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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 27, 1994
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
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.
[Not Applicable]
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, $149,213,259* May 9, 1994
$.10 par value
[cover page 1 of 2 pages]
Page 1 of 141; Exhibit index appears on page 51
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, 5,101,308 May 9, 1994
$.10 par value
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for 1994 Annual Meeting of Shareholders--
Incorporated by reference into Part III of this Form 10-K.
=====================================================================
*Included in such amount are 856,086 shares of common stock valued at
$29.250 per share and held by Jerry Shore, the Registrant's Chief
Executive Officer and Chairman of the Board and a member of the
Registrant's Board of Directors.
[cover page 2 of 2 pages]
PART I
Item 1. Business.
General
Park Electrochemical Corp. ("Park"), through its subsidiaries
(unless the context otherwise requires, Park and its subsidiaries are
hereinafter called the "Company"), is primarily engaged in the design,
manufacture and marketing of advanced electronic materials used in the
production of sophisticated, multilayer printed circuit boards. The Company
is a leading supplier of high performance laminates, prepregs and semi-
finished circuit boards to computer and electronics original equipment
manufacturers ("OEMs") and to major independent printed circuit board
manufacturers. The Company's advanced electronic materials are used in
computer, telecommunication, transportation, aerospace, military electronics
and other sophisticated electronic equipment applications. The Company is
also engaged in the design, manufacture and marketing of plumbing hardware
and industrial components.
The Company's business is divided into three industry segments:
electronics, plumbing hardware and industrial components. See Note 13 of
the Notes to Consolidated Financial Statements included in Item 8 of this
Report for information concerning the amounts of sales to unaffiliated cus-
tomers, operating profit, identifiable assets, depreciation and
amortization, and capital expenditures attributable to each of the Company's
industry segments during its last three fiscal years.
The sales, operating profit and identifiable assets of the Company's
foreign operations for the last three fiscal years are also set forth in
Note 13 of the Notes to Consolidated Financial Statements included in Item
8 of this Report. Such operations primarily consist of the operations of
the Company's subsidiaries in the United Kingdom, France and Singapore. The
Company's foreign operations are subject to the impact of foreign currency
fluctuations. See Note 1 of the Notes to Consolidated Financial Statements
contained in Item 8 of this Report.
Electronic Operations
The Company produces high technology laminates which are
manufactured primarily to customer specifications and are used principally
in the production of sophisticated multilayer printed circuit boards. These
laminates are made of conductive metals attached to insulating materials and
require rigorous process and quality control during production. The process
of converting the composite laminates into a printed circuit board involves
the transfer of the graphics of the printed wiring pattern to the sheet to
be processed, etching off that part of the conductive sheet that is not
required, and leaving the printed wiring conductors on the insulating
materials. The predominant composite used in the manufacture of advanced
electronic materials consists of the combination of copper conductive
material and insulation made up of epoxy and other resins reinforced with
woven fiberglass or prepreg. The Company produces prepreg both for use in
the production of high technology laminates and for direct sale to its
customers. These customers would normally perform the process of assembling
the prepreg and the copper conductive material to the core printed circuit
board. These customers would then complete the multilayer printed circuit
board by transferring and etching the printed wiring pattern to the outside
layers as described above. The Company also produces sophisticated semi-
finished multilayer printed circuit boards and panels. The production of
this product requires additional processing, by the Company, of its laminate
and prepreg products.
Industry Background
Printed circuit boards are widely used in the manufacture of
electronic equipment as the foundation for, and the interconnection between,
various integrated circuits and electronic components. Printed circuit
boards consist of metallic traces which conduct electrical current and which
are on or bonded within laminates. Initially, most boards produced were
double-sided printed circuit boards, with a different pattern of metallic
traces printed on each side of the printed circuit boards. Rapid techno-
logical advances in both semiconductor design and fabrication techniques
have placed significant demands on the performance of printed circuit boards
and have served as the impetus for development of new electronic materials,
including increasingly more advanced laminates. Greater density, complexity
and miniaturization of electronic circuitry have resulted in the development
of increasingly sophisticated electronic equipment which combines higher
performance and reliability with reduced size and cost. This has created
increased demand for more sophisticated printed circuit boards and, in
response to this demand, multilayer printed circuit boards were developed
which incorporate multiple layers of metallic traces and expand the amount
of circuitry available on the board. In addition, innovative electronic
manufacturing techniques, such as the direct surface mounting of components
to the printed circuit boards, have been developed in order to achieve
higher density circuitry and lower cost per circuit interconnection.
These trends in the printed circuit board industry have placed
increasingly rigorous demands on the electrical, thermal, chemical and
mechanical properties of the electronic materials used in printed circuit
board production. For example, electrical properties of laminates must be
highly consistent and predictable in order to avoid circuit timing mal-
functions. Likewise, mechanical properties must be tightly controlled so
that the various layers used in a multilayer printed circuit board can be
properly aligned. Thermal stability is also critical, particularly for
dense, high speed systems, because of the heat generated on the printed
circuit board.
Products and Services
The Company's high technology laminates are produced to customer
specifications using varying concentrations of insulating materials and
conducting materials. The Company's high technology prepreg and semi-
finished multilayer products are also manufactured to customer specifica-
tions. The Company specializes in creating electrically, mechanically,
chemically and thermally predictable materials which consistently meet the
special requirements of its customers. Because product requirements vary
from customer to customer, the Company's electronics circuitry business
requires a significant degree of customer service. The Company must be
capable of simultaneously filling many diverse customer orders on a timely
basis. The Company believes that its success in meeting these requirements
is based in large part on its ability to work with its customers in
developing product specifications, its willingness to allocate research and
development resources to meet new product requirements and its application
of stringent quality control to its technologically advanced production
process. The quality control program employed by the Company involves
monitoring each product and the materials used in its manufacture for purity
and uniformity, and maintaining highly disciplined process control
throughout the manufacturing cycle to assure uniformity and conformity with
each customer's specifications. The Company also offers incentive programs
to employees for their contribution to meeting product specifications on a
consistent basis.
Due to its emphasis on service and its desire to remain close to its
markets and customers, the Company has established multiple electronic
circuitry facilities in the Northeast United States, the Southwest United
States (California and Arizona), the United Kingdom, France and Singapore.
During the fiscal year ended February 28, 1993, the Company added two new
facilities dedicated to the manufacture of very high performance leading
edge printed circuitry materials, one in Arizona, USA and one in Lannemezan,
France.
Marketing and Customers
The Company's electronic materials and circuitry products are
marketed primarily to large computer and electronics OEMs and to major
independent printed circuit board manufacturers who are located throughout
the United States, Canada, Europe and the Far East. 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. Accordingly, the Company's strategy emphasizes the
use of multiple facilities established in market areas in close proximity to
its customers. After securing an order, Company personnel work closely with
the customer in developing the specifications needed for that customer's
product. The development work done with one customer, nevertheless, is
often applicable to the needs of other customers.
During the Company's 1994 fiscal year, more than 10% of the
Company's sales were made to a major domestic manufacturing concern. This
concern purchased electronic circuitry product manufactured by the Company.
The Company believes its relations with this customer to be very
satisfactory and further believes this customer will continue to make
significant purchases during the immediate future. Although the Company's
electronics 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 1994 fiscal year and the electronics
segment is not dependent on any other single customer, the loss of a major
customer or of a group of this segment's customers could have a material
adverse effect upon the business of this segment.
The Company's electronics segment's products are marketed by sales
personnel in industrial centers in the United States, Europe and the Far
East. Such personnel include both salaried employees and independent sales
representatives who work on a commission basis.
Materials and Sources of Supply
The principal materials used in the manufacture of the Company's
electronics products consist of copper foil, fiberglass cloth and synthetic
reinforcements, and specially formulated resins and chemicals. It is the
Company's philosophy to identify and concentrate on a limited number of
chosen suppliers of copper foil, resins and chemicals, and fiberglass cloth
and reinforcements. The Company attempts to develop and maintain close
working relationships with these chosen suppliers who have dedicated
themselves to complying with the Company's stringent specifications and
technical requirements. Although, as stated, the Company attempts to
concentrate on a limited number of suppliers for these materials, the
Company has nevertheless identified alternate sources of supply for each of
the aforesaid materials. However, there exists a limited number of
qualified suppliers of these materials. Therefore, although the Company
considers its relationships with its suppliers to be satisfactory, a
disruption of the supply of material from one of the Company's principal
suppliers could adversely affect the electronics segment's business.
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 Company's electronics segment.
Competition
The Company's electronics business is highly competitive. The
Company has many competitors of varying sizes and financial resources in the
electronic materials business located in the United States, Western Europe
and the Far East. Since the Company attempts to focus its efforts toward
the more sophisticated and "high-tech" end of the electronic materials
markets, quality and service, as well as price, are very significant
competitive factors. The Company's competitors in the high performance
electronic materials market consist of companies dedicated to particular
specialty areas as well as divisions and subsidiaries of some of the world's
major electronics and manufacturing concerns. These major concerns are
substantially larger and have significantly greater financial resources than
the Company. The principal competitive factors in the electronic materials
market are quality, customer service and price. The Company believes that
its competitive advantage is based on its ability to deliver, on a timely
basis, quality products that consistently meet customers' specifications.
The markets in which the Company's electronics 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's products are currently technologically competitive and the
Company directs a significant amount of its time and resources toward
maintaining its technological competitive advantage, there is no assurance
that the Company's products will be technologically competitive in the
future, or that the Company will continue to develop new products that are
technologically competitive.
Plumbing Hardware Operations
The Company markets plumbing hardware products which it designs and
manufactures typically from chrome and brass plated zinc and plastic. The
Company also markets brass cast and plastic plumbing hardware products and
components. These products are sold to OEMs, hardware and plumbing
wholesalers and home improvement centers. The Company's plumbing hardware
products are designed for low cost and ease of installation and repair and
also for water and energy conservation.
Marketing and Customers
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. All
of such products are marketed by sales personnel including both salaried
employees and independent sales representatives who work on a commission
basis. The Company's plumbing hardware customers, substantially all of
which are located in the United States, include OEMs, hardware and plumbing
wholesalers and home improvement centers. The Company has entered into an
exclusive contract with a major U.S. faucet manufacturer to supply them with
a key group of plastic assembled products. No single plumbing hardware
customer accounted for 10% or more of the Company's total sales during the
last fiscal year. However, the loss of a major customer or of a group of
some of the largest customers of the plumbing hardware operations could have
a material adverse effect upon this segment.
Manufacturing and Sources of Supply
The Company designs and manufactures its plumbing hardware to its
own specifications and to the specifications of OEMs, using combinations of
materials and product designs that are developed by its personnel. The
Company usually combines chrome-plated zinc and plastic moldings for its
products.
The principal materials used in the manufacture of the Company's
plumbing hardware products consist of zinc, plastics, plating materials, and
other component parts. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for these materials are not
readily available, the Company has experienced no difficulties in obtaining
such materials. The Company purchases brass castings from one supplier and
the Company has a long-term contract with this supplier.
Competition
The Company has many competitors in the plumbing hardware business,
including some major corporations which manufacture their own plumbing
hardware products and which have substantially greater financial resources
than the Company. The Company competes for plumbing hardware business
principally in terms of product performance, the ability to manufacture and
deliver products in accordance with a customer's needs, and price. The
Company's plumbing hardware business can be affected by fluctuations in the
housing industry.
Industrial Components Operations
The Company's industrial components operations are comprised of
manufacturing advanced composites utilized primarily by the defense and
aerospace industries and special purpose industrial adhesive tapes and
bonding films used to join industrial components together.
Marketing and Customers
The Company's industrial components products are manufactured (and
in some cases assembled) at the Company's facilities located in Waterbury,
Connecticut and Holyoke, Massachusetts. These products are marketed by
sales personnel including both salaried employees and independent sales
representatives who work on a commission basis. The Company's industrial
components customers, the majority of which are located in the United
States, are fairly diverse and include OEM's in, and suppliers to, the
aerospace and defense industry, the automotive industry and other manufac-
turing industries. No single industrial components customer accounted for
10% or more of the Company's total sales during the last fiscal year.
However, the loss of a major customer or of a group of some of the largest
customers of the industrial components operations could have a material
adverse effect upon this segment.
Manufacturing, Materials and Sources of Supply
The Company designs and manufactures its industrial components to
its own specifications and to the specifications of its customers. The
materials used in the manufacture of the Company's industrial components
include chemicals, films, resins, fiberglass, plastics, and other fabricated
materials and adhesives. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for many of these materials
are not readily available, the Company has experienced no difficulties in
obtaining such materials.
Competition
The Company has many competitors in the industrial components
segment, including some major manufacturing concerns which have substantial-
ly greater financial resources than the Company. The Company competes for
industrial components business on the basis of product performance and
development, product qualification and approval, the ability to manufacture
and deliver products in accordance with customers' needs and requirements,
and price.
Product Development
The Company's high performance laminates, prepregs and semi-finished
multilayer printed circuit boards are produced to customer specifications,
which are typically developed with the Company's assistance. Generally, the
Company utilizes funds first to develop a product or process in concept, and
later to refine and shape the product or process to fit the specifications
of a particular customer. The development work performed for one customer
is also often applicable to the needs of other customers.
Most of the Company's product development expenditures are
attributable to the efforts of the Company's electronics operations to
develop products that will be technologically competitive. The product
development work of the Company's electronic materials business is focused
on development of new and improved materials, products and processes to meet
the changing performance, signal transmission speed, density and reliability
requirements of the electronics industry. In response to rapid changes in
the electronic materials business, these expenditures on product development
have increased over the past several years.
The advanced composites manufactured by the Company are also
produced to customer specifications. Product development efforts are
devoted toward the conforming of the Company's advanced composites to the
specifications of, and the obtaining of approvals from, the Company's
customers.
The Company's product development efforts relating to its plumbing
hardware business operations are directed toward the development of new
decorative plumbing hardware product designs and new materials to be used in
the manufacture of plumbing products. This requires market research,
industrial design, engineering and testing for ease of installation and
durability.
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 April 29, 1994,
the unfilled portion of all purchase orders believed to be firm was
approximately $15,959,000, as compared to $15,692,000 at April 30, 1993.
Backlog of the Company's three industry segments at April 29, 1994, as
compared to April 30, 1993, was as follows:
April 29, 1994 April 30, 1993
Electronics $11,518,000 $10,279,000
Plumbing Hardware 2,605,000 1,899,000
Industrial Components 1,836,000 3,514,000
Total $15,959,000 $15,692,000
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 February 27, 1994.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto.
In the Company's opinion, some of these patents and trademarks, particularly
those related to certain of its electronics and plumbing hardware products,
are important to such products. Generally, however, the Company does not
believe that its inability to obtain new, or to defend existing, patents and
trademarks would have a material adverse effect on the Company's business.
Employees
At February 27, 1994, the Company had approximately 1,540 employees.
Of these employees, 1,270 are engaged in the Company's electronics
operations, 210 in its plumbing hardware operations, 40 in its industrial
components operations and 20 consisted of executive personnel and general
administrative staff. Approximately 11% of the Company's employees, most of
whom are engaged in the industrial components, plumbing hardware and foreign
electronics 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. 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 environmental control facilities during the remainder of
its current fiscal year or its succeeding fiscal year. However, other
possible developments, such as the enactment or adoption of even more
stringent environmental laws and regulations, could conceivably result in
substantial additional costs to the Company.
The Company and certain of its subsidiaries have been named by the
Environmental Protection Agency (the "EPA") or a comparable state agency
under the Comprehensive Environmental Response, Compensation and Liability
Act (the "Superfund Act") or similar state law as potentially responsible
parties for a number of hazardous waste disposal sites or other potentially
contaminated areas. Under the Superfund Act and similar state laws, all
parties who may have contributed any waste to a hazardous waste disposal
site or contaminated area identified by the EPA or comparable state agency
are jointly and severally liable for the cost of cleanup unless the EPA or
such agency agrees otherwise. Generally, these sites are locations at which
numerous persons dispose 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 a very effective and comprehensive
environmental compliance program. Management believes the ultimate
disposition of known environmental matters will not have a material adverse
effect upon the Company's business.
Item 2. Properties.
The following chart indicates the significant properties owned and
leased by the Company, the industry segment(s) which use 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
manufacturing, warehouse and assembly facilities.)
Size
Owned or (Square
Location Leased Use Footage)
Lake Success, NY Leased Executive Offices 7,000
Walden, NY Owned Electronics 51,000
New Windsor, NY Leased Electronics 11,000
Fullerton, CA Leased Electronics 72,000
Anaheim, CA Leased Electronics 26,000
Tempe, AZ Leased Electronics 52,000
Tempe, AZ Leased Electronics 38,000
Tempe, AZ Leased Electronics 15,000
Mirebeau, France Owned Electronics 81,000
Lannemezan, France Owned Electronics 29,000
Skelmersdale, England Owned Electronics 54,000
Galashiels, Scotland Leased Electronics 13,000
Chippenham, England Leased Electronics 5,000
Singapore Owned Electronics 40,000
Singapore Leased Electronics 18,000
Grand Rapids, MI Owned Plumbing Hardware/ 165,000
Industrial Components
Comstock Park, MI Leased Plumbing Hardware 39,000
Holyoke, MA Leased Industrial Components/ 17,000
Electronics
Waterbury, CT Leased Industrial Components/ 100,000
Electronics
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 February 27, 1994.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant:
Name Title Age
Jerry Shore Chairman of the Board, Chief 68
Executive Officer, President and
a Director
E. Philip Smoot Executive Vice President and a 56
Director
Brian E. Shore Executive Vice President and a 42
Director
Allen Levine Vice President and Chief 64
Financial Officer, Secretary and
Treasurer
Jerry Shore has served the Company in the capacities stated above
for more than the past five years.
Mr. Smoot has served the Company in the capacities stated above for
more than the past five years.
Brian Shore has served as a Director of the Company for more than
the past five years. Brian Shore was elected a Vice President of the
Company in January 1993 and was elected Executive Vice President of the
Company in May of 1994. Brian Shore also served as General Counsel of the
Company from April, 1988 until April, 1994.
Mr. Levine has served the Company as Vice President for more than
the past five years and became the Chief Financial Officer of the Company in
March 1990. Mr. Levine was elected to the additional offices of Secretary
and Treasurer of the Company in May of 1991.
There are no family relationships between the directors or executive
officers of the Company, except that Brian Shore is the son of Jerry Shore.
The term of office of each executive officer of the Company expires
upon the election and qualification of his successor.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder Matters.
The Company's Common Stock is listed and trades on the New York
Stock Exchange (trading symbol PKE). (The Common Stock also trades on the
Midwest Stock Exchange.) The following table sets forth, for each of the
quarterly periods indicated, the high and low sale prices for the Common
Stock as reported on the New York Stock Exchange and dividends declared on
the Common Stock.
For the Fiscal Year Stock Price Dividends
Ended February 27, 1994 High Low Declared
First Quarter 16 1/2 11 1/2 $.08
Second Quarter 15 7/8 14 5/8 $.08
Third Quarter 18 14 3/4 $.08
Fourth Quarter 27 16 5/8 $.08
For the Fiscal Year Stock Price Dividends
Ended February 28, 1993 High Low Declared
First Quarter 14 1/8 13 $.08
Second Quarter 13 3/4 12 7/8 $.08
Third Quarter 13 1/2 12 5/8 $.08
Fourth Quarter 13 11 5/8 $.08
As of May 9, 1994, there were 2,407 holders of record of Common
Stock.
The Indenture relating to the Company's 7 1/4% Convertible
Subordinated Debentures due June 15, 2006 prohibits the payment of dividends
on, or repurchase of, shares of the Company's Common Stock, if the aggregate
expenditures therefor subsequent to March 2, 1986 exceed the sum of (i) 60%
of Consolidated Net Earnings, as defined in such Indenture, since March 2,
1986, less 100% of any net losses since that date, plus (ii) the net
proceeds from certain issuances of shares since March 2, 1986, plus (iii)
$5,000,000. On April 5, 1994, the Company announced that, on May 31, 1994,
it will redeem all of the outstanding 7 1/4% Convertible Subordinated
Debentures. The redemption price will be $1,021.75, plus accrued interest
through the redemption date, for each $1,000 principal amount of debentures.
