of Park Electrochemical Corp. for the fiscal
year ended March 2, 1997.
ERNST & YOUNG LLP
New York, New York
May 29, 1997
[exh2401]
<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-02-1997
<PERIOD-END> MAR-02-1997
<CASH> 42,321
<SECURITIES> 102,232
<RECEIVABLES> 52,060
<ALLOWANCES> 1,746
<INVENTORY> 20,458
<CURRENT-ASSETS> 220,414
<PP&E> 165,757
<DEPRECIATION> 82,366
<TOTAL-ASSETS> 307,862
<CURRENT-LIABILITIES> 55,410
<BONDS> 100,000
0
0
<COMMON> 1,358
<OTHER-SE> 141,997
<TOTAL-LIABILITY-AND-EQUITY> 307,862
<SALES> 334,490
<TOTAL-REVENUES> 342,143
<CGS> 275,372
<TOTAL-COSTS> 309,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,508
<INCOME-PRETAX> 26,897
<INCOME-TAX> 8,338
<INCOME-CONTINUING> 18,559
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,559
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.59
</TABLE>