A $1,000 principal amount debenture is convertible into 48.31 shares of the
Company's common stock at a conversion price of $20.70 per share at any time
prior to the close of business on May 27, 1994. As of May 5, 1994,
$21,917,000 of principal amount debentures had been converted into 1,058,755
shares of the Company's common stock. The aforesaid restrictions and
prohibitions contained in the Indenture will be eliminated at the close of
business on May 31, 1994, the redemption date for the debentures.
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 February 27, 1994 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,
independent Certified Public Accountants, for the fiscal year ended February
27, 1994 and Deloitte & Touche, independent Certified Public Accountants for
all prior periods presented. The consolidated financial statements as of
February 27, 1994 and February 28, 1993 and for the three years ended
February 27, 1994, together with the auditors' report for the year ended
February 27, 1994, appear elsewhere in this Report.
Item 6
Fiscal Year Ended
Feb 27, Feb 28, Mar 1, Mar 3, Feb 25,
1994 1993 1992 1991 1990
(In Thousands, Except Per Share Amounts)
STATEMENT OF EARNINGS INFORMATION:
NET SALES $208,410 $175,176 $165,287 $163,982 $148,231
COSTS AND EXPENSES:
Cost of sales 168,175 149,145 141,717 141,278 124,753
Selling, general and administrative 25,930 22,865 21,250 21,385 18,682
Total costs and expenses 194,105 172,010 162,967 162,663 143,435
Operating profit 14,305 3,166 2,320 1,319 4,796
OTHER INCOME (EXPENSE):
Interest expense (2,407) (2,058) (2,649) (2,735) (2,816)
Other income, net 947 1,967 2,252 4,323 4,998
Total other income (expense) (1,460) (91) (397) 1,588 2,182
EARNINGS BEFORE INCOME TAXES 12,845 3,075 1,923 2,907 6,978
INCOME TAX PROVISION 4,783 810 608 1,018 2,840
EARNINGS BEFORE EXTRAORDINARY GAIN 8,062 2,265 1,315 1,889 4,138
EXTRAORDINARY GAIN - Net of taxes 290
NET EARNINGS $ 8,062 $ 2,265 $ 1,315 $ 2,179 $ 4,138
PRIMARY EARNINGS PER COMMON SHARE:
Earnings before extraordinary gain $ 2.02 $ .50 $ .29 $ .38 $ .80
Extraordinary gain .06
NET EARNINGS $ 2.02 $ .50 $ .29 $ .44 $ .80
FULLY DILUTED EARNINGS PER COMMON
SHARE:
Earnings before extraordinary gain $ 1.69 $ .50 $ .29 $ .38 $ .80
Extraordinary gain .06
NET EARNINGS $ 1.69 $ .50 $ .29 $ .44 $ .80
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Primary 3,993 4,534 4,528 4,923 5,147
Fully diluted 5,727 4,534 4,528 4,923 5,147
DIVIDENDS PER COMMON SHARE $ .32 $ .32 $ .32 $ .32 $ .32
BALANCE SHEET INFORMATION:
Working capital $ 45,867 $ 45,811 $ 51,737 $ 56,790 $ 70,529
Total assets 140,750 129,009 130,734 135,759 135,043
Long-term debt 32,861 33,957 33,439 33,420 35,104
Stockholders' equity 61,454 60,700 62,275 63,676 66,923
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Results of Operations
Fiscal 1994 Compared with Fiscal 1993
During the Company's fiscal year ended February 27, 1994, sales in-
creased 19% to $208,410,000 from $175,176,000 during the fiscal year ended
February 28, 1993. Operating profit for the 1994 fiscal year increased 352%
to $14,305,000 from $3,166,000 for the prior fiscal year. During the 1994
fiscal year, the Company continued its emphasis on its electronics segment,
which accounted for $182,559,000 in sales or 88% of the Company's total
sales worldwide, compared to $147,419,000, or 84% of the Company's total
worldwide sales during fiscal year 1993. The Company's foreign operations,
which are dedicated almost exclusively to the electronics segment, accounted
for $46,491,000 in sales or 22% of total sales worldwide during the 1994
fiscal year. Foreign sales during this fiscal year were virtually flat
compared to the prior fiscal year's foreign sales of $46,347,000. During
fiscal 1994, sales by the plumbing hardware segment increased 1% to
$18,210,000 from $18,086,000 during the prior fiscal year. Fiscal 1994
sales by the industrial components segment decreased 21% to $7,641,000 from
$9,671,000 during the prior fiscal year.
The gross profit percentage for the Company's worldwide operations
was 19.3% for the 1994 fiscal year, as compared to 14.9% for the prior
fiscal year.
The Company's overall improvement in profitability during the 1994
fiscal year was predominantly due to increased sales volume and a fairly
significant increase in the operating profits of the Company's United States
based electronics operations.
As mentioned above, the performance of the electronics segment, and
particularly the United States based electronics operations, improved during
the 1994 fiscal year. This improvement came in spite of continuing price
pressure on the sophisticated printed circuitry materials produced by this
segment, even in the Unites States. The negative impact of this price
pressure was offset by increased market share and sales volume, improved
yields and more effective and efficient resource utilization, particularly
at the United States based electronics operations. The European sophisti-
cated printed circuit materials industry continued to operate at depressed
levels during the 1994 fiscal year. The decline in the market for products
which support the manufacture of sophisticated electronic gear in Europe has
resulted in significant overcapacity in the printed circuit materials
industry, which in turn has lead to fierce price cutting for the products
manufactured by the Company's European electronics operations. This market
shrinkage and severe price pressure has very adversely effected the
Company's European electronics operations. The Company's Far East based
electronics operations continue to perform reasonably well, but were also
affected by price pressure.
The Company has continued its significant investment in the
machinery and equipment of its electronics business for the purpose of
enhancing capability and expanding capacity. The Company has also continued
to invest in the electronics businesses' leading edge technology and product
development efforts. The Company is currently expanding its electronics
manufacturing facilities in Arizona and Singapore, and plans to expand the
capacity of its New York facility during the year. In addition, the Company
continues to actively evaluate other strategic acquisition opportunities for
its electronics business. The Company believes that its ongoing commitment
to its electronic businesses' manufacturing capability and leading edge
technology has enabled, and will continue to enable, the Company's electron-
ics business to compete very effectively in the worldwide sophisticated
printed circuitry materials markets.
During the 1994 fiscal year, the Company's plumbing hardware segment
continued to underperform. Nevertheless, the Company's plumbing hardware
business very recently entered into an exclusive, long-term contract with a
very significant U.S. faucet manufacturer, and this agreement is expected to
greatly enhance the Company's market presence in a key target product area.
The Company also very recently entered into a long-term manufacturing,
marketing and product development contract with Mexico's largest faucet
manufacturer. Through this agreement, high quality decorative brass
plumbing products have been added to the existing plated zinc and plastic
plumbing hardware product lines carried by the Company's plumbing business,
and this addition has very substantially increased the potential market for
this businesses' products.
The Company's industrial components segment consists of the
Company's advanced composite and industrial adhesive tape businesses. The
performance of the industrial adhesive tape business improved significantly
during the 1994 fiscal year. Unfortunately, this improvement was overshad-
owed by the poor performance of FiberCote, the Company's 80% owned advanced
composite business. As previously reported, during the 1994 fiscal year,
the Company's internal accounting staff discovered financial and accounting
errors and irregularities at FiberCote. A thorough internal investigation
revealed that the FiberCote problems were caused, at least in part, by the
collusive conduct of certain members of FiberCote's senior management. As
a result of this investigation, the Company restated its previously reported
financial statements due to overstatements of net earnings arising from
these errors and irregularities including the following amounts: 1993
fiscal year - $195,000; and 1992 fiscal year - $406,000. The Company took
corrective action to address the financial and accounting problems at
FiberCote, including the dismissal of FiberCote's chief executive officer
and chief financial officer. The Company is in the process of resetting
FiberCote's business and operations. The FiberCote business accounts for
less than 5% of the Company's sales and net worth. In addition to these
problems, FiberCote has suffered as a result of reductions in the military
and aerospace markets which it serves.
Selling, general and administrative expenses, measured as a percent-
age of sales, were 12.4% during the 1994 fiscal year, as compared to 13.1%
during the prior fiscal year. This reduction in percentage is a function of
the partially fixed nature of the selling, general and administrative
expenses, relative to the increase in sales.
During the 1994 fiscal year, interest expense increased 17% to
$2,407,000 from $2,058,000 during the prior fiscal year. These expenses are
attributable to the interest payments made by the Company on its Convertible
Debentures and, to a lesser extent, on loans carried by certain of the
Company's foreign subsidiaries. The increase in this expense was attribut-
able to the reduction in interest capitalized to property, plant and
equipment during fiscal 1994 compared to fiscal 1993. Other income
decreased 52% to $947,000 during the 1994 fiscal year from $1,967,000 during
the 1993 fiscal year. Investment income, which is the principal component
of other income, decreased 42% to $947,000 during fiscal year 1994, as
compared to $1,619,000 during the prior fiscal year. This reduction in
investment income occurred because the average rate of interest earned by
the Company during the 1994 fiscal year was lower than that in effect during
the 1993 fiscal year. Also included in other income for the 1993 fiscal
year was a $348,000 gain derived from foreign currency transactions. The
Company's cash reserves continued to be invested primarily in short term
taxable instruments and government securities.
The Company's effective income tax rate for fiscal 1994 was 37.2%,
as compared to 26.3% for fiscal 1993. The effective tax rate for fiscal
1994 increased due to the reductions in general business credits, the
reduced impact of favorable foreign tax rate differentials, and the
adjustment in the prior year of Federal and state income tax accruals.
These increases were partially offset by the reduced impact of state and
local taxes, and foreign net operating losses without tax benefit, on the
1994 effective tax rate.
The Company's net earnings increased 256% in fiscal 1994 to
$8,062,000 from $2,265,000 during fiscal 1993. The increase in net profit
was attributable to the increase in operating profit. Primary and fully
diluted earnings per share increased to $2.02 and $1.69, respectively, for
the 1994 fiscal year compared to $.50 for both primary and fully diluted
earnings per share for the 1993 fiscal year.
The impact of inflation on the Company's operations was not consid-
ered to be significant during these periods.
Fiscal 1993 Compared with Fiscal 1992
During the Company's fiscal year ended February 28, 1993, sales in-
creased 6% to $175,176,000 from $165,287,000 during the fiscal year ended
March 1, 1992. Operating profit for the 1993 fiscal year increased 36% to
$3,166,000 from $2,320,000 for the prior fiscal year. During the 1993
fiscal year, the Company continued its emphasis on its electronics segment,
which accounted for $147,419,000 in sales or 84% of the Company's total
sales worldwide, compared to $137,707,000, or 83% of the Company's total
worldwide sales during fiscal year 1992. The Company's foreign operations,
which are dedicated almost exclusively to the electronics segment, accounted
for $46,347,000 in sales or 26% of total sales worldwide during the 1993
fiscal year. Foreign sales during the 1993 fiscal year decreased 1% from
the prior fiscal year's foreign sales of $46,675,000 due to the reduced
sales volume of the Company's European operations. During fiscal 1993,
sales by the plumbing hardware segment decreased 2% to $18,086,000 from
$18,394,000 during the prior fiscal year. Fiscal 1993 sales by the
industrial components segment increased 5% to $9,671,000 from $9,186,000
during the prior fiscal year.
The gross profit percentage for the Company's worldwide operations
was 14.9% for the 1993 fiscal year, as compared to 14.3% for the prior
fiscal year.
The depressed results for the 1993 fiscal year were largely
attributable to the ongoing weakness of all business segments and particu-
larly the serious difficulties experienced by the Company's European based
electronics operations.
The performance of the electronics segment during the 1993 fiscal
year was relatively weak. The United States electronics markets showed
signs of beginning a modest recovery and, in response, the Company's
domestic electronics operations began to improve during the latter half of
the 1993 year. However, these improvements were seen almost exclusively in
sales volumes, rather than in pricing, for the Company's electronics
products. Further, these improvements were nearly completely overshadowed
by the serious difficulties encountered by the Company's European electron-
ics operations during the 1993 year. The European sophisticated printed
circuit materials industry continued to operate under extreme pressure
during the 1993 year. This pressure had very adversely affected the pricing
for the Company's European electronics products and therefore the operating
margins of the Company's European electronics operations. The Company
adjusted the operating levels of its European operations in response to this
depressed market environment during the 1993 fiscal year in an attempt to
remove as much cost from these operations as possible while maintaining its
relatively significant business presence in that region. The Company's Far
East based electronics operations performed reasonably well during fiscal
1993.
During the 1993 fiscal year the Company acquired a French concern
which specializes in the manufacture of new, ultra-thin laminates for very
advanced printed circuitry applications, as well as the development of other
leading technologies and products for the printed circuitry industry. The
Company's new high-tech manufacturing facility in Tempe, Arizona also came
on-line during fiscal 1993. To the Company's knowledge, this facility is
the only facility in the world which is dedicated exclusively to the
development and manufacture of advanced high performance printed circuitry
material products which are used in the most sophisticated electronics
applications.
The Company's plumbing hardware segment continued to be adversely
affected by the ongoing domestic economic downturn, weak housing starts in
the United States and competitive pressure from the Far East during the 1993
year. During the 1993 fiscal year, the Company focused on improving the
production yields of its plumbing hardware operations. However, outside
market pressures continued to adversely affect this business.
While the sales of the industrial adhesive tape business grew
reasonably well during the 1993 fiscal year as compared to the prior year,
the operating margins of that business were somewhat disappointing. As
discussed above, the Company's financial statements were restated to reverse
certain accounting errors and irregularities discovered at the Company's 80%
owned advanced composite subsidiary, FiberCote, the other principal business
in the Company's industrial component segment. This advanced composite
business had come under pressure as the result of slow-downs and cut-backs
in the military and aerospace markets it serves.
Selling, general and administrative expenses, measured as a percent-
age of sales, were 13.1% during the 1993 fiscal year, as compared to 12.9%
during the prior fiscal year. Included in fiscal year 1993 selling, general
and administrative expenses were provisions for doubtful accounts of
$1,904,000 compared to $1,350,000 in the 1992 fiscal year. This increase
was a reflection of the general weakness in the electronics markets in which
the Company operates.
During the 1993 fiscal year, interest expense decreased 22% to
$2,058,000 from $2,649,000 during the prior fiscal year. These expenses
were attributable to the interest payments made by the Company on its
Convertible Debentures and, to a lesser extent, on loans carried by certain
of the Company's foreign subsidiaries. The majority of the reduction in
this expense was attributable to the repayment of virtually all of the
foreign loans by the Company during the 1993 fiscal year. Due to the
increasing spread between the interest earned on its cash reserves and the
interest charged on borrowings, the Company chose to eliminate nearly all
foreign bank borrowings. Other income decreased 13% to $1,967,000 during
the 1993 fiscal year from $2,252,000 during the 1992 fiscal year.
Investment income, which was the principal component of other income,
decreased 28% to $1,619,000 during fiscal year 1993, as compared to
$2,252,000 during the prior fiscal year. This significant reduction in
investment income occurred because the Company had a lesser amount of
available funds for investment during the 1993 fiscal year, and because the
prevailing interest rates during the 1993 fiscal year were lower than those
in effect during the 1992 fiscal year. Also included in other income for
the 1993 fiscal year was a $348,000 gain derived from foreign currency
transactions. This foreign currency gain partially offset the reduction in
investment income. The Company's cash reserves were invested primarily in
short term taxable instruments and government securities.
The Company's effective income tax rate for fiscal 1993 was 26.3%,
as compared to 31.6% for fiscal 1992. The lower effective tax rate for
fiscal 1993 was influenced by the adjustment of Federal and state income tax
accruals, the lower provision for state taxes and the increase in general
business credits. These reductions were partially offset by the net impact
of the higher foreign effective tax rate, which resulted from the increase
in foreign losses without tax benefit.
The Company's net earnings increased 72% in fiscal 1993 to
$2,265,000 from $1,315,000 during fiscal 1992. The increase in the 1993 net
profit was largely attributable to the increase in operating profit.
Primary and fully diluted earnings per share increased to $.50 for the 1993
fiscal year from $.29 for the 1992 fiscal year.
The impact of inflation on the Company's operations was not consid-
ered to be significant during these periods.
Liquidity and Capital Resources
At February 27, 1994, the Company's cash and temporary investments
amounted to $38,053,000, as compared to $32,768,000 at February 28, 1993.
This increase in the Company's cash and investment position was attributable
to several factors, including cash generated from operations. The Company's
working capital position was $45,867,000 at February 27, 1994, as compared
to $45,811,000 at February 28, 1993. The Company's current ratio, or the
ratio of current assets to current liabilities, was 2.1 to 1 at February 27,
1994, compared to 2.6 to 1 at February 28, 1993.
During the three year period ended February 27, 1994, the Company
generated $40,760,000 of funds from operations and expended $30,844,000 for
the purchase of property, plant and equipment.
On April 5, 1994, the Company announced that it had elected to
redeem its 7 1/4% Convertible Subordinated Debentures on May 31, 1994. The
redemption price is $1,021.75, plus accrued interest through the redemption
date, for each $1,000 principal amount. A $1,000 principal amount debenture
is convertible into 48.31 shares of the Company's common stock at any time
prior to the close of business on May 27, 1994. As of May 5, 1994,
$21,917,000 of principal amount debentures were converted into 1,058,755
shares of the Company's common stock. The Company believes that a
significant portion of the remaining outstanding debentures will be
converted into the Company's common stock prior to May 31, 1994. In any
event, effective May 31, 1994, substantially all of the Company's long-term
debt will have been eliminated, along with the debt service costs associated
therewith.
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 are
also available for appropriate acquisitions and other expansions of the
Company's business.
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 sheet of Park
Electrochemical Corp. and subsidiaries as of February 27, 1994 and the
related consolidated statements of earnings, stockholders' equity, and
cash flows for the year then ended. Our audit also included the financial
statement schedules listed in the Index at Item 14(a)(2). These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedules based on our
audit. The financial statements and financial statement schedules of Park
Electrochemical Corp. for the two years in the period ended February 28,
1993, were audited by other auditors whose report dated May 7, 1993,
except as to Note 16 as to which the date is October 8, 1993, expressed an
unqualified opinion on those statements and schedules.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements for the year ended
February 27, 1994 present fairly, in all material respects, the financial
position of Park Electrochemical Corp. and subsidiaries as of February 27,
1994, and the results of their operations and their cash flows for the
year then ended in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
ERNST & YOUNG
New York, New York
May 6, 1994
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Shares and Per Share Amounts)
February 27, February 28,
1994 1993
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,135 $ 9,006
Marketable securities (Note 2) 23,918 23,762
Accounts receivable, less allowance for
doubtful accounts of $2,673 and $2,977,
respectively 28,904 26,114
Inventories (Note 3) 16,144 14,233
Prepaid expenses and other current
assets (Note 8) 2,738 1,853
Total current assets 85,839 74,968
PROPERTY, PLANT AND EQUIPMENT - At cost, less
accumulated depreciation and amortization
(Note 4) 51,398 50,478
OTHER ASSETS 3,513 3,563
TOTAL $140,750 $129,009
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans payable (Note 5) $ 78 $ 120
Accounts payable 24,443 19,226
Accrued liabilities (Note 6) 12,487 8,735
Income taxes payable 2,964 1,076
Total current liabilities 39,972 29,157
LONG-TERM DEBT (Note 7) 32,861 33,957
DEFERRED INCOME TAXES (Note 8) 4,772 4,395
DEFERRED PENSION LIABILITY (Note 11) 1,691 800
COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)
STOCKHOLDERS' EQUITY (Notes 9, 10 and 11):
Preferred stock, $1 par value per share -
authorized, 500,000 shares; issued, none - -
Common stock, $.10 par value per share -
authorized, 15,000,000 shares; issued,
5,203,825 and 5,177,451 shares, respectively 520 518
Additional paid-in capital 17,965 17,250
Retained earnings 57,098 50,312
Currency translation adjustments 177 109
Pension liability adjustment (1,148) (398)
74,612 67,791
Less treasury stock, at cost, 1,150,642 and
635,461 shares, respectively (13,158) (7,091)
Total stockholders' equity 61,454 60,700
TOTAL $140,750 $129,009
See notes to consolidated financial statements
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Per Share Amounts)
52 Weeks Ended
February 27, February 28, March 1,
1994 1993 1992
NET SALES $208,410 $175,176 $165,287
COSTS AND EXPENSES:
Cost of sales 168,175 149,145 141,717
Selling, general and administrative 25,930 22,865 21,250
Total costs and expenses 194,105 172,010 162,967
Operating profit 14,305 3,166 2,320
OTHER INCOME (EXPENSE):
Interest expense (2,407) (2,058) (2,649)
Other income, net (Notes 2 and 14) 947 1,967 2,252
Total other income (expense) (1,460) (91) (397)
EARNINGS BEFORE INCOME TAXES 12,845 3,075 1,923
INCOME TAX PROVISION (Note 8) 4,783 810 608
NET EARNINGS $ 8,062 $ 2,265 $ 1,315
EARNINGS PER COMMON SHARE (Note 10):
Primary $2.02 $ .50 $ .29
Fully diluted $1.69 $ .50 $ .29
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands, Except Shares and Per Share Amounts)
Additional Currency Pension
Common Stock Paid-in Retained Translation Liability Treasury Stock
Shares Amount Capital Earnings Adjustments Adjustment Shares Amount
BALANCE, MARCH 3, 1991 5,177,451 $518 $17,313 $49,632 $3,770 $ (336) 647,273 $ (7,221)
Net earnings 1,315
Exchange rate changes (1,180)
Change in pension liability
adjustment (29)
Cash dividends,
$.32 per share (1,449)
Purchase of treasury stock 5,062 (58)
BALANCE, MARCH 1, 1992 5,177,451 518 17,313 49,498 2,590 (365) 652,335 (7,279)
Net earnings 2,265
Exchange rate changes (2,481)
Change in pension
liability adjustment (33)
Stock options exercised (63) (16,875) 188
Cash dividends,
$.32 per share (1,451)
Purchase of treasury stock 1
BALANCE, FEBRUARY 28, 1993 5,177,451 518 17,250 50,312 109 (398) 635,461 (7,091)
Net earnings 8,062
Exchange rate changes 68
Change in pension
liability adjustment (750)
Stock options exercised 184 (43,625) 499
Conversion of debentures 26,374 2 531
Cash dividends,
$.32 per share (1,276)
Purchase of treasury stock 558,806 (6,566)
BALANCE, FEBRUARY 27, 1994 5,203,825 $520 $17,965 $57,098 $ 177 $(1,148) 1,150,642 $(13,158)
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
52 Weeks Ended
February 27, February 28, March 1,
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 8,062 $ 2,265 $ 1,315
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 8,733 7,840 7,196
Provision for doubtful accounts receivable (3) 1,904 1,350
Gain on sale of marketable securities (61) (180) (157)
Provision for deferred income taxes (52) (1,025) (294)
Other, net 282 220 119
Changes in operating assets and liabilities:
(Increase) in accounts receivable (2,773) (1,154) (3,700)
(Increase) decrease in inventories (1,908) (1,100) 3,895
Decrease (increase) in prepaid expenses
and other current assets 89 784 (371)
Decrease (increase) in other assets 164 (2,138) (552)
Increase (decrease) in accounts payable 5,265 544 (1,022)
Increase in accrued liabilities 3,247 810 1,162
Increase in income taxes payable 1,007 633 364
Net cash provided by operating activities 22,052 9,403 9,305
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (9,627) (10,307) (10,910)
Purchases of marketable securities (200,404) (288,213) (376,800)
Proceeds from sales of marketable securities 200,309 293,584 377,048
Cash acquired in acquisition, net of cash paid - 6 -
Net cash used in investing activities (9,722) (4,930) (10,662)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings (64) (1,402) (2,741)
Dividends paid (1,276) (1,451) (1,449)
Proceeds from exercise of stock options 683 - -
Purchase of treasury stock (6,566) - (58)
Other - 3 (21)
Net cash used in financing activities (7,223) (2,850) (4,269)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
BEFORE EFFECT OF EXCHANGE RATE CHANGES 5,107 1,623 ( 5,626)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 22 (544) (205)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,129 1,079 ( 5,831)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,006 7,927 13,758
CASH AND CASH EQUIVALENTS, END OF YEAR $ 14,135 $ 9,006 $ 7,927
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED FEBRUARY 27, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation - The consolidated financial statements
include the accounts of Park Electrochemical Corp. ("Park") and its
subsidiaries (collectively, the "Company"), substantially all of which
are wholly owned. All significant intercompany balances and
transactions have been eliminated.
b. Accounting Period - The Company's fiscal year is the 52 or 53 week
period ending the Sunday nearest to the last day of February. Fiscal
years 1994, 1993 and 1992 ended on February 27, 1994, February 28,
1993 and March 1, 1992, respectively. Each fiscal year presented
included 52 weeks.
c. Marketable Securities - Marketable securities are stated at the lower
of aggregate cost or market.
d. Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
e. 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.
f. Income Taxes - Deferred income taxes are provided for temporary
differences in the reporting of certain items, primarily depreciation,
for income tax purposes as compared to financial accounting purposes.
United States ("U.S.") Federal income taxes have not been provided on
the undistributed earnings (approximately $7,100,000 at February 27,
1994) of the Company's foreign subsidiaries, since it is management's
practice and intent to reinvest such earnings in the operations of
these subsidiaries.
g. 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.
h. Deferred Charges - Preoperating and start-up costs incurred in
connection with new manufacturing facilities are deferred and included
in other assets and amortized on a straight-line basis over five
years.
Costs incurred in connection with the issuance of debt financing are
deferred and included in other assets and amortized on a straight-line
basis over the respective debt repayment period.
i. Consolidated Statements of Cash Flows - The Company considers all
money market securities and investments with maturities at the date of
purchase of 90 days or less to be cash equivalents.
Supplemental cash flow information:
Fiscal Year
1994 1993 1992
Cash paid during the year for:
Interest $2,352,000 $2,002,000 $2,592,000
Income taxes 3,960,000 1,072,000 899,000
j. Accounting for Certain Investments in Debt and Equity Securities - The
Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". SFAS No. 115 will
require investments in marketable equity securities and debt
securities to be presented at fair value. Implementation of SFAS No.
115 will not be required until fiscal 1995. The impact, if any, of
SFAS No. 115 on the consolidated financial statement is not expected
to be significant.
2. MARKETABLE SECURITIES
February 27, February 28,
1994 1993
Certificates of deposit $ - $ 2,000,000
Floating rate and medium term notes 6,000,000 2,000,000
Deposit notes - 3,999,000
U.S. Treasury bills and other
government securities 17,782,000 15,754,000
Other 136,000 9,000
$23,918,000 $23,762,000
Included in other income are realized gains on marketable securities
transactions of $61,000, $180,000 and $157,000 for fiscal 1994, 1993 and
1992, respectively.
3. INVENTORIES
February 27, February 28,
1994 1993
Raw materials $ 4,727,000 $ 4,580,000
Work-in-process 3,479,000 2,331,000
Finished goods 7,581,000 6,835,000
Manufacturing supplies 357,000 487,000
$16,144,000 $14,233,000
4. PROPERTY, PLANT AND EQUIPMENT
February 27, February 28,
1994 1993
Land, buildings and improvements $17,460,000 $15,546,000
Machinery, equipment, furniture
and fixtures 88,463,000 81,764,000
105,923,000 97,310,000
Less accumulated depreciation
and amortization 54,525,000 46,832,000
$51,398,000 $50,478,000
Depreciation and amortization expense relating to property, plant and
equipment amounted to $8,188,000, $7,148,000 and $6,842,000 for fiscal
1994, 1993 and 1992, respectively. Interest expense capitalized to
property, plant and equipment amounted to $109,000, $508,000 and $206,000
for fiscal 1994, 1993 and 1992, respectively.
5. BANK LOANS PAYABLE
Bank loans payable consist of $78,000 of unsecured demand loans relating
to foreign subsidiaries. Related foreign lines of credit totalled
$6,100,000 at February 27, 1994, of which $6,022,000 remains available
to the subsidiaries. The weighted average interest rate applicable to
such loans outstanding at February 27, 1994 approximated 8%.
6. ACCRUED LIABILITIES
February 27, February 28,
1994 1993
Payroll and commissions $ 3,112,000 $ 1,868,000
Taxes, other than income taxes 1,191,000 1,140,000
Other 8,184,000 5,727,000
$12,487,000 $ 8,735,000
7. LONG-TERM DEBT
February 27, February 28,
1994 1993
7.25% convertible subordinated
debentures $32,852,000 $33,398,000
Other 71,000 572,000
32,923,000 33,970,000
Less current portion (included
in accrued liabilities) 62,000 13,000
$32,861,000 $33,957,000
On June 12, 1986, the Company issued $35,000,000 of principal amount
7.25% convertible subordinated debentures which mature on June 15, 2006
with interest payable semiannually on June 15 and December 15 of each
year. The debentures are unsecured, subordinated to bank loans payable
(Note 5) and other long-term debt and are convertible at any time prior
to maturity into shares of the Company's common stock at $20.70 per
share. The Company may redeem the debentures at specified prices, plus
accrued interest, currently at 102.175% of principal value and declining
to 100% on June 15, 1996. Beginning June 15, 1996, and on each June 15
through 2005, the Company is required to redeem 7.5% of the original
principal amount, adjusted for any earlier redemptions, conversions or
open market purchases, to retire 75% of the debentures prior to maturity.
The indenture contains a minimum net worth requirement and certain
limitations regarding the payment of dividends and acquisitions of
treasury shares. Underwriting discount and related costs incurred in
connection with this financing amounted to $1,240,000.
On April 5, 1994, the Company announced that it had elected to redeem the
7.25% convertible subordinated debentures on May 31, 1994. The
redemption price will be $1,021.75, plus accrued interest through the
redemption date, for each $1,000 principal amount. A $1,000 principal
amount debenture is convertible into 48.31 shares of the Company's common
stock at any time prior to the close of business on May 27, 1994. As of
May 5, 1994, $21,917,000 of principal amount debentures were converted
into 1,058,755 shares of the Company's common stock. The Company
believes that a substantial portion of the $11,481,000 balance of
debentures still outstanding as of May 5, 1994 will convert into the
Company's common stock prior to May 31, 1994. If the conversion of
substantially all the debentures had occurred as of the beginning of the
1994 fiscal year, the primary earnings per share for fiscal 1994 would
have closely approximated the fully diluted earnings per share for fiscal
1994.
8. INCOME TAXES
The income tax provision includes the following:
Fiscal Year
1994 1993 1992
Current:
Federal $4,300,000 $1,650,000 $ 841,000
State and local 535,000 185,000 455,000
Foreign - - (394,000)
4,835,000 1,835,000 902,000
Deferred:
Federal 396,000 (475,000) (10,000)
State and local (145,000) (160,000) (5,000)
Foreign (303,000) (390,000) (279,000)
(52,000) (1,025,000) (294,000)
$4,783,000 $ 810,000 $ 608,000
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
1994 1993 1992
Statutory U.S. Federal tax rate 35.0% 34.0% 34.0%
Tax accruals no longer required - (16.3) -
Foreign net operating losses
without tax benefit 4.6 34.1 5.2
Foreign tax rate differentials (.9) (21.9) (22.1)
State and local taxes, net of
Federal benefit 2.0 8.0 15.4
General business credits (2.8) (11.0) (6.4)
Other, net (.7) (.6) 5.5
37.2% 26.3% 31.6%
The Company adopted SFAS No. 109 effective March 1, 1993. SFAS No. 109
supersedes SFAS No. 96, "Accounting for Income Taxes" which the Company
had adopted in fiscal 1989. The cumulative effect of the adoption of
SFAS No. 109 was not significant.
The Company has foreign net operating loss carryforwards of approximately
$20,700,000, of which $16,700,000 was acquired through a business
combination. Approximately, $11,700,000 of the foreign tax net operating
loss carryforwards expire in varying amounts from 1995 through 1999; the
remainder have an indefinite expiration.
At February 27, 1994, a current deferred tax asset of $962,000, primarily
attributable to reserves not currently deductible for tax purposes, is
included in other current assets. A long-term deferred tax asset of
$339,000, primarily attributable to foreign net operating loss
carryforwards, is included in other assets. This long-term deferred tax
asset is net of a valuation reserve of approximately $8,300,000. The
majority of the valuation reserve relates to foreign net operating loss
carryforwards acquired through a business combination. The deferred tax
liabilities consist primarily of timing differences relating to
depreciation.
9. STOCKHOLDERS' EQUITY
a. 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 300,000 shares of the Company's common stock are available for
grant to key employees. The purchase price for common stock to be
acquired, upon the exercise of options, will be no less than 100% of the
fair market value of such stock at the date the options are granted. The
1992 Plan will expire in March 2002.
Information with respect to the Company's stock option plans follows:
Range of Outstanding Options
Exercise Prices Granted Exercisable
Balance, March 3, 1991 $ 7.41 - $17.75 138,825 101,862
Options becoming exercisable 12.00 - 17.75 - 15,964
Granted 11.00 - 12.10 83,900 -
Cancelled 11.50 - 17.75 (32,800) (29,900)
Balance, March 1, 1992 7.41 - 17.17 189,925 87,926
Options becoming exercisable 11.00 - 13.63 - 27,100
Granted 13.25 - 14.85 39,009 -
Exercised 7.41 (16,875) (16,875)
Cancelled 11.00 - 13.63 (1,350) (476)
Balance, February 28, 1993 11.00 - 17.17 210,709 97,675
Options becoming exercisable 11.00 - 14.85 - 36,552
Granted 14.75 - 14.88 90,650 -
Exercised 11.00 - 17.17 (43,625) (43,625)
Cancelled 11.00 - 14.85 (12,000) (3,800)
Balance, February 27, 1994 $11.00 - $17.17 245,734 86,802
At February 27, 1994, 192,341 stock options were available for future
grant under the plans.
On July 24, 1985, the Company's stockholders approved the grant of a
nonqualified stock option to an officer of the Company to purchase 50,000
shares of the Company's common stock at an exercise price of $15 per
share, the fair market value of the Company's common stock on November
27, 1984, the date of the grant. The option is exercisable in whole or
in part through November 27, 1994.
b. Dividends - During fiscal 1994, the Company declared and paid cash
dividends of $.32 per share, aggregating $1,276,000. A cash dividend of
$.08 per share was declared on March 18, 1994 payable on May 10, 1994 to
stockholders of record on April 12, 1994.
c. Treasury Stock - The Company repurchased six shares and one share of its
common stock under authorizations of the Board of Directors during fiscal
1994 and 1993, respectively.
On March 9, 1993, in a privately negotiated transaction with an
unaffiliated third party, the Company repurchased 558,800 shares of its
common stock for $6,566,000. The purchase was made outside the Company's
stock repurchase program.
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, each stockholder of record on
February 15, 1989 received one right for each share of common stock owned
at that date. In the event that a person has acquired, or has the right
to acquire, 30% or more of the then outstanding common stock of the
Company or tenders for 20% of more of the outstanding common stock of the
Company (in either event, an "acquiring person"), 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 $60. In addition, each holder of an unexercised exercisable
right, other than an acquiring person, shall have the right to purchase
one share of the principal voting security of the acquiring person for
each right held by such holder at a purchase price per share equal to 50%
of the then market price per share of such acquiring person's securities.
Under certain circumstances, each unexercised exercisable right may
instead entitle the holder thereof to purchase one or fewer shares of the
Company's common stock at a 50% discount of the then market price. The
Company may redeem the rights for a nominal consideration at any time.
Unless redeemed or exercised earlier, all rights expire on February 15,
1999.
e. Reserved Common Shares - At February 27, 1994, 2,075,128 shares of common
stock were reserved for issuance upon exercise of stock options and
conversions of the 7.25% convertible subordinated debentures.
10. EARNINGS PER COMMON SHARE
Primary earnings per common share are computed based on the weighted
average number of common shares outstanding during the period. For
fiscal years 1993 and 1992, the assumed conversion of the Company's 7.25%
convertible subordinated debentures (after elimination of related
interest expense and amortization of deferred debt issuance costs, net
of income tax effect) was not considered in the calculation of the fully
diluted earnings per share, as the effect was antidilutive.
The weighted average number of common shares used to compute earnings per
share are as follows:
Fiscal Year
1994 1993 1992
Primary 3,993,000 4,534,000 4,528,000
Fully diluted 5,727,000 4,534,000 4,528,000
11. 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
$1,513,000, $708,000 and $661,000 for fiscal 1994, 1993 and 1992,
respectively. Contributions are discretionary and may not exceed the
amount allowable as a tax deduction under the Internal Revenue Code.
During fiscal 1992, the Board of Directors of the Company approved the
incorporation of 401(k) retirement savings provisions into the
existing profit sharing retirement plan.
b. Pension Plans - A subsidiary of the Company has two pension plans
covering its union employees. The pension plans are noncontributory
defined benefit plans. The Company's funding policy is to contribute
annually the amounts necessary to satisfy the Internal Revenue
Service's funding standards.
In accordance with SFAS No. 87, the Company records its unfunded
pension liability related to its two defined benefit pension plans,
which amounted to $1,691,000 and $800,000 at February 27, 1994 and
February 28, 1993, respectively. The effect on the Company's
consolidated financial statements in recording the liability is to
recognize an asset (included in "Other Assets") of $543,000 and
$402,000 representing the deferred unrecognized prior service costs of
the plans at February 27, 1994 and February 28, 1993, respectively,
and to record a reduction of stockholders' equity of $1,148,000 and
$398,000 representing the excess of the liability over the
unrecognized prior service cost at February 27, 1994 and February 28,
1993, respectively.
Pension cost includes the following components:
Fiscal Year
1994 1993 1992
Service cost - benefits earned
during the period $ 48,000 $ 41,000 $ 43,000
Interest cost on projected benefit
obligation 276,000 247,000 242,000
Return on plan assets - actual (40,000) (94,000) (82,000)
Net amortization and deferral (39,000) (5,000) (13,000)
Net periodic pension cost $245,000 $189,000 $190,000
The funded status of the pension plan follows:
February 27, February 28,
1994 1993
Accumulated benefit obligation (including
vested benefit obligation of $3,816,000
and $2,874,000, respectively) $3,816,000 $2,879,000
Projected benefit obligation $3,816,000 $2,879,000
Plan assets at fair value 1,983,000 1,974,000
Excess of projected benefit obligation
over plan assets 1,833,000 905,000
Unrecognized net loss (1,152,000) (402,000)
Unrecognized prior service cost (301,000) (130,000)
Unrecognized net assets being amortized
over 15 years (238,000) (268,000)
Accrued pension liability $ 142,000 $ 105,000
The projected benefit obligation was determined using an assumed
discount rate of 7% and 9% for fiscal years 1994 and 1993,
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 February 27, 1994, plan assets were invested in U.S. government
securities, discounted bank notes and equity securities.
12. 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 a land lease. The leases on facilities
are for terms of up to 10 years, the latest of which expires in 1998,
and the land lease expires in 2011. Many of the leases contain
renewal options for periods ranging from 1 to 15 years and require the
Company to pay real estate taxes and other operating costs.
These noncancelable operating leases have the following payment
schedule:
Fiscal Year Amount
1995 $1,815,000
1996 1,296,000
1997 909,000
1998 899,000
1999 307,000
Thereafter 645,000
$5,871,000
Rental expense, inclusive of real estate taxes and other costs,
amounted to $2,142,000, $1,755,000 and $1,463,000 for fiscal 1994,
1993 and 1992, respectively.
b. Environmental Contingencies - The Company and certain of its
subsidiaries have been named by the Environmental Protection Agency
(the "EPA") or a comparable state agency under the Comprehensive
Environmental Response, Compensation and Liability Act (the "Superfund
Act") or a similar state law as potentially responsible parties for a
number of hazardous waste disposal sites or other potentially
contaminated areas. Under the Superfund Act and similar state laws,
all parties who may have contributed any waste to a hazardous waste
disposal site or contaminated area identified by the EPA or a
comparable state agency are jointly and severally liable for the cost
of cleanup unless the EPA or such agency agrees otherwise. Generally,
these sites are locations at which numerous persons dispose 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 a very effective and comprehensive environmental
compliance program.
Included in cost of sales are charges for actual expenditures and
accruals, based on estimates, for certain environmental matters
described above. The Company accrues estimated costs associated with
known environmental matters, when such costs can be estimated.
Management believes the ultimate disposition of known environmental
matters will not have a material adverse effect upon the liquidity,
capital resources, business or consolidated financial position of the
Company. However, one or more of such environmental matters could
have a significant negative impact on the Company's consolidated
financial results for a particular reporting period.
13. BUSINESS SEGMENTS
The Company has three major business segments: electronics, plumbing
hardware and industrial components. The Company's electronic materials
and circuitry products are marketed primarily to large computer and
electronics original equipment manufacturers ("OEMs") and to major
independent printed circuit board manufacturers that are located
throughout the United States, Canada, Europe and the Far East. The
Company's plumbing hardware customers, substantially all of which are
located in the United States, include OEMs, hardware and plumbing
wholesalers and home improvement centers. The Company's industrial
components customers, the majority of which are located in the United
States, include OEMs, aerospace and defense manufacturers.
Financial information concerning the Company's business segments follows
(all amounts stated in thousands of dollars):
Fiscal Year
1994 1993 1992
Sales to unaffiliated customers:
Electronics $182,559 $147,419 $137,707
Plumbing hardware 18,210 18,086 18,394
Industrial components 7,641 9,671 9,186
Net sales $208,410 $175,176 $165,287
Operating profit (1):
Electronics $ 18,597 $ 6,292 $ 6,091
Plumbing hardware (442) (635) (919)
Industrial components (802) 80 (511)
Total operating profit 17,353 5,737 4,661
General corporate expense (3,048) (2,571) (2,341)
Interest expense (2,407) (2,058) (2,649)
Other income, net 947 1,967 2,252
Total other income (expense) (1,460) (91) (397)
Earnings before income taxes $ 12,845 $ 3,075 $ 1,923
Identifiable assets (2):
Electronics $ 91,786 $ 85,880 $ 81,498
Plumbing hardware 6,293 7,291 7,353
Industrial components 3,223 4,027 3,966
101,302 97,198 92,817
Corporate assets 39,448 31,811 37,917
Total assets $140,750 $129,009 $130,734
Depreciation and amortization:
Electronics $ 7,910 $ 6,955 $ 6,306
Plumbing hardware 507 528 547
Industrial components 230 254 243
8,647 7,737 7,096
Corporate depreciation 86 103 100
Total depreciation and
amortization $ 8,733 $ 7,840 $ 7,196
Capital expenditures:
Electronics $ 9,193 $ 9,758 $ 10,138
Plumbing hardware 227 537 529
Industrial components 39 81 412
9,459 10,376 11,079
Corporate capital expenditures 23 17 24
Total capital expenditures $ 9,482 $ 10,393 $ 11,103
(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.
Sales to customers under common control, which were mostly attributed
to the electronics segment, were 25.3%, 15.6% and 17.4% of the
Company's consolidated sales for fiscal 1994, 1993 and 1992,
respectively. Intersegment sales and sales between geographic areas
were not significant.
Financial information regarding the Company's foreign operations,
which are conducted substantially in the United Kingdom, France and
Singapore, follows:
Fiscal Year
1994 1993 1992
Sales to unaffiliated customers $46,491 $46,347 $46,675
Sales to U.S. affiliates (1) - - 248
$46,491 $46,347 $46,923
Operating loss $(3,252) $(2,942) $(1,227)
Loss before income taxes $(3,242) $(2,989) $(1,578)
Identifiable assets $38,477 $37,031 $36,182
(1) Sales to U.S. affiliates are accounted for at cost and are eliminated
in consolidation.
14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter
First Second Third Fourth
(Amounts in Thousands, Except Per Share Amounts)
Fiscal 1994:
Net sales $49,229 $47,318 $54,063 $57,800
Gross profit 8,031 8,902 10,378 12,924
Net earnings 892 1,588 2,177 3,405
Earnings per common share:
Primary $.22 $.40 $.55 $.85
Fully diluted $.22 $.35 $.45 $.66
Weighted average common
shares outstanding:
Primary 4,002 3,983 3,983 4,005
Fully diluted 4,002 5,728 5,728 5,728
Fiscal 1993:
Net sales $43,093 $44,176 $43,801 $44,106
Gross profit 6,462 6,516 6,271 6,782
Net earnings 643 702 232 688
Earnings per common share:
Primary and fully diluted $.14 $.16 $.05 $.15
Weighted average common
shares outstanding:
Primary and full diluted 4,525 4,526 4,542 4,542
Net earnings for the second quarter of fiscal 1993, includes $348,000
derived from currency exchange gains realized during such quarter, which
are included in other income on the consolidated statement of earnings.
Earnings per common share is computed separately for each quarter.
Therefore, the sum of such quarterly per share amounts may differ from
the total for the years.
15. ACQUISITION
In April 1992, the Company acquired 100% of the capital stock of Metclad
S.A. ("Metclad"), a French corporation located in Lannemezan, France, for
$429,000 in cash, plus the assumption of liabilities in the amount of
$1,421,000. This acquisition has been accounted for as a purchase and,
accordingly, the purchase price has been allocated to the acquired assets
and liabilities based on their estimated fair value at the date of
acquisition. The operating results of this acquisition are included in
the Company's consolidated statements of earnings from the date of
acquisition. Pro forma consolidated results are not presented because
Metclad was not an operating company at the time of acquisition.
16. RESTATEMENT
On September 20, 1993, the Company announced that its internal accounting
staff had recently uncovered financial and accounting errors and
irregularities at FiberCote Industries, Inc. ("FiberCote"), its 80% owned
advanced composites subsidiary. On the basis of the Company's
investigation of such financial and accounting errors and irregularities,
the Company had determined to restate the audited consolidated financial
statements. The adjustments involved the write-off of certain improperly
recorded receivables and the recognition of previously unrecorded
liabilities at FiberCote. The consolidated financial statements have
been restated to reverse the overstatements of net earnings in the
following amounts:
Fiscal Year
1993 1992
(Amounts in Thousands,
Except Per Share Amounts)
Earnings before income taxes,
as previously reported $3,370 $2,513
Adjustments (295) (590)
Earnings before income taxes,
as restated $3,075 $1,923
Net earnings, as previously reported $2,460 $1,721
Adjustments (195) (406)
Net earnings, as restated $2,265 $1,315
Earnings per common share
primary and fully diluted,
as previously reported $ 0.54 $ 0.38
Adjustments to earnings (0.04) (0.09)
Earnings per common share
primary and fully diluted,
as restated $ 0.50 $ 0.29
*******
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable because previously reported.
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 1994 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 1994 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 1994 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 1994 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,
independent auditors 19
Balance sheets 20
Statements of earnings 21
Statements of stockholders' equity 22
Statements of cash flows 23
Notes to consolidated financial
statements (1-16) 24
(2) Financial Statement Schedules:
Schedule I - Marketable securities 44
Schedule V - Property, plant and equipment 45
Schedule VI - Accumulated depreciation and
amortization of property, plant and equipment 46
Schedule VIII - Valuation and qualifying
accounts 47
Schedule IX - Short-term borrowings 48
Schedule X - Supplementary income
statement information 49
All other schedules have been omitted because they are inapplicable
or not required, or the information is included elsewhere in the financial
statements or notes thereto.
(3)Exhibits:
Exhibit
Number Description
3.01 Restated Certificate of Incorporation filed with the Secretary
of State of the State of New York on April 10, 1989. (Reference
is made to Exhibit 3.01(g) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1989, Commis-
sion File No. 1-4415, which is incorporated herein by refer-
ence.)
3.02 By-Laws of the Company, as amended to date. (Reference is made
to Exhibit 3.02 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.)
4.01 Indenture dated as of June 15, 1986 by and between the Company
and The Bank of New York, as Trustee, relating to the Company's
7-1/4% Convertible Subordinated Debentures due June 15, 2006.
(Reference is made to Exhibit 4.01(a) of the Company's Registra-
tion Statement on Form S-2, Commission File No. 33-6029, which
exhibit is incorporated herein by reference.)
Additional information concerning Registrant's long-term debt is
set forth in Note 7 of the Notes to Consolidated Financial
Statements included in Item 8 of this Report. Other than the
Indenture referred to above, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries;
therefore, in accordance with paragraph (iii) of Item 4 of Item
601(b) of Regulation S-K, the other instruments defining the
rights of holders of long-term debt are not filed herewith.
Registrant hereby agrees to furnish a copy of any such other
instrument to the Securities and Exchange Commission upon
request.
4.02 Summary of Rights to Purchase Series A Preferred Stock of the
Company.
4.03 Rights Agreement, dated as of February 15, 1989, by and between
the Company and Registrar and Transfer Company, relating to the
Company's Preferred Stock Purchase Rights.
10.01 Lease Agreement dated as of June 21, 1975, regarding real
property located at 1100 East Kimberly Avenue, Anaheim, Califor-
nia, between Nelco Products, Inc. and James and Velma Emmi and
modification executed as of December 21, 1979. (Reference is
made to Exhibit 10.01 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.01(a) Lease Agreement dated December 12, 1989 regarding real property
located at 1100 East Kimberly Avenue, Anaheim, California
between Nelco Products, Inc. and James Emmi. (Reference is made
to Exhibit 10.01(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 25, 1990, Commission File No.
1-4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.02 Lease dated as of April 20, 1976, regarding real property
located at 1107 East Kimberly Avenue, Anaheim, California,
between Nelco Products, Inc. and James and Velma Emmi and
modification executed as of December 21, 1979. (Reference is
made to Exhibit 10.02 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.02(a) Lease Agreement dated December 12, 1989 regarding real property
located at 1107 East Kimberly Avenue, Anaheim, California
between Nelco Products, Inc. and James Emmi. (Reference is made
to Exhibit 10.02(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 25, 1990, Commission File No.
1-4415, which is incorporated herein by reference.)
10.03 Lease Agreement dated August 16, 1983 regarding real property
located at 1411 E. Orangethorpe Avenue, Fullerton, California
between Nelco Products, Inc. and TCLW/Fullerton. (Reference is
made to Exhibit 10.04 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.03(a) Addendum 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 property located at 1421 E.
Orangethorpe Avenue, Fullerton, California. (Reference is made
to Exhibit 10.04(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1989, Commission File No.
1-4415, which is incorporated herein by reference.)
10.03(b) Third and Fourth Addenda dated January 7, 1991 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real
property located at 1411, 1421 and 1431 E. Orangethorpe Avenue,
Fullerton, California. (Reference is made to Exhibit 10.03(b)
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3,1991, Commission file No. 1-4415, which is
incorporated herein by reference.)
10.04 Lease Agreement dated February 15, 1983 regarding real property
located at 1130 West Geneva Drive, Tempe, Arizona between Nelco
Products, Inc. and CMD Southwest, Inc. (Reference is made to
Exhibit 10.05 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 25, 1990, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.04(a) Lease Amendment dated December 10, 1992 to Lease Agreement dated
February 15, 1983 regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona between Nelco Technology, Inc. and
CMD Southwest Inc., and novation substituting Nelco Technology,
Inc. for Nelco Products, Inc. (Reference is made to Exhibit
10.04(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993, Commission File No. 1-4415,
which is incorporated herein by reference.)
Exhibit
Number Description
10.05 Lease Agreement, dated May 26, 1982 regarding real property
located at 4 Gul Crescent, Jurong, Singapore between Nelco
Products Pte. Ltd. (lease was originally entered into by Kiln
Technique (Private) Limited, which subsequently assigned this
lease to Nelco Products Pte. Ltd. and the Jurong Town
Corporation. (Reference is made to Exhibit 10.05 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding real property
located at 4 Gul Crescent, Jurong, Singapore. (Reference is
made to Exhibit 10.05(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.06(a) 1974 Amended Stock Option Plan of the Company. (Reference is
made to Exhibit 10.06 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference. This
exhibit is a management contract or compensatory plan or
arrangement.)
10.06(b) 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(c) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Employment Agreement dated December 12, 1984 between Park and
Jerry Shore. (Reference is made to Exhibit 10.07(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1991, Commission File No. 1-4415, which is incorporated
herein by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07(b) Option Agreement dated November 27, 1984 between Park and Jerry
Shore. (Reference is made to Exhibit 10.07(b) of the Company's
Annual Report on Form 10-K for the fiscal year ended March 3,
1991, Commission File No. 1-4415, which is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07(c) Amended and Restated Employment Agreement dated February 28,
1994 between Park and Jerry Shore.
Exhibit
Number Description
10.08 Lease Agreement dated April 15, 1988 regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut
between FiberCote Industries, Inc. (lease was initially entered
into by USP Composites, Inc., which subsequently changed its
name to FiberCote Industries, Inc.) and Geoffrey Etherington,
II. (Reference is made to Exhibit 10.09 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 26, 1989,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.08(a) Lease Amendment dated December 21, 1992 to Lease Agreement dated
April 15, 1988 regarding real property located at 172 East
Aurora Street, Waterbury, Connecticut between FiberCote
Industries, Inc. and Geoffrey Etherington II. (Reference is
made to Exhibit 10.08(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.09 Lease Agreement dated March 14, 1988 regarding real property
located at 1117 West Fairmont, Tempe, Arizona between Nelco
Products, Inc. and CMD Southwest One. (Reference is made to
Exhibit 10.10 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 26, 1989, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.09(a) Lease Amendment dated December 10, 1992 to Lease Agreement dated
March 14, 1988 regarding real property located at 1117 West
Fairmont, Tempe, Arizona between Nelco Technology, Inc. and CMD
Southwest One, and novation substituting Nelco Technology, Inc.
for Nelco Products, Inc. (Reference is made to Exhibit 10.09(a)
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.10 Lease Agreement dated October 1, 1991 regarding real property
located at 25 North Park, N.E., Comstock Park, Michigan between
Zin-Plas Corporation and Philip L. Johnson d/b/a Johnson
Development Company. (Reference is made to Exhibit 10.10 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.11 Lease Agreement dated August 31, 1989 regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona between Nelco
Technology, Inc. and Cemanudi Associates. (Reference is made to
Exhibit 10.12 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 25, 1990, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.12 Lease Agreement dated October 12, 1990 between New England
Laminates Co., Inc. and Adams/CRR Corp. regarding real property
located in New Windsor, New York. (Reference is made to Exhibit
10.12 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.12(a) Letter Amendment dated October 28, 1992 to Lease Agreement dated
October 12, 1990 between New England Laminates Co., Inc. and
Adams/CRR Corp. regarding real property located in New Windsor,
New York. (Reference is made to Exhibit 10.12(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.)
10.13 Lease Agreement dated December 12, 1990 between Neltec, Inc. and
NZ Properties, Inc. regarding real property located at 1420 W.
12th Place, Tempe, Arizona. (Reference is made to Exhibit 10.13
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 13, 1986 to Indenture of Lease
dated November 1, 1984 between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(a) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 between Dielectric Polymers, Inc.
and Holyoke Supply Company, Inc. regarding real property located
at 218 Race Street, Holyoke, Massachusetts. (Reference is made
to Exhibit 10.14(b) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993, Commission File No.
1-4415, which is incorporated herein by reference.)
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
10.15 Lease Agreement dated January 8, 1992 between Nelco Technology,
Inc. and CMD Southwest, Inc. regarding real property located at
1135 West Geneva Drive, Tempe, Arizona. (Reference is made to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference.)
10.16 Lease Assignation, dated April 18, 1991 between New England
Laminates (UK) Limited and Tweedbank Circuit Supplies Limited,
of the Lease Agreement dated October 20, 1986 between Tweedbank
Circuit Supplies Limited and the Scottish Development Agency
regarding real property located at Block 2 and Unit 2 of Block
8, Tweedbank Industrial Estate, Galashiels, Scotland. (Reference
is made to Exhibit 10.16 of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1992, Commission File
No. 1-4415, which exhibit is incorporated herein by reference.)
Exhibit
Number Description
10.17 Sublease Agreement dated April 27, 1992 between New England
Laminates (U.K.) Limited and Mill Book Company Limited regarding
real property located at Bumpers Farm Industrial Estate, Brunel
Way, Chippenham, England. (Reference is made to Exhibit 10.17
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.18 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
11.01 Computation of fully-diluted earnings per common share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young.
(b) Reports on Form 8-K filed during the fiscal quarter ended
February 27, 1994.
(1) Current report on Form 8-K, dated January 18, 1994.
(2) Amendment No. 1 on Form 8-K/A to the Company's current
report on Form 8-K, dated January 18, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 25, 1994 PARK ELECTROCHEMICAL CORP.
By: /s/ Jerry Shore
Jerry Shore,
Chairman of the Board and President
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/ Jerry Shore Chairman of the Board,
Jerry Shore President and Director
(principal executive
officer) May 25, 1994
/s/ Allen Levine Vice President (principal
Allen Levine financial and accounting
officer) May 25, 1994
/s/ E. Philip Smoot Director
E. Philip Smoot May 25, 1994
/s/ Brian E. Shore Director
Brian E. Shore May 25, 1994
/s/ Anthony Chiesa Director
Anthony Chiesa May 25, 1994
/s/ Lloyd Frank Director
Lloyd Frank May 25, 1994
/s/ Norman M. Schneider Director
Norman M. Schneider May 25, 1994
Schedule I
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES
Column A Column B Column C Column D Column E
Market Value Amount at Which
Of Issue at Security
Number of Cost of Balance Is Carried on the
Name and Title of Issue Shares Issue Sheet Date Balance Sheet
FEBRUARY 27, 1994:
Common Stocks 35,047 $ 145,000 $ 136,000 $ 136,000
Floating rate and medium term notes:
Canadian Imperial Bank of Commerce 1,000,000 1,000,000 1,000,000
Bayerische Landesbank 1,000,000 1,000,000 1,000,000
Merrill Lynch and Company, Inc. 2,000,000 2,000,000 2,000,000
Morgan Stanley 1,000,000 1,000,000 1,000,000
Student Loan Marketing Association 1,000,000 1,000,000 1,000,000
6,000,000 6,000,000 6,000,000
U.S. Treasury bills and other
Government securities 17,880,000 17,782,000 17,782,000
TOTAL MARKETABLE SECURITIES $24,025,000 $23,918,000 $23,918,000
FEBRUARY 28, 1993:
Common Stocks 359 $ 9,000 $ 9,000 $ 9,000
Certificates of deposit:
Commerz Bank 2,000,000 2,000,000 2,000,000
Deposit notes:
Swiss Bank 1,997,000 2,007,000 1,999,000
Morgan Guaranty Trust Company 2,000,000 2,000,000 2,000,000
3,997,000 4,007,000 3,999,000
Floating rate and medium term notes:
Canadian Imperial Bank of Commerce 1,000,000 1,000,000 1,000,000
American Telephone and Telegraph 1,000,000 1,002,000 1,000,000
2,000,000 2,002,000 2,000,000
U.S. Treasury bills and other
Government securities 15,786,000 15,941,000 15,754,000
TOTAL MARKETABLE SECURITIES $23,792,000 $23,959,000 $23,762,000
Schedule V
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning Additions End
Description of Period at Cost Retirements Other of Period
YEAR ENDED FEBRUARY 27, 1994:
Land, buildings and improvements $15,546,000 $ 2,004,000 $ (70,000) $ (20,000) (A) $17,460,000
Machinery, equipment and fixtures 81,764,000 7,478,000 (733,000) (46,000) (A) 88,463,000
$97,310,000 $ 9,482,000 $ (803,000) $ (66,000) $105,923,000
YEAR ENDED FEBRUARY 28, 1993:
$ 204,000 (B)
Land, buildings and improvements $13,443,000 $ 2,290,000 $ (7,000) (384,000) (A) $15,546,000
856,000 (B)
Machinery, equipment and fixtures 75,704,000 8,103,000 (1,317,000) (1,582,000) (A) 81,764,000
$89,147,000 $10,393,000 $(1,324,000) $ (906,000) $97,310,000
YEAR ENDED MARCH 1, 1992:
Land, buildings and improvements $11,745,000 $ 2,123,000 $ (164,000) $ (261,000) (A) $13,443,000
Machinery, equipment and fixtures 68,633,000 8,980,000 (891,000) (1,018,000) (A) 75,704,000
$80,378,000 $11,103,000 $(1,055,000) $(1,279,000) $89,147,000
(A) Effect of foreign exchange rate changes
(B) Assets acquired through acquisition
Schedule VI
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Retirements Other of Period
YEAR ENDED FEBRUARY 27, 1994:
Buildings and improvements $ 5,084,000 $1,046,000 $ (67,000) $ (9,000) (A) $ 6,054,000
Machinery, equipment and fixtures 41,748,000 7,142,000 (433,000) 14,000 (A) 48,471,000
$46,832,000 $8,188,000 $(500,000) $ 5,000 $54,525,000
YEAR ENDED FEBRUARY 28, 1993:
Buildings and improvements $ 4,274,000 $ 884,000 $ (2,000) $ (72,000) (A) $ 5,084,000
Machinery, equipment and fixtures 37,127,000 6,264,000 (929,000) (714,000) (A) 41,748,000
$41,401,000 $7,148,000 $(931,000) $(786,000) $46,832,000
YEAR ENDED MARCH 1, 1992:
$ (60,000) (A)
Buildings and improvements $ 4,235,000 $ 796,000 $ (66,000) (631,000) (B) $ 4,274,000
631,000 (B)
Machinery, equipment and fixtures 31,581,000 6,046,000 (722,000) (409,000) (A) 37,127,000
$35,816,000 $6,842,000 $(788,000) $(469,000) $41,401,000
(A) Effect of foreign exchange rate changes
(B) Reclassification
Schedule VIII
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column F
Balance at Charged to Other Balance at
Beginning Cost and Accounts Translation End
Description of Period Expenses Written Off Adjustment of Period
(A)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
52 weeks ended February 27, 1994 $2,977,000 $ (3,000) $ (317,000) $ 16,000 $2,673,000
52 weeks ended February 28, 1993 $1,645,000 $1,904,000 $ (451,000) $ (121,000) $2,977,000
52 weeks ended March 1, 1992 $ 908,000 $1,350,000 $ (597,000) $ (16,000) $1,645,000
(A) Uncollectible accounts, net of recoveries
Schedule IX
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest Rate
Category of Aggregate at End Interest During During During
Short-term Borrowings of Period Rate the Period the Period the Period
(A) (B)
FEBRUARY 27, 1994:
Loans payable to banks (foreign) $ 78,000 8.3% $ 508,000 $ 319,000 8.6%
FEBRUARY 28, 1993:
Loans payable to banks (foreign) $ 120,000 10.5% $1,496,000 $ 644,000 10.4%
MARCH 1, 1992:
Loans payable to banks (foreign) $1,495,000 11.3% $5,105,000 $2,976,000 12.3%
(A)Average amount outstanding during the period is computed by dividing the total of monthly outstanding principal balances
by the number of months in the period
(B)Weighted average interest rate for the year is computed by dividing the actual short-term interest expense by the average
short-term debt outstanding
Schedule X
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
Charged to Costs and Expenses
Fiscal Year Ended
1994 1993 1992
Item
Maintenance and repairs $4,259,000 $3,645,000 $3,638,000
Amortization of intangible assets (A) (A) (A)
Taxes, other than payroll and income
taxes (A) (A) (A)
Royalties (A) (A) (A)
Advertising costs (A) (A) (A)
(A) Amounts are not presented as such amounts are less than 1% of net sales
=================================================
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 February 27, 1994
___________________
PARK ELECTROCHEMICAL CORP.
Volume 1 of 1
=================================================
Exhibit
Number Description
3.01 Restated Certificate of Incorporation filed with the Secretary
of State of the State of New York on April 10, 1989. (Reference
is made to Exhibit 3.01(g) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1989, Commis-
sion File No. 1-4415, which is incorporated herein by refer-
ence.)
3.02 By-Laws of the Company, as amended to date. (Reference is made
to Exhibit 3.02 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.)
4.01 Indenture dated as of June 15, 1986 by and between the Company
and The Bank of New York, as Trustee, relating to the Company's
7-1/4% Convertible Subordinated Debentures due June 15, 2006.
(Reference is made to Exhibit 4.01(a) of the Company's Registra-
tion Statement on Form S-2, Commission File No. 33-6029, which
exhibit is incorporated herein by reference.)
Additional information concerning Registrant's long-term debt is
set forth in Note 7 of the Notes to Consolidated Financial
Statements included in Item 8 of this Report. Other than the
Indenture referred to above, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries;
therefore, in accordance with paragraph (iii) of Item 4 of Item
601(b) of Regulation S-K, the other instruments defining the
rights of holders of long-term debt are not filed herewith.
Registrant hereby agrees to furnish a copy of any such other
instrument to the Securities and Exchange Commission upon
request.
4.02 Summary of Rights to Purchase Series A Preferred Stock of the
Company.
4.03 Rights Agreement, dated as of February 15, 1989, by and between
the Company and Registrar and Transfer Company, relating to the
Company's Preferred Stock Purchase Rights.
10.01 Lease Agreement dated as of June 21, 1975, regarding real
property located at 1100 East Kimberly Avenue, Anaheim, Califor-
nia, between Nelco Products, Inc. and James and Velma Emmi and
modification executed as of December 21, 1979. (Reference is
made to Exhibit 10.01 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.01(a) Lease Agreement dated December 12, 1989 regarding real property
located at 1100 East Kimberly Avenue, Anaheim, California
between Nelco Products, Inc. and James Emmi. (Reference is made
to Exhibit 10.01(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 25, 1990, Commission File No.
1-4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.02 Lease dated as of April 20, 1976, regarding real property
located at 1107 East Kimberly Avenue, Anaheim, California,
between Nelco Products, Inc. and James and Velma Emmi and
modification executed as of December 21, 1979. (Reference is
made to Exhibit 10.02 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.02(a) Lease Agreement dated December 12, 1989 regarding real property
located at 1107 East Kimberly Avenue, Anaheim, California
between Nelco Products, Inc. and James Emmi. (Reference is made
to Exhibit 10.02(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 25, 1990, Commission File No.
1-4415, which is incorporated herein by reference.)
10.03 Lease Agreement dated August 16, 1983 regarding real property
located at 1411 E. Orangethorpe Avenue, Fullerton, California
between Nelco Products, Inc. and TCLW/Fullerton. (Reference is
made to Exhibit 10.04 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.03(a) Addendum 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 property located at 1421 E.
Orangethorpe Avenue, Fullerton, California. (Reference is made
to Exhibit 10.04(a) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1989, Commission File No.
1-4415, which is incorporated herein by reference.)
10.03(b) Third and Fourth Addenda dated January 7, 1991 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real
property located at 1411, 1421 and 1431 E. Orangethorpe Avenue,
Fullerton, California. (Reference is made to Exhibit 10.03(b)
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3,1991, Commission file No. 1-4415, which is
incorporated herein by reference.)
10.04 Lease Agreement dated February 15, 1983 regarding real property
located at 1130 West Geneva Drive, Tempe, Arizona between Nelco
Products, Inc. and CMD Southwest, Inc. (Reference is made to
Exhibit 10.05 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 25, 1990, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.04(a) Lease Amendment dated December 10, 1992 to Lease Agreement dated
February 15, 1983 regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona between Nelco Technology, Inc. and
CMD Southwest Inc., and novation substituting Nelco Technology,
Inc. for Nelco Products, Inc. (Reference is made to Exhibit
10.04(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993, Commission File No. 1-4415,
which is incorporated herein by reference.)
Exhibit
Number Description
10.05 Lease Agreement, dated May 26, 1982 regarding real property
located at 4 Gul Crescent, Jurong, Singapore between Nelco
Products Pte. Ltd. (lease was originally entered into by Kiln
Technique (Private) Limited, which subsequently assigned this
lease to Nelco Products Pte. Ltd. and the Jurong Town
Corporation. (Reference is made to Exhibit 10.05 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05(a) Deed of Assignment, dated April 17, 1986 between Nelco Products
Pte. Ltd., Kiln Technique (Private) Limited and Paul Ma, Richard
Law, and Michael Ng, all of Peat Marwick & Co., of the Lease
Agreement dated May 26, 1982 between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding real property
located at 4 Gul Crescent, Jurong, Singapore. (Reference is
made to Exhibit 10.05(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.06(a) 1974 Amended Stock Option Plan of the Company. (Reference is
made to Exhibit 10.06 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 25, 1990, Commission File
No. 1-4415, which is incorporated herein by reference. This
exhibit is a management contract or compensatory plan or
arrangement.)
10.06(b) 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(c) 1992 Stock Option Plan of the Company. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Employment Agreement dated December 12, 1984 between Park and
Jerry Shore. (Reference is made to Exhibit 10.07(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1991, Commission File No. 1-4415, which is incorporated
herein by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07(b) Option Agreement dated November 27, 1984 between Park and Jerry
Shore. (Reference is made to Exhibit 10.07(b) of the Company's
Annual Report on Form 10-K for the fiscal year ended March 3,
1991, Commission File No. 1-4415, which is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07(c) Amended and Restated Employment Agreement dated February 28,
1994 between Park and Jerry Shore.
Exhibit
Number Description
10.08 Lease Agreement dated April 15, 1988 regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut
between FiberCote Industries, Inc. (lease was initially entered
into by USP Composites, Inc., which subsequently changed its
name to FiberCote Industries, Inc.) and Geoffrey Etherington,
II. (Reference is made to Exhibit 10.09 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 26, 1989,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.08(a) Lease Amendment dated December 21, 1992 to Lease Agreement dated
April 15, 1988 regarding real property located at 172 East
Aurora Street, Waterbury, Connecticut between FiberCote
Industries, Inc. and Geoffrey Etherington II. (Reference is
made to Exhibit 10.08(a) of the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, Commission
File No. 1-4415, which is incorporated herein by reference.)
10.09 Lease Agreement dated March 14, 1988 regarding real property
located at 1117 West Fairmont, Tempe, Arizona between Nelco
Products, Inc. and CMD Southwest One. (Reference is made to
Exhibit 10.10 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 26, 1989, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.09(a) Lease Amendment dated December 10, 1992 to Lease Agreement dated
March 14, 1988 regarding real property located at 1117 West
Fairmont, Tempe, Arizona between Nelco Technology, Inc. and CMD
Southwest One, and novation substituting Nelco Technology, Inc.
for Nelco Products, Inc. (Reference is made to Exhibit 10.09(a)
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.10 Lease Agreement dated October 1, 1991 regarding real property
located at 25 North Park, N.E., Comstock Park, Michigan between
Zin-Plas Corporation and Philip L. Johnson d/b/a Johnson
Development Company. (Reference is made to Exhibit 10.10 of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.11 Lease Agreement dated August 31, 1989 regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona between Nelco
Technology, Inc. and Cemanudi Associates. (Reference is made to
Exhibit 10.12 of the Company's Annual Report on Form 10-K for
the fiscal year ended February 25, 1990, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.12 Lease Agreement dated October 12, 1990 between New England
Laminates Co., Inc. and Adams/CRR Corp. regarding real property
located in New Windsor, New York. (Reference is made to Exhibit
10.12 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.12(a) Letter Amendment dated October 28, 1992 to Lease Agreement dated
October 12, 1990 between New England Laminates Co., Inc. and
Adams/CRR Corp. regarding real property located in New Windsor,
New York. (Reference is made to Exhibit 10.12(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.)
10.13 Lease Agreement dated December 12, 1990 between Neltec, Inc. and
NZ Properties, Inc. regarding real property located at 1420 W.
12th Place, Tempe, Arizona. (Reference is made to Exhibit 10.13
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1991, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 13, 1986 to Indenture of Lease
dated November 1, 1984 between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(a) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, Commission File No. 1-
4415, which is incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 between Dielectric Polymers, Inc.
and Holyoke Supply Company, Inc. regarding real property located
at 218 Race Street, Holyoke, Massachusetts. (Reference is made
to Exhibit 10.14(b) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993, Commission File No.
1-4415, which is incorporated herein by reference.)
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
10.15 Lease Agreement dated January 8, 1992 between Nelco Technology,
Inc. and CMD Southwest, Inc. regarding real property located at
1135 West Geneva Drive, Tempe, Arizona. (Reference is made to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference.)
10.16 Lease Assignation, dated April 18, 1991 between New England
Laminates (UK) Limited and Tweedbank Circuit Supplies Limited,
of the Lease Agreement dated October 20, 1986 between Tweedbank
Circuit Supplies Limited and the Scottish Development Agency
regarding real property located at Block 2 and Unit 2 of Block
8, Tweedbank Industrial Estate, Galashiels, Scotland. (Reference
is made to Exhibit 10.16 of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1992, Commission File
No. 1-4415, which exhibit is incorporated herein by reference.)
Exhibit
Number Description
10.17 Sublease Agreement dated April 27, 1992 between New England
Laminates (U.K.) Limited and Mill Book Company Limited regarding
real property located at Bumpers Farm Industrial Estate, Brunel
Way, Chippenham, England. (Reference is made to Exhibit 10.17
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.18 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
11.01 Computation of fully-diluted earnings per common share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young.
EXHIBIT 4.02
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
OF PARK ELECTROCHEMICAL CORP.
The Board of Directors of Park Electrochemical Corp. (the
"Company") has effected a distribution of one preferred stock purchase
right (collectively the "Rights") per outstanding share of Common Stock of
the Company, $.1O par value per share (the "Common Stock"), held of record
on February 15, 1989 or issued thereafter and prior to the Distribution
Date (as defined below). Each Right entitles the holder thereof to
purchase from the Company one one-hundredth (1/100th) of a share of a new
series of Preferred Stock of the Company, $1.00 par value per share,
designated as Series A Preferred Stock (the "Preferred Stock"), at a price
of $60.00 (the "Purchase Price") per each one one-hundredth of a share.
The description and terms of the Rights are set forth in a Rights
Agreement dated as of February 15, 1989 (the "Rights Agreement") between
the Company and Registrar & Transfer Company, as Rights Agent (the "Rights
Agent"). Capitalized terms used but not defined herein shall have the
respective meanings assigned such terms in the Rights Agreement.
A copy of the Rights Agreement may be obtained by shareholders
of the Company free of charge from the Company by written request to Park
Electrochemical Corp., 5 Dakota Drive, Lake Success, N.Y. 11042. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
Until the Distribution Date, the Rights shall not be exercisable
and shall be evidenced only by certificates representing shares of Common
Stock. The term "Distribution Date" means the date that the Rights become
exercisable, as determined by a majority of the Continuing Directors of
the Company. (As defined in the Rights Agreement, Continuing Directors
include members of the Company's Board of Directors who were directors
prior to the time an Acquiring Person became an Acquiring Person and any
successors to such directors recommended by a majority of Continuing
Directors). However, the Distribution Date may only be a date within 20
days (unless such period of time is extended by the Continuing Directors)
after the earlier of (i) the date of a public announcement that a Person
has acquired, or has the right to acquire, 30% or more of the then
outstanding shares of Common Stock or (ii) the date of the commencement
of, or public announcement of an intention to make, a tender or exchange
offer by any Person other than the Company for 20% or more the then
outstanding shares of Common Stock. The Continuing Directors may
determine that there will be no Distribution Date (and thus that the
Rights will not become exercisable) in connection with the occurrence of
any such event by adopting a resolution to that effect within such 20-day
period, provided that if after such a determination is made there is a 5%
or greater increase in the ownership of the outstanding shares of common
Stock or rights to acquire such Common Stock by such Acquiring Person or
any change in the terms of such tender or exchange offer which the
Continuing Directors believe to be material, then a new determination may
be made by the Continuing Directors as to whether there is to be a
Distribution Date with respect to each such increase in ownership or
change in terms. If the Continuing Directors adopt no such resolution or
take no other action with respect to the exercisability of the Rights
within any such 20-day period, then the Distribution Date shall be the
last day of such 20-day period.
The Rights Agreement may be amended in such a manner as the
Continuing Directors and Rights Agent may deem necessary or desirable so
long as the interests of the holders of the Rights are not materially
adversely affected, as determined in good faith by the Continuing
Directors.
Until the Distribution Date, the Rights will be evidenced by the
certificates for Common Stock and will be transferable only in connection
with the transfer of the Common Stock. As soon as practicable after the
Distribution Date, separate certificates evidencing the Rights (the
"Rights Certificates") shall be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date (or, if the
Distribution Date is not a business day, the closest business day prior
thereto) and such separate certificates alone shall evidence the Rights.
The Rights (and the Rights Certificates, if issued) shall expire
on February 15, 1999 (the "Final Expiration Date"), unless earlier
redeemed by the Company as described below. After the Distribution Date,
the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby to acquire shares of Preferred Stock by duly
surrendering the Rights Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent, together
with payment of the Purchase Price for each one one-hundredth of a share
of Preferred stock for which such Rights are being exercised. No less
than 100 Rights, and only integral multiples of 100 Rights, may be exer-
cised at any time to acquire shares of Preferred Stock. The Rights must
be exercised within 35 days after the Distribution Date unless the
Continuing Directors determine to extend the period during which the
Rights may be exercised for an additional period but not beyond the
expiration or redemption date of the Rights.
Upon liquidation, dissolution or winding up of the Company, the
holders of the Preferred Stock shall receive an amount equal to accrued
and unpaid dividends plus an amount equal to the greater of (i) $100 per
share or (ii) an aggregate amount per share of Preferred Stock equal-to
100 times the aggregate amount distributable per share with respect to the
Common Stock, before any distribution is made to holders of shares of
stock ranking junior to the Preferred Stock. Dividends on outstanding
shares of Preferred Stock shall be payable quarterly, on a cumulative
basis, at the annual rate of 5% per annum (calculated as a percent of the
liquidation value per share of $100), in cash. Unpaid dividends shall
cumulate and be compounded quarterly: The Preferred Stock may be redeemed
(subject to any limitations required by applicable law) by the Company, in
the discretion of the Continuing Directors, at any time at a redemption
price of 101% of the Purchase Price paid for such Preferred Stock. There
is no restriction on the redemption of the Preferred Stock while there is
any arrearage by the Company in the payment of dividends thereon. The
Preferred Stock shall not have voting rights except as required by law.
The Purchase Price and the number of shares of Preferred Stock
issuable upon exercise of the Rights are subject to adjustment from time
to time in the event, among other things, of the subdivision, combination
or reclassification of the Preferred Stock or the Common Stock.
In the event that on or after the Distribution Date and prior to
the Final Expiration Date, or earlier redemption by the company, (a) the
Company shall, or shall agree or become obligated to, merge into or
consolidate with any other Person, (b) any Person shall, or shall agree or
become obligated to, merge into the Company whether or not the Company's
securities remain outstanding and unchanged thereby, (c) the Company or
any of its subsidiaries shall, or shall agree or become obligated to, sell
or otherwise transfer more than 50% of the assets of the Company and its
subsidiaries (taken as a whole) or assets which, during any of the
immediately preceding three fiscal years, accounted for more than 50% of
the net profits or more than 50% of the gross revenue of the company and
its subsidiaries (taken as a whole) to any Person, or (d) any Acquiring
Person, directly or indirectly, without the prior approval of a majority
of the Continuing Directors or the holders of at least a majority of the
shares of Common Stock not beneficially owned by the Acquiring Person
shall, or shall agree or become obligated to, (i) transfer, in one or more
transactions, any assets to the Company in exchange for capital stock of
the company or for securities exercisable for or convertible into capital
stock of the Company or otherwise obtain from the Company, with or without
consideration, any capital stock of the Company or securities exercisable
for or convertible into capital stock of the Company (other than as part
of a pro rata distribution to all holders of such stock), (ii) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
(in one or more transactions) to, from or with the Company or any of its
subsidiaries, as the case may be, assets on terms and conditions less
favorable to the Company or such subsidiaries than the Company or such
subsidiaries would be able to obtain in arm's-length negotiation with an
unaffiliated third party, or (iii) receive the benefit (except
proportionately as a stockholder) of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its subsidiaries, then,
should any Of the events described in (a) through (d) occur, to the extent
permitted by applicable law, the Company will take such action as will be
necessary to ensure, and will not enter into or consummate any such
merger, consolidation, sale, transfer Or other transaction which does not
provide, that each holder of an unexercised Right, other than an Acquiring
Person, shall have the right to purchase one share of the principal voting
security of the other party to the transaction (or, in certain instances,
of the survivor of a merger or consolidation) for each Right held by such
holder at a purchase price per share equal to 50% of the then market price
per share of such Person's securities. Under certain circumstances, each
Right may, instead, entitle the holder to purchase one or fewer shares
(the exact number being dependent upon available shares and other factors
pertaining at the time of purchase) of the Company's Common Stock at a 50%
discount of the then market price. Each Right is exercisable once
only, with such exercise, depending upon the conditions and circumstances
existing at such time, for the purpose of acquiring either shares of
Preferred Stock or the other shares, as the case may be. After Rights
Certificates have been issued, exercise of the Rights to acquire shares of
Preferred Stock or for any other purpose requires surrender of the Rights
Certificates and other documents, and the taking of the other action,
called for by the Rights Agreements.
The Company may, at its option, upon action of the Continuing
Directors, redeem all-but not less than all the Rights at a price of $.01
per Right at any time prior to the Distribution Date and a price of $.03
per Right on or within 10 days subsequent to the Distribution Date (unless
such period of time is extended by the Continuing Directors). Except as
otherwise required by law, immediately upon the action of the Continuing
Directors ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further
action and without any notice (unless otherwise determined by the
Continuing Directors), all present or future right or power to exercise
the Rights shall terminate and thereafter the only right which the holders
of such Rights shall have with respect thereto shall be to receive the
price to be paid on redemption. Within 15 days of the action of the
Continuing Directors ordering redemption of the Rights, the Company shall
give notice of such redemption, by mail, to all holders of the then
outstanding Rights at such holders' last known addresses as they appear on
the registry books of the Rights Agent, or, prior to the Distribution
Date, on the registry books of the transfer books of the transfer agent
for the Common Stock.
Neither the Rights nor the Rights Certificates, themselves,
confer upon a holder thereof, as such, any rights as a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends. At no time shall the holder of a Right or a Rights Certificate
have any rights other than as specifically set forth in the Rights
Agreement.
EXHIBIT 4.03
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 15, 1989
BETWEEN
PARK ELECTROCHEMICAL CORP.
AND
REGISTRAR & TRANSFER COMPANY
AS RIGHTS AGENT
RIGHTS AGREEMENT
This Agreement, dated as of February 15, 1989, between Park
Electrochemical Corp., a New York corporation (the "Company'), and
Registrar & Transfer Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company authorized and
declared a distribution of one Right for each share of Common Stock, $.10
par value per share, of the Company outstanding on February 15, 1989 (the
'Record Date") and authorized the issuance of one Right for each share of
such Common Stock of the Company issued between the Record Date and the
Distribution Date (as such term is defined in Section 3 hereof), each
Right representing the right to purchase one one-hundredth of a share of
Series A Preferred Stock, $1.00 par value per share, of the Company having
the rights and preferences set forth in a Certificate of Amendment to the
Certificate of Incorporation in the form of Exhibit A hereto (the
'Preferred Stock'), upon the terms and subject to the conditions
hereinafter set forth (the 'Rights');
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein,set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a)"Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, is the Beneficial Owner (as such term
is hereinafter defined) of 30% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any employee benefit plan
of the Company or any entity holding shares of Common Stock and which was
organized, appointed or established by the Company for or pursuant to the
terms of any such plan.
(b) "Affiliate" and 'Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations, as in effect on the date hereof, under the Securities
Exchange Act of 1934 (the "Exchange Act').
(c) A Person shall be deemed the 'Beneficial owner' of,
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial owner' of, or to
"beneficially own*, securities tendered pursuant to a
tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not
in writing); Provided, however, that a Person shall not
be deemed the "Beneficial owner' of, or to 'beneficially
own', any security under this clause (B) if the
agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given
in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person
or any of such Person's Affiliates or Associates has or
has had any agreement, arrangement or understanding
(whether or not in writing), for the purpose of ac-
quiring, holding, voting (except pursuant to a revocable
proxy as described in clause (B) of subparagraph (ii) of
this paragraph (c)) or disposing of any securities of
the Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City time, on
the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, S.10 par
value per share, of the Company, except that 'Common Stock' when used with
reference to any Person other than the Company shall mean the capital
stock with the greatest voting power of such Person or, if such Person is
a subsidiary of another Person which is a corporation, the corporation
which ultimately controls such first-mentioned Person. For purposes of
this Agreement, a corporation 'ultimately controls" another corporation if
the controlling corporation, directly or indirectly, through one or more
subsidiaries or otherwise, beneficially owns 50% or more of the
outstanding principal voting securities of the controlled corporation, but
no other corporation beneficially owns more than 50% of the controlling
corporation's outstanding principal voting securities; provided that if
pursuant to the foregoing there would be more than one corporation 'ulti-
mately controlling' another corporation, then the corporation with the
greatest tangible net worth as of the date of measurement shall be deemed
the sole 'ultimately controlling" corporation.
(g) "Continuing Director" shall mean any member of the
Company's Board of Directors who was a member of the Company's Board of
Directors prior to the time that an Acquiring Person became an Acquiring
Person, and any successor of a Continuing Director who is recommended in
writing to succeed such Continuing Director by a majority of Continuing
Directors then on the Company's Board of Directors.
(h) "Person" shall mean any individual, firm,
corporation, partnership or other entity and may, unless the context
otherwise requires, include an Acquiring Person or the Company.
Any determination required by the definitions contained in this
Section I shall be made by the Continuing Directors and such determination
shall be final and binding.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders
of the Rights (who, in accordance with Section 3 hereof, shall prior to
the Distribution Date (as such term is hereinafter defined) also be the
holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may deem neces-
sary or desirable.
Section 3. Issue of Right Certificates.
(a) The Distribution Date shall be the date on which a
majority of the Continuing Directors determine that the Rights become
exercisable in accordance with this Agreement; provided, however, that the
Rights shall become exercisable only after compliance by the Company with
all applicable registration requirements under federal or state securities
laws. The Distribution Date fixed by the Continuing Directors may only be
a date within 20 days (unless such period of time is extended by the
Continuing Directors) after the earlier of (i) the date of a public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such, or (ii) the date of the commencement of, or first
public announcement of the intent of any Person or Persons (other than the
Company or any employee benefit plan of the Company) to commence, a tender
or exchange offer for 20% or more of the then outstanding shares of Common
Stock (such date so fixed by the Continuing Directors being herein
referred to as the 'Distribution Date'). The Continuing Directors may
determine that there will be no Distribution Date (and thus that the
Rights will not become exercisable) in connection with the occurrence of
any such event by adopting a resolution to such effect within such 20-day
period (or within any extension thereof as shall be approved by the
Continuing Directors); provided, however, if after any such determination
is made (whether by adoption of resolution or otherwise) there shall be a
5% or greater increase in the ownership of Common Stock or rights to
acquire such Common Stock by such Acquiring Person or any change in the
terms of such tender or exchange offer which the Continuing Directors
believe to be material, then within 20 days after the determination of
each such occurrence (or within any extension of such 20-day period as
shall be approved by the Continuing Directors) a new determination may be
made by the Continuing Directors as to whether there shall be a
Distribution Date with respect to each such occurrence. if the Continuing
Directors do not take action within any such 20-day period (as such period
may be extended by the Continuing Directors) to cause the Rights to become
or not to become exercisable, then the Distribution Date shall be the last
day of such 20-day period (or the last day of an extension thereof, as the
case may be). Until the Distribution Date or earlier redemption of the
Rights (x) the Rights shall be evidenced by the certificates for the
Common Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, (y) the Rights
will be transferable only in connection with the transfer of Common Stock
and only to the transferee thereof, and (z) the transfer of Common Stock
shall constitute the transfer of the Rights evidenced by the certificate
for such Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent shall send by first-class, postage prepaid mail,
which may in its discretion be insured, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a right cer-
tificate, in substantially the form of Exhibit B hereto (the 'Right
Certificates"), evidencing, in one or more certificates as determined by
the Rights Agent, one Right for each share of Common Stock held. As of
and after the Distribution Date, the Rights shall be evidenced solely by
such Right Certificates.
(b) As soon as practicable after the Record Date, the
Company shall prepare and the Agent shall send a copy of a summary of the
Rights, in substantially the form of Exhibit C hereto (the 'Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect
to certificates for Common Stock outstanding as of the Record Date, until
the Distribution Date the Rights shall be evidenced by such certificates
and the registered holders thereof shall also be the registered holders of
the associated Rights. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of any of the
certificates for Common Stock shall also constitute the transfer of the
Rights associated with such Common Stock represented by such certificates.
(c) Unless otherwise provided by the Continuing
Directors, certificates for Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date (as
such term is hereinafter defined) shall be deemed also to be certificates
for Rights, and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights (the 'Rights") as set forth in
a Rights Agreement between Park Electrochemical Corp.
and Registrar & Transfer Company, as Rights Agent, dated
as of February 15, 1989 (the 'Rights Agreement'), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
executive offices of Park Electrochemical Corp. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Park Electrochemical Corp. will mail to
the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor. Under certain circumstances, Rights
issued to Acquiring Persons (as defined in the Rights
Agreement) and any subsequent holder of such Rights may
be limited.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares of Preferred Stock and of
assignment to be printed on the reverse thereof) shall each be
substantially in the form of Exhibit 8 hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right Certificates,
whenever distributed, shall be dated as of the Distribution Date, and
shall entitle the holders thereof to purchase such number of one-
hundredths of a share of Preferred Stock as shall be set forth therein at
the price for each one-hundredth of a share set forth therein (the
"Purchase Price"), as stated in Section 7(b), but the number of such one-
hundredths of a share and the Purchase Price for each one-hundredth of a
share shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so counter-
signed. in case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may,be countersigned
by the Rights Agent, and issued and delivered by the Company with the same
force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right
Certificates may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its offices in Cranford, New Jersey, books for
registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right certificates
(which, subject to the provisions of Section 22 hereof, shall be as of the
Distribution Date).
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated,-Destroyed, Lost or stolen Right Certificates.
After the Distribution Date, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one-hundredths of a share of Preferred Stock as the Right
Certificate or Right certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine
or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Transfer
Rights Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Notwithstanding any provision herein to the contrary, Right
Certificates may only be issued in denominations entitling the registered
holder thereof to purchase one-hundredth of a share of Preferred Stock or
an integral multiple thereof.
Section 7. Exercise of Rights; Purchase Price; Expiration of
Rights.
(a) Except as otherwise provided herein, the registered
holder of any unexercised Right Certificate may, after receipt thereof and
subject to Section 3, exercise the Rights evidenced thereby at any time
prior to the Close of Business on the thirty-fifth day following the
Distribution Date (unless the Continuing Directors, in their discretion,
determine to extend the period during which the Rights may be exercised
until a date no later than the earlier of (i) February 15, 1999 (the
"Final Expiration Date') or (ii) the date on which the Rights are redeemed
as provided in Section 23 hereof (such earlier date being herein referred
to as the "Expiration Date')) upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent, together
with payment of the Purchase Price for each one-hundredth of a share of
Preferred Stock for which such Rights are being exercised. No less than
one hundred Rights, and only integral multiples of one hundred Rights, may
be exercised at any time by the holder thereof to acquire shares of
Preferred Stock.
(b) The Purchase Price for each one-hundredth of a share
of Preferred Stock upon the exercise of a Right shall initially be $60.00,
shall be subject to adjustment from time to time as provided in Section 11
hereof but at no time shall be less than required by applicable law and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax in cash, or
by certified check or bank draft payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from the Company or
any transfer agent of the Preferred Stock certificates (or script if the
Company determines, or is required by law or the rules of any exchange, to
use same) for the number of shares of Preferred Stock to be purchased and
the Company hereby agrees to Comply and hereby irrevocably authorizes its
transfer agent to comply with all such requests, and (ii) promptly after
receipt of such certificates or script, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate
previously surrendered, registered in such name or names as may be
designated by such holder.
(d) in case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to such holder's duly
authorized assigns.
(e) The Company shall promptly notify any holder of a
Right whose attempt to exercise its Right against any Person is declared
ineffective or invalid for any reason whatsoever, including but not
limited to, the refusal of the Principal Party (as such term is
hereinafter defined) to assume their obligations hereunder. After receipt
of such notice, such holder may be required to take further affirmative
action in order to effect the valid exercise of its Right (including at-
tempting to exercise its Right against another Person), which action may
include, without limitation, taking whatever action is permitted under
Section 15 of this Agreement to enforce or otherwise act in respect of his
right to exercise the Right. Notwithstanding the foregoing, without the
consent of the Continuing Directors, the holders of Rights may attempt to
exercise their Rights against the Company, if and when permitted
hereunder, no earlier than seven days after the mailing of the aforesaid
notice. Until a Right is validly exercised, the Company may take any and
all action permitted it under the terms of this Agreement, including but
not limited to the redemption of Rights under Section 23 hereof. A Right
may be exercised only once, regardless of the purpose of such exercise.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Rights Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to the
Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or
any authorized and issued shares of Preferred Stock held in its treasury,
a number of shares of Preferred Stock sufficient to permit the exercise in
full of all Outstanding Rights.
So long as the shares of Preferred Stock issuable upon the
exercise of the Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause, from and after the time
the Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such
exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price),
be duly and validly authorized and issued and fully paid and non-
assessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to, or the issuance of the shares of Pre-
ferred Stock in the name of, or delivery of such shares to, a Person other
than the registered holder of the Right Certificates evidencing Rights
surrendered upon the exercise thereof, or be required to issue any
certificates or script for shares of Preferred Stock in a name other than
that of, or deliver such shares to a Person other than, the registered
holder upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name a certificate for shares of Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Preferred Stock represented thereby on,
and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes and charges) was made;
provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby and
payment of the Purchase Price (and any applicable transfer taxes and
charges), the holder of a Right Certificate shall not be entitled to any
rights of a stockholder of the Company with respect to shares for which
the Rights shall be exercisable, including, without limitation, to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of one-hundredths of a
share of Preferred Stock for which a Right is exercisable and the number
of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) In the event the Company shall at any time after the
date of this Agreement subdivide, combine, reclassify or otherwise change
the Preferred Stock, the Purchase Price in effect at the time of the
effective date of such subdivision, combination, reclassification or other
change, and the number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
subdivision, combination, reclassification or other change.
(b) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of the Preferred Stock contained in
Sections 7, 9, 10, 11 and 13, which provisions shall apply on like terms
to any such other shares.
(c) in the event there shall be a stock dividend split
(by way of dividend or otherwise), subdivision, combination or
reclassification of the Common Stock prior to the Distribution Date, the
Rights shall be properly adjusted to take account thereof.
(d) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock (or fractions
thereof) issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one-hundredth of a share and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
(e) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value of the
shares of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any lawful corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at
such adjusted Purchase Price.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock and the Preferred Stock a copy of such cer-
tificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger, Sale or Transfer of Assets or
Earning Power or Certain Other Transactions.
(a) In the event that on or after the Distribution Date
and prior to the Expiration Date (1) the Company shall, or shall agree or
become obligated to, consolidate with, or merge with or into, any other
Person, (2) any other Person shall, or shall agree or become obligated to,
merge into the Company, whether or not the Company's securities remain
outstanding and unchanged thereby, (3) the Company shall, or shall agree
or become obligated to, sell or otherwise transfer (or one or more of its
subsidiaries shall sell, or shall agree or become obligated to sell or
otherwise transfer), in one or more transactions, more than 50% of the
assets of the company and its subsidiaries (taken as a whole) or assets
which, during any of the immediately preceding three fiscal years,
accounted for more than 50% of the net profits or more than 50% of the
gross revenue of the Company and its, subsidiaries (taken as a whole) to
any other Person or Persons, or (4) any Acquiring Person, directly or
indirectly, without the prior approval of a majority of the Continuing
Directors or the holders of at least a majority of the shares of Common
Stock not beneficially owned by the Acquiring Person shall, or shall agree
or become obligated to (i) transfer, in one or more transactions, any
assets to the Company in exchange for capital stock of the Company or for
securities exercisable for or convertible into capital stock of the
Company or otherwise obtain from the Company, with or without
consideration, any capital stock of the Company or securities exercisable
for or convertible into capital stock of the Company (other than as part
of a pro rata distribution to all holders of such stock), (ii) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
(in one or more transactions) to, from or with the Company or any of its
subsidiaries, as the case may be, assets on terms and conditions less
favorable to the Company or such subsidiaries than the Company or such
subsidiaries would be able to obtain in arm's length negotiation with an
unaffiliated third party, or (iii) receive the benefit (except
proportionately as a stockholder) of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its subsidiaries; then, and in
any of the cases referred to in this subsection (a) above, to the extent
permitted by applicable law, the Company shall take such action as will be
necessary to ensure, and will not enter into or consummate any such
merger, consolidation, sale, transfer or other transaction which does not
provide, that each holder of a Right other than an Acquiring Person, shall
thereafter, have the right for each Right held to purchase one share of
Common Stock of the Principal Party (as such term is hereinafter defined)
at a price per share of 50% of the market price per share of such Common
Stock (determined pursuant to Section 13(h) hereof) on the date such
consolidation, merger, sale, transfer or other transaction was authorized
by the Company or, if no authorization by the Company was given, on the
date of the occurrence of the event giving rise to this obligation. The
Company shall not consummate any consolidation, merger, sale, transfer or
other transaction unless prior thereto the Company and the other party or
parties thereto shall have executed and delivered to the Rights Agent one
or more supplemental agreements providing the holders of Rights with the
foregoing rights and the other party or parties shall have expressly
assumed all obligations to be incurred by them under this Section 13. The
Rights shall become exercisable to purchase shares of Common Stock only
after compliance by the Principal Party with all applicable registration
requirements under federal or state securities laws.
(b) 'Principal Party" shall mean: (A) in the case of any
transaction described in clause (1) or (2) of Section 13(a), the Acquiring
Person or other Person (excluding the Company) that is the other party to
the merger or consolidation; (B) in the case of any transaction described
in Clause (3) of Section 13(a), the Acquiring Person or other Person
(excluding the Company) that is the other party to such transaction or the
largest transaction or aggregation of transactions in a series of
transactions; or (C) in the case of any transaction described in Clause
(4) of Section 13(a), the Acquiring Person engaging in the specified
transaction; provided, however, that if such Principal Party does not have
Common Stock (and therefore by definition is not ultimately controlled by
a Person which has Common Stock), or if any transaction referred to in
Clauses (1) through (4) of Section 13(a) is consummated but the provisions
of Section 13(a) cannot be enforced against or applied to such Principal
Party to cause it to issue the securities at the price called for thereby,
then "Principal Party' shall, for purposes only of any transaction
described in Clause (1) or (2) of Section 13(a), refer to the Person which
survives or results from such merger or consolidation and, for purposes
only of any transaction referred to in Clause (3) or (4) of Section 13(a),
refer to the Company.
(c) In every instance in which the obligation to issue
shares or to purchase Rights arising under this Section 13 may be required
to be incurred by the Acquiring Person or any other Person other than the
Company, then this Agreement shall be construed so as to cause such
obligation to be incurred by such Acquiring Person or other Person and not
by the Company.
(d) (i) In the event any Person (other than the Company
but including any Person surviving or resulting from any transaction
referred to in Clause (1) or (2) of Section 13(a)) incurs an obligation to
issue shares under this Section 13, and any rights or warrants with
respect to such shares have previously been distributed and are, at the
time such obligation is incurred, transferable only with such shares, the
shares of such Common Stock shall be delivered together with such rights
or warrants or with rights or warrants having substantially the same terms
as such previously distributed rights or warrants.
(ii) In every instance in which a Person (other than the
Company but including any Person surviving or resulting from any
transaction referred to in Clause (1) or (2) of Section 13(a)) incurs an
obligation to issue shares under this Section 13, such Person shall take
such steps (including, but not limited to, the authorization and
reservation of a sufficient number of shares of its Common Stock in the
same manner as provided in Section 9 hereof with respect to Preferred
Stock, and compliance with all applicable requirements under federal or
state securities laws) as may be necessary to assure all holders the
ability to exercise their Rights in full, and shall, in addition, use its
best efforts to remove any legal or contractual restrictions preventing
the fulfillment of its obligations hereunder, as soon as possible.
(iii) In the event the Company should but for this
subsection be required to issue' a given number of shares pursuant to this
Section 13 but (A) does not have as authorized but unissued shares or as
treasury shares the number of shares otherwise proposed to be issued, or
(B) the issuance of said number of shares to be issued shall require,
pursuant to any applicable law, any rule or regulation made pursuant
thereto or pursuant to any rule or regulation of any stock exchange to
which the Company may be subject, the approval of the shareholders of the
Company, then the Company's obligation to issue said number of shares
shall be reduced to an obligation to issue the greatest number of shares
or fractional shares which (x) is less than one share per Right and which
will comport with the requirements of law applicable to such issuance, or
(y) shall not require the approval of the shareholders of the Company, as
the case may be, and the purchase price for such shares shall also be
reduced pro rata (the aforesaid reduction in the number of shares and
purchase price being herein called the Issuance Reduction"), it being
specifically agreed, however, that no Person, other than the Company,
shall be entitled to the reductions permitted by the Issuance Reduction.
(iv) In the event that any Person (other than the Company
but including any Person surviving or resulting from any transaction
referred to in Clause (1) or (2) of Section 13(a)) incurs the obligation
to issue shares contemplated by this Section 13 but does not fulfill such
obligation, the Company may, by action of the Continuing Directors, set
off any amounts it may owe to such Person and distribute such amounts, pro
rata, to holders who have chosen, and taken all available steps, to
exercise their Rights until such Persons's obligation to the holders of
Rights shall be fulfilled.
(v) In the event that at any time the holder of a Right
shall become entitled to purchase shares under this Section 13, thereafter
the number of such shares so purchasable upon exercise of such Right shall
be subject to adjustment from time to time in a manner and on terms as
nearly as practicable to the provisions with respect to Preferred Stock
contained in Section 11(a) hereof.
(vi) If a holder elects to exercise the right to purchase
shares granted pursuant to this Section 13, such holder shall surrender to
the Rights Agent its Right Certificate accompanied by a written notice in
the form of Exhibit D attached hereto. Promptly after receipt of such
Right Certificate and notice, the Rights Agent shall notify the Company
and the Principal Party and the Principal Party will immediately deliver
to such holder the shares of Common Stock.
(e) The provisions of this Section 13 shall similarly
apply to successive mergers, consolidations or sales or other transfers.
(f) Any Right Certificate issued pursuant to Section 3
hereof that represents Rights beneficially owned by an Acquiring Person or
an Affiliate or Associate of an Acquiring Person and any Right Certificate
issued at any time upon the transfer of any Rights to an Acquiring Person
or to any nominee, Affiliate or Associate of such Acquiring Person, and
any Right Certificate issued pursuant to Section 6 or Section 11 upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Right Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate (as such terms are defined in
the Rights Agreement) of an Acquiring Person. Under
certain circumstances, the Rights represented hereby may
be limited, as provided in Section 13 of the Rights
Agreement.
The Right Certificates which shall contain the foregoing legend shall be
designated by the Company to the Rights Agent. The Company reserves the
right to require (or to cause the Rights Agent or any transfer agent of
the Company to require) any Person who submits a Right Certificate (or a
certificate representing shares of Common Stock of the Company which evi-
dences a Right) for transfer or exercise of the Rights represented thereby
to establish to the reasonable satisfaction of the Company that such
Person or its transferee is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
(g) For the purposes of this Section 13, 'subsidiaries'
shall mean any corporations or other entities of which a majority of the
voting power of the equity securities or equity interests is owned,
directly or indirectly, by the Company.
(h) For the purpose of any computation hereunder, the
'current market price" per share of Common Stock or Preferred Stock on any
date shall be deemed to be the average of the daily closing prices per
share of such Common Stock or Preferred Stock for the 30 consecutive
Trading Days (as such term is hereinafter defined)-immediately prior to
such date; provided, however, that in the event that the current market
price per share of the Common Stock or Preferred Stock is determined
during a period (i) following the announcement by the issuer of such
Common Stock or Preferred Stock of (x) a dividend or distribution on such
Common Stock or Preferred Stock payable in shares of such Common Stock or
Preferred Stock or securities convertible into shares of such Common Stock
or Preferred Stock, or (y) any subdivision, combination or
reclassification of such Common Stock or Preferred Stock, and (ii) prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the *current
market price" shall be properly adjusted to take into account ex-dividend
trading; and provided further, however, that if during any 30 Trading Day
period with respect. to which current market price per share of Common
Stock is determined, any rights or warrants theretofore transferable only
with such Common Stock are detached and transferable separately, the
current market price per share of Common Stock on such date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the remainder of such 30 days occurring after such
detachment. The closing price for each day shall be the last sale price
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
shares of Common Stock, or Preferred Stock, as the case may be, are not
listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the shares of Common Stock or Preferred Stock, as the case may be, are
listed or admitted to trading or, if the shares of Common Stock or Pre-
ferred Stock, as the case may be, are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in
use, or, if on any such date the shares of Common Stock or Preferred
Stock, as the case may be, are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock or Preferred Stock, as
the case may be, selected by the Continuing Directors. If on any such
date no market maker is making a market in the Common Stock or Preferred
Stock, as the case may be, the fair value of such shares on such date, as
determined reasonably and with good faith to the holders of Rights by the
Continuing Directors, shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the
shares of Common Stock or Preferred Stock, as the case may be, are listed
or admitted to trading is open for the transaction of business or, if the
shares of Common Stock or Preferred Stock, as the case may be, are not
listed or admitted to trading on any national securities exchange, a Busi-
ness Day.
Section 14. Depositary Receipts. Notwithstanding any other
provision of this Agreement, the Company may (i) deposit Preferred Stock
or Common Stock, as the case may be, pursuant to a depository arrangement
and issue depository receipts rather than issuing fractional shares of
such Preferred Stock or Common Stock, as the case may be, (ii) issue
script rather than issuing fractional shares of Preferred Stock or Common
Stock, as the case may be, or (iii) take such other action and exercise
such other alternatives with respect to fractional shares of its Preferred
Stock or Common Stock as are permitted pursuant to Section 509 of the New
York Business Corporation Law or any other provisions of applicable law.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the
Right certificates (and, prior to the Distribution Date, the registered-
holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, on such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or pro-
ceeding against the Company or against any other Person as to which a
right of action may exist to enforce, or other-wise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to or bound by this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent and then
only if surrendered at the office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the person in whose name a Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to receive
dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed
to confer upon the holder of any Right Certificate, as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in Section 24 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses incurred in the exercise and performance of its duties
under this Agreement. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or wilful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim
of liability in the premises.
The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Stock or, in connection
herewith, for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, di-
rection, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Chance of Name of Rights
Agent. Any corporation into which the Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided
in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person) be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the President, any vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except as to its countersignature thereof)
or be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11
or 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock to be issued pursuant to this Agreement or any
Right certificate or as to whether any shares of Preferred Stock will,
when so issued, be validly authorized and issued, fully paid and non-
assessable.
(f) The company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with the Company or, consistent with its obligation to the
Company hereunder, otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company orr any
other legal entity.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its further
duties under this Agreement upon 30 days' notice in writing mailed to the
Company, and to each transfer agent of the Preferred Stock (if any), by
registered or certified mail, and by giving public notice of such
resignation, and if required by law, giving notice to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Preferred Stock (if any) by registered
or certified mail, and by giving public notice of any such removal and, if
required by law, giving notice to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of any
state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision
or examination by Federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$5,000,000 or such lesser amount as the Continuing Directors of the
Company shall determine. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held, or thereafter
acquired, by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Stock (if any), and give public notice of such
appointment and, if required by law, mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by the Continuing Directors to
reflect any adjustment or change made in accordance with the provisions of
this Agreement.
Section 23. Redemption and Termination.
(a) The Company may, at its option, upon action of the
Continuing Directors, redeem all but not less than all the Rights at a
redemption price of $.O1 per Right at any time prior to the Distribution
Date and at a redemption price of $.03 per Right on, or within 10 days
subsequent to, the Distribution Date (unless such 10-day period of time is
extended by the Continuing Directors), and prior to exercise or the Final
Expiration Date, appropriately adjusted in each instance to reflect any
stock split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
"Redemption Price").
(b) Except as otherwise may be required by applicable
law, immediately upon the action of the Continuing Directors of the
Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within fifteen days after the action of the Continuing
Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment
of the Redemption Price will be made.
(c) Payment of the Redemption Price will only be made
upon surrender of the Right Certificate (if after the Distribution Date).
If redemption is made prior to the Distribution Date, payment of the
Redemption Price will be made to the holders of Common Stock on the date
fixed for redemption, as reflected on the registry books of the transfer
agent for the Common Stock.
Section 24. Notice of Certain Events After the Distribution Date.
In case after the Distribution Date any of the events set forth in Section
13(a) of this Agreement shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 13 hereof.
The failure to give the notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Park Electrochemical Corp.
5 Dakota Drive
Lake Success, New York 11042
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (and,
prior to the Distribution Date, the holder of any Rights) shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder of any Right Certificates at the address of such
holder as shown on the registry books of the Company or the Rights Agent
(and, prior to the Distribution Date, addressed to the holder at the
address of such holder as shown on the stock transfer books maintained by
the Company's transfer agent).
Section 26. Supplements and Amendments. The Company, by action
of the Continuing Directors, and the Rights Agent may from time to time
supplement, or amend this Agreement, the Rights and the Right Certificates
without the approval of any holders of Rights or Right Certificates in
order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or to make, add, delete or change any other provisions
hereunder which the Continuing Directors and the Rights Agent may deem
necessary or desirable and which shall not materially adversely affect the
interest of the holders of Rights or Right Certificates, as determined in
good faith by the Continuing Directors.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock).
Section 29. Severability. If any term, provision, covenant,
right, obligation, directive, requirement or restriction of this Agreement
is held by a court of competent jurisdiction or other binding authority to
be invalid, unlawful, tolled, limited, void or unenforceable for any
reason whatsoever, the remainder of the terms, provisions, covenants,
rights, obligations, directives, requirements and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, it being specifically agreed
that all such remaining items are fully severable, separate, distinct and
enforceable.
Section 30. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be governed
by and construed and enforced in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State and without reference to concepts of conflicts of law.
Section 31. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 32. Action by Directors. Except as otherwise provided
herein, any reference herein to action by the Board of Directors of the
Company refers to action by such vote as is required by the Certificate of
Incorporation or By-Laws of the Company or otherwise required by
applicable law. Except as otherwise provided herein, any reference herein
to action by the Continuing Directors refers to action by vote of a
majority of the Continuing Directors then entitled to act. In order for
the Continuing Directors to take any action hereunder, unless otherwise
permitted by law, there shall be at least three Continuing Directors and
they shall constitute a committee which shall have all the authority of
the Board of Directors of the Company in taking any action permitted them
under this Agreement; provided, however, that if at any time there shall
be fewer than three Continuing Directors, the Continuing Directors then
remaining shall nonetheless have the authority to recommend directors to
succeed former Continuing Directors as provided in Section 1(g) hereof.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: Park Electrochemical Corp.
By By
Name: Name:
Title: Title:
Attest: Registrar & Transfer Company
By By
Name: Name:
Title: Title:
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
of
Park Electrochemical Corp.
(Under Section 805 of the Business Corporation Law)
It is hereby certified that:
FIRST: The name of the Corporation is PARK ELECTROCHEMICAL CORP.
and the name under which the Corporation was formed was PARK NAME PLATE
INC.
SECOND: The Certificate of Incorporation of the Corporation was
filed with the Department of State of the State of New York on March 31,
1954.
THIRD: The amendment of the Certificate of Incorporation effected
by this Certificate of Amendment is to add a provision stating the number,
designation, relative rights, preferences and limitations of the shares of
a series of Preferred Stock, as fixed by the Board of Directors pursuant
to authority expressly vested in them in the Certificate of Incorporation.
FOURTH: To accomplish the foregoing amendment a new Section 6
shall be added to Article IV of the Certificate of Incorporation which
shall read as follows:
"The Board of Directors has authorized a series of
Preferred Stock which series shall be designated as
Series A Preferred Stock (the "Series A Preferred
Stock") and the number of shares constituting such
series shall be 150,000.
(a) The holders of record of shares of Series A
Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors or a duly
authorized committee thereof out of funds legally
available for the purpose, dividends in cash at the rate
per share of 5% per annum (calculated as a percentage of
the liquidation value per share of $100). Dividends
shall be payable quarterly, on the dates on which a
quarterly dividend or distribution on the Common Stock,
$.10 par value per share ("Common Stock") of the
Corporation is payable (other than a dividend payable in
Common Stock) (each such date being referred to herein
as a "Dividend Payment Date'), commencing on the first
Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred
Stock, or, if no such dividends on the Common Stock are
payable, then on such quarterly dates designated by the
Board of Directors or a duly authorized committee
thereof. To the extent the Board of Directors or a duly
authorized committee thereof does not declare the full
5% dividend or, if so declared, such dividend is not
fully paid in cash, the amount not so declared or paid
shall accumulate as provided in paragraph (b) of this
Section 6. The Board of Directors or a duly authorized
committee thereof may fix a record date for the
determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend declared
thereon, which record date shall be not less than 10
days nor more than 50 days prior to the date fixed for
the payment thereof.
(b) Dividends on the outstanding shares of
Series A Preferred Stock shall be cumulative from the
date of issue of such shares. Accrued dividends,
whether or not declared, that are not paid shall
compound quarterly at 5% per annum until the date of
payment of such dividends. The amounts with respect to
such compounding shall also constitute accrued
dividends. Accumulated but unpaid dividends may be
declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on
such date, not less than 10 days nor more than 50 days
preceding the payment date thereof, as may be fixed by
the Board of Directors of the Corporation or a duly
authorized committee thereof.
(c) So long as any of the shares of Series A
Preferred Stock are outstanding, no dividends shall be
paid or declared, nor any distribution be made, on the
Common Stock, or any other security junior to the Series
A Preferred Stock, other than a dividend payable in
Common Stock or such other junior security, nor shall
any shares of Common Stock, or any other security junior
to the Series A Preferred Stock, be acquired for
consideration by the Corporation, unless all dividends
on the Series A Preferred Stock for all past dividend
dates shall have been paid and the full dividends
thereon for the most recent dividend date shall have
been paid, or declared and a sum sufficient for the
payment thereof set apart. Subject to the foregoing
provisions, dividends on the Common Stock (payable in
cash, stock or otherwise) as may be determined by the
Board of Directors may be declared and paid from time to
time out of the remaining funds legally available for
the payment of dividends, and the Series A Preferred
Stock shall not be entitled to participate in any such
dividends, whether payable ;in cash, stock or otherwise.
(d) The holders of record of shares of Series A
Preferred Stock shall not be entitled to any voting
rights, except as otherwise provided by law.
(e) The Corporation may at the discretion of a
majority of the Continuing Directors (as hereinafter
defined) redeem, at any time, in whole but not in part,
all of the shares and fractional shares of Series A
Preferred Stock at a redemption price of $6,060 per
whole share, reduced pro rata for redemptions of
fractional shares, plus accrued and unpaid dividends
thereon (as provided in paragraphs (a), (b) and (c) of
this Section 6 above) to the date fixed for optional
redemption, and adjusted if, and to the extent that, the
price at which the Series A Preferred Stock is issued is
more or less than $6,000 per share.
(f) In the event the Corporation shall redeem
the shares of Series A Preferred Stock, notice of such
redemption shall be given by first class mail, postage
prepaid, mailed not less than 15 days nor more than 60
days prior to the redemption date, to each holder of
record of such shares at such holder's address as the
same appears on the stock register of the Corporation;
provided, however, that no failure to mail such notice
nor any defect therein shall affect the validity of the
redemption of the shares of Series A Preferred Stock to
be redeemed. Each such notice shall state: (i) the
redemption date; (ii) the place or places where
certificates for shares are to be surrendered for
payment of the redemption price; and (iii) that
dividends on the shares will cease to accrue on such
redemption date.
(g) Notice having been mailed as aforesaid, from
and after the redemption date (unless default shall be
made by the Corporation in providing money for the
payment of the redemption price) dividends on the shares
of Series A Preferred Stock shall cease to accrue and
all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the
Corporation the redemption price and any accrued and
unpaid dividends) shall cease. Upon surrender in accor-
dance with said notice of the certificates for shares
(properly endorsed or assigned for transfer, if the
Continuing Directors of the Corporation shall so require
and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price
aforesaid.
(h) "Continuing Director' shall mean a member of
the Corporation's Board of Directors who was a member of
the Corporation's Board of Directors prior to the time
an Acquiring Person (as hereinafter defined) became an
Acquiring Person, and any successor of a Continuing
Director who is recommended in writing to succeed a
Continuing Director by a majority of Continuing Direc-
tors then on the Corporation's Board of Directors.
(i) "Acquiring Person" shall mean any person who
or which, together with all affiliates and associates of
such person, is the Beneficial Owner (as hereinafter
defined) of 30% or more of the shares of Common Stock
then outstanding, but shall not include the Corporation,
any employee benefit plan of the Corporation or any
person holding shares of Common Stock and which was
organized, appointed or established by the Corporation
for or pursuant to the terms of any such plan.
(j) A person shall be deemed the "Beneficial
Owner," of, and shall be deemed to "beneficially own"
any securities: (i) which such person or any of such
person's affiliates or associates beneficially owns,
directly or indirectly; (ii) which such person or any of
such person's affiliates or associates has (A) the right
to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a person shall not be
deemed the "Beneficial owner" of, or to "beneficially
own", securities tendered pursuant to a tender or
exchange offer made by such person or any of such
person's affiliates or associates until such tendered
securities are accepted for purchase or exchange: or (B)
the right to vote pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided,
however, that a person shall not be deemed the
"Beneficial owner" of, or to "beneficially own", any
security under this clause (B) if the agreement,
arrangement or understanding to vote such-security (1)
arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and
regulations of the Securities Exchange Act of 1934, as
amended, and (2) is not also then reportable by such
person on Schedule 13D under said Securities Exchange
Act (or any comparable or successor report); or (iii)
which are beneficially owned, directly or indirectly, by
any other person with which such person or any of such
person's affiliates or associates has or has had any
agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in clause (B) of subparagraph (ii) of this
paragraph (j)) or disposing of any securities of the
Corporation.
(k) Any shares of Series A Preferred Stock which
shall have been redeemed shall, after such redemption,
have the status of authorized but unissued shares of
Preferred Stock, without designation as to series until
such shares are once more designated as part of a
particular series by the Board of Directors.
(l) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of
the Corporation, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal
to the greater of (i) $100 for each whole share
outstanding, or (ii) an aggregate amount for each whole
share outstanding equal to 100 times the aggregate
amount distributable per share with respect to the
Common Stock; such amount in either case to be reduced
pro rata for any fractional shares outstanding, plus an
amount in cash equal to all accrued but unpaid dividends
thereon (as provided in paragraphs (a), (b) and (c) of
this Section 6 above) to the date fixed for liquidation,
dissolution or winding up before any payment shall be
made or any assets distributed to the holders of any
shares of Common Stock or to the holders of any shares
of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the series A
Preferred Stock. If the assets of the Corporation are
not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of Series
A Preferred Stock, then the holders of all such shares
shall share ratably in such distribution of assets in
accordance with the amount which would be payable on
such distribution if the amounts to which the holders of
outstanding shares of Series A Preferred Stock are
entitled were paid in full.
(m) For the purposes of this Section 6, neither
the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other
consideration) of all or substantially all the property
or assets of the Corporation nor the consolidation or
merger of the Corporation with one or more other
corporations shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary,
unless such voluntary sale, conveyance, exchange or
transfer shall be in connection with a dissolution or
winding up the business of the Corporation.
(n) The Series A Preferred Stock shall be pari
passu to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the dis-
tribution of assets, except to the extent a series is
made junior or subordinate to the Series A Preferred
Stock.
(o) Each fractional share of the Series A
Preferred Stock outstanding shall be entitled to a
ratably proportionate amount of all rights relating to
the shares of the Series A Preferred Stock, including
dividend and voting rights. The liquidation payment or
redemption payment with respect to each fractional share
of Series A Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment or
redemption payment with respect to each outstanding
share of Series A Preferred Stock.
FIFTH: The foregoing amendment of the Certificate of Incorporation of
the Corporation was authorized by the vote at a meeting of the Board of
Directors of the Corporation.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury as of
this 15th day of February, 1989.
_______________________________
_______________________________
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER FEBRUARY 15, 1999 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. (THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OF AN ACQUIRING PERSON. UNDER CERTAIN CIRCUMSTANCES, THE
RIGHTS REPRESENTED HEREBY MAY BE LIMITED, AS PROVIDED IN SECTION 13 OF THE
RIGHTS AGREEMENT.]1
Right Certificate
Park Electrochemical Corp.
This certifies that _________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles such registered owner, subject to the terms, provisions and
conditions of the Rights Agreement dated as of February 15, 1989 (the
'Rights Agreement') between Park Electrochemical Corp. a New York
corporation (the "Company'), and Registrar & Transfer Company (the "Rights
Agent"), to purchase from the Company at any time after the Distribution
Date (as such term in defined in the Rights Agreement) and prior to 5:00
P.M. (New York City time) on February 15, 1999 at the office of the Rights
Agent, or its successors as Rights Agent, in Cranford, New Jersey, one
one-hundredth of a fully paid, nonassessable share of the Series A
Preferred Stock (the 'Preferred Stock') of the Company, at a purchase
price of $60.00 (the "Purchase Price'), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase on the
reverse hereof duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a share which
may be purchased upon exercise thereof) set forth above, and the Purchase
Price per one one-hundredth of a share of Preferred Stock set forth above,
are the number and Purchase Price as of February 15, 1989 based on the
Preferred Stock as constituted at such date.
1 To be included for certificates issued to Acquiring Persons or their
Associates or Affiliates.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates. Copies of the Rights Agreement are on file at the
executive offices of the Company and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number
of shares of Preferred Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised. A Right may be exercised only once, regardless of the purpose
of such exercise.
Subject to the provisions of the Right Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $.Ol per Right at any time prior to the
Distribution Date and at a price of $.03 per Right on, or within 10 days
subsequent to, the Distribution Date (unless such 10-day period is
extended by the Continuing Directors) and prior to the Expiration Date.
No holder of this Right Certificate shall be deemed for any
purpose the holder of shares of Preferred Stock or of any other securities
of the Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of
a stockholder of the Company, including any right to receive notice of
meetings or other actions affecting stockholders (except as provided in
the Rights Agreement), or to receive dividends, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement and then only to the extent therein provided.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of___________, 19__
ATTEST: Park Electrochemical Corp.
By:_____________________ By:_________________________
Secretary Chairman of the Board
Countersigned:
Registrar & Transfer Company
By:_________________________
Authorized Signature
[On Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Right Certificate.)
FOR VALUE RECEIVED______________________________________________
hereby sells, assigns and transfers unto________________________
________________________________________________________________
________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and ap-
point_________________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company and of the
Rights Agent, with full power of substitution.
Dated:_______________, 19__
_______________________________
Signature
NOTICE
The signature on the foregoing Form of Assignment must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this certificate to
Purchase Preferred Stock.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
_______________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights
and requests that certificates for such shares of Preferred Stock be
issued in the name of:
Please insert social security
or other identifying number _______________________
____________________________________________________
(Please print name and address)
____________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number _______________________
____________________________________________________
(Please print name and address)
____________________________________________________
Dated:_________________, 19__
__________________________
Signature
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT C
PARK ELECTROCHEMICAL CORPORATION
February 15, 1989
Dear Park Electrochemical Corp. Shareholder:
On February 2, 1989, your Board of Directors adopted a Shareholder
Rights Plan, and in connection therewith, declared a dividend of Preferred
Stock Purchase Rights to Shareholders of record on February 15, 1989. As
prescribed by the Board's declaration, you will receive one Right for each
share of Common Stock which you own. This letter reviews the Board's
reasons for adopting this Shareholder Rights Plan, and the following
Summary describes this Plan in greater detail.
The Board has adopted this Plan in order to strengthen its ability to
protect the interests of the Shareholders of Park Electrochemical. The
primary purpose of this Plan is to insure that all of Park's Shareholders
receive fair treatment in the event of an unsolicited attempt or offer to
acquire control of your Company. To date, over 600 public companies have
adopted similar shareholder rights plans.
The Plan is designed to protect you, the Shareholder, in the event of
(i) an unsolicited offer to acquire control over the Company, including an
offer that does not treat all Shareholders equally, (ii) the acquisition
on the open market of shares constituting control over the Company,
without offering fair value to all of the Company's Shareholders and (iii)
other coercive takeover tactics which could impair the Board's ability to
fully represent the interests of all of the Company's Shareholders.
The Plan is not intended to prevent a sale of the Company and will not do
so. The Plan is designed, however, to encourage any potential acquiror of
the Company to negotiate the manner and terms of any proposed acquisition
with the Board of Directors. The Shareholder Rights Plan has not been
adopted in response to any specific effort or attempt to acquire control
of the Company, and the Board of Directors is not aware of any such effort
or attempt. The Board believes that the adoption of this Plan and the
distribution of the Rights under the Plan will enhance the ability of
management to operate the business of the Company successfully and to
achieve the Company's long range goals.
The adoption of the Plan, and the distribution of the Rights
thereunder, does not in any way weaken the financial strength of your
Company or interfere with its business plans. The distribution of the
Rights has no dilutive effect and will not affect your Company's reported
earnings per share. Furthermore, this distribution will not change the
way in which you presently trade the Company's shares. In addition, the
distribution of the Rights should not be taxable to you or the Company.
As described in the Summary, you will not be provided with an actual
certificate representing your Rights at this time. Your Rights will be
represented by your Common Stock certificates.
Your Board of Directors has given very careful consideration to the
adoption of this Plan over an extended period of time. The Board was
aware when it adopted this Plan that certain persons are of the view that
shareholder rights plan of this kind deter legitimate acquisition
proposals. The Board carefully considered these views and concluded that
the arguments advanced by proponents thereof are speculative and do not
justify leaving Park's Shareholders without any protection against unfair
treatment by an acquiror who may be seeking its own advantages rather than
those of Park's Shareholders. Your Board believes that the Shareholder
Rights Plan which it has adopted represents a sound, reasonable means of
addressing the complex issues of corporate policy created by the current
takeover environment.
In adopting the Shareholder Rights Plan your Board of Directors is
affirming its confidence in Park's future and its belief that you, our
Shareholders, should be given every opportunity to participate fully in
that future.
on behalf of the Board of Directors,
Jerry Shore
Chairman of the Board
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
OF PARK ELECTROCHEMICAL CORP.
The Board of Directors of Park Electrochemical Corp. (the
"Company") has effected a distribution of one preferred stock purchase
right (collectively the "Rights") per outstanding share of Common Stock of
the Company, $.10 par value per share (the "Common Stock"), held of record
on February 15, 1989 or issued thereafter and prior to the Distribution
Date (as defined below). Each Right entitles the holder thereof to
purchase from the Company one one-hundredth (1/100th) of a share of a new
series of Preferred Stock of the Company, $1.00 par value per share,
designated as Series A Preferred Stock (the "Preferred Stock"), at a price
of $60.00 (the "Purchase Price") per each one one-hundredth of a share.
The description and terms of the Rights are set forth in a Rights
Agreement dated as of February 15, 1989 (the "Rights Agreement") between
the Company and Registrar & Transfer Company, as Rights Agent (the "Rights
Agent"). Capitalized terms used but not defined herein shall have the
respective meanings assigned such terms in the Rights Agreement.
A copy of the Rights Agreement may be obtained by shareholders
of the Company free of charge from the Company by written request to Park
Electrochemical Corp., 5 Dakota Drive, Lake Success, N.Y. 11042. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
Until the Distribution Date, the Rights shall not be exercisable
and shall be evidenced only by certificates representing shares of Common
Stock. The term "Distribution Date" means the date that the Rights become
exercisable, as determined by a majority of the Continuing Directors of
the Company. (As defined in the Rights Agreement, Continuing Directors
include members of the Company's Board of Directors who were directors
prior to the time an Acquiring Person became an Acquiring Person and any
successors to such directors recommended by a majority of Continuing
Directors). However, the Distribution Date may only be a date within 20
days (unless such period of time is extended by the Continuing Directors)
after the earlier of (i) the date of a public announcement that a Person
has acquired, or has the right to acquire, 30% or more of the then
outstanding shares of Common Stock or (ii) the date of the commencement
of, or public announcement of an intention to make, a tender or exchange
offer by any Person other than the company for 20% or more the then
outstanding shares of Common Stock. The Continuing Directors may
determine that there will be no Distribution Date (and thus that the
Rights will not become exercisable) in connection with the occurrence of
any such event by adopting a resolution to that effect within, such 20-day
period, provided that if after such a determination is made there is a 5%
or greater increase in the ownership of the outstanding shares of Common
Stock or rights to acquire such Common Stock by such Acquiring Person or
any change in the terms of such tender or exchange offer which the
Continuing Directors believe to be material, then a new determination may
be made by the Continuing Directors as to whether there is to be a
Distribution Date with respect to each such increase in ownership or
change in terms. If the Continuing Directors adopt no such resolution
or take no other action with respect to the exercisability of the Rights
within any such 20-day period, then the Distribution Date shall be the
last day of such 20-day period.
The Rights Agreement may be amended in such a manner as the
Continuing Directors and Rights Agent may deem necessary or desirable so
long as the interests of the holders of the Rights are not materially
adversely affected, as determined in good faith by the continuing
Directors.
Until the Distribution Date, the Rights will be evidenced by the
certificates for Common Stock and will be transferable only in connection
with the transfer of the Common Stock. As soon as practicable after the
Distribution Date, separate certificates evidencing the Rights (the
"Rights Certificates") shall be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date (or, if the
Distribution Date is not a business day, the closest business day prior
thereto) and such separate certificates alone shall evidence the Rights.
The Rights (and the Rights Certificates, if issued) shall expire
on February 15, 1999 (the "Final Expiration Date"), unless earlier
redeemed by the Company as described below. After the Distribution Date,
the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby to acquire shares of Preferred Stock by duly surrender-
ing the Rights Certificate with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent, together with
payment of the Purchase Price for each one one-hundredth of a share of
Preferred Stock for which such Rights are being exercised. No less than
100 Rights, and only integral multiples of 100 Rights, may be exercised at
any time to acquire shares of Preferred Stock. The Rights must be
exercised within 35 days after the Distribution Date unless the Continuing
Directors determine to extend the period during which the Rights may be
exercised for an additional period but not beyond the expiration or
redemption date of the Rights.
Upon liquidation, dissolution or winding up of the Company, the
holders of the Preferred Stock shall receive an amount equal to accrued
and unpaid dividends plus an amount equal to the greater of (i) $100 per
share or (ii) an aggregate &mount per share of Preferred Stock equal to
100 times the aggregate amount distributable per share with respect to the
Common Stock, before any distribution is made to holders of shares of
stock ranking junior to the Preferred Stock. Dividends on outstanding
shares of Preferred Stock shall be payable quarterly, on a cumulative
basis, at the annual rate of 5% per annum (calculated as a percent of the
liquidation value per share of $100), in cash. Unpaid dividends shall
cumulate and be compounded quarterly. The Preferred stock may be redeemed
(subject to any limitations required by applicable law) by the Company, in
the discretion of the Continuing Directors, at any time at a redemption
price of 101% of the Purchase Price paid for such Preferred Stock. There
is no restriction on the redemption of the Preferred Stock while there is
any arrearage by the Company in the payment of dividends thereon. The
Preferred Stock shall not have voting rights except as required by law.
The Purchase Price and the number of shares of Preferred Stock
issuable upon exercise of the Rights are subject to adjustment from time
to time in the event, among other things, of the subdivision, combination
or reclassification of the Preferred Stock or the Common Stock.
In the event that on or after the Distribution Date and prior to
the Final Expiration Date, or earlier redemption by the Company, (a) the
Company shall, or shall agree or become obligated to, merge into or
consolidate with any other Person, (b) any Person shall, or shall agree or
become obligated to, merge into the company whether or not the Company's
securities remain outstanding and unchanged thereby, (c) the Company or
any of its subsidiaries shall, or shall agree or become obligated to, sell
or otherwise transfer more than 50% of the assets of the Company and its
subsidiaries (taken as a whole) or assets which, during any of the
immediately preceding three fiscal years, accounted for more than 50% of
the net profits or more than 50% of the gross revenue of the Company and
its subsidiaries (taken as a whole) to any Person, or (d) any Acquiring
Person, directly or indirectly, without the prior approval of a majority
of the Continuing Directors or the holders of at least a majority of the
shares of Common Stock not beneficially owned by the Acquiring Person
shall, or shall agree or become obligated to, (i) transfer, in one or more
transactions, any assets to the Company in exchange for capital stock of
the Company or for securities exercisable for or convertible into capital
stock of the Company or otherwise obtain from the Company, with or without
consideration, any capital stock of the Company or securities exercisable
for or convertible into capital stock of the Company (other than as part
of a pro rata distribution to all holders of such stock), (ii) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
(in one or more transactions) to, from or with, the Company or any of its
subsidiaries, as the case may be, assets on terms and conditions less
favorable to the company or such subsidiaries than the Company or such
subsidiaries would be able to obtain in arm's-length negotiation with an
unaffiliated third party, or (iii) receive the benefit (except proportion-
ately as a stockholder) of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its subsidiaries, then, should any of
the events described in (a) through (d) occur, to the extent permitted by
applicable law, the Company will take such action as will be necessary to
ensure, and will not enter into or consummate any such merger, consolida-
tion, sale, transfer or other transaction which does not provide, that
each holder of an unexercised Right, other than an Acquiring Person, shall
have the right to purchase one share of the principal voting security of
the other party to the transaction (or, in certain instances, of the
survivor of a merger or consolidation) for each Right held by such holder
at a purchase price per share equal to 50% of the then market price per
share of such Person's securities. Under certain circumstances, each
Right may, instead, entitle the holder to purchase one or fewer shares
(the exact number being dependent upon available shares and other factors
pertaining at the time of purchase) of the Company's Common Stock at a 50%
discount of the then market price. Each Right is exercisable once only,
with such exercise, depending upon the conditions and circumstances
existing at such time, for the purpose of acquiring either shares of
Preferred Stock or the other shares, as the case may be. After Rights
Certificates have been issued, exercise of the Rights to acquire shares of
Preferred Stock or for any other purpose requires surrender of the Rights
Certificates and other documents, and the taking of the other action,
called for by the Rights Agreements.
The Company may, at its option, upon action of the Continuing
Directors, redeem all but not less than all the Rights at a price of $.01
per Right at any time prior to the Distribution Date and at a price of
$.03 per Right on or within 10 days subsequent to the Distribution Date
(unless such period of time is extended by the Continuing Directors).
Except as otherwise required by law, immediately upon the action of the
Continuing Directors ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent, and without any further
action and without any notice (unless otherwise determined by the
Continuing Directors), all present or future right or power to exercise
the Rights shall terminate and thereafter the only right which the holders
of such Rights shall have with respect thereto shall be to receive the
price to be paid on redemption. within 15 days of the action of the
Continuing Directors ordering redemption of the Rights, the Company shall
give notice of such redemption, by mail, to all holders of the then
outstanding Rights at such holders' last known addresses as they appear on
the registry books of the Rights Agent, or, prior to the Distribution
Date, on the registry books of the transfer books of the transfer agent
for the Common Stock.
Neither the Rights nor the Rights Certificates, themselves,
confer upon a holder thereof, as such, any rights as a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends. At no time shall the holder of a Right or a Rights Certificate
have any rights other than as specifically set forth in the Rights
Agreement.
EXHIBIT D
FORM OF ELECTION TO EXERCISE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Certificate to Purchase
Common Stock.)
The undersigned hereby irrevocably elects to exercise ______________
rights represented by this Right Certificate to purchase the shares of
Common Stock of____________________, as the Principal Party, issuable upon
the exercise of such Rights and requests that certificates for such shares
of Common Stock be issued in the name of:
Please insert social security
or other identifying number _______________________
____________________________________________________
(Please print name and address)
____________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number _______________________
____________________________________________________
(Please print name and address)
____________________________________________________
Dated:_________________, 19__
__________________________
Signature
NOTICE
The signature on the foregoing Form of Election to Election to
Exercise must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT 10.07(c)
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, made and entered into
as of the 28th day of February, 1994, 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.
W I T N E S S E T H
WHEREAS, Shore has been an employee of the company since 1954 and has
served in one or more of the capacities of Chairman of the Board,
President and Chief Executive Officer of the Company since 1954;
WHEREAS, the Company and Shore have previously executed and delivered
an Agreement, dated December 12, 1984 (the "Original Agreement"), 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 by amending and restating the
original Agreement;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Position; Term. The Company hereby employs Shore and Shore
hereby accepts employment and agrees to serve the Company as its chief
executive officer for a term commencing on the date hereof and ending on
February 28, 1999, which period shall be automatically extended on
February 29, 1995 and on each subsequent February 28 or February 29, as
the case may be, by an additional one year unless, on or before the
preceding March 1 the Board of Directors of the Company (the "Board of
Directors") shall determine otherwise and shall so notify Shore. If the
Board of Directors shall so determine and shall so notify Shore, then the
term of this Agreement shall end four years from the February 28 or
February 29, as the case may be, subsequent to such determination and
notification. As used in this Agreement, the term employment term" shall
mean, as of any date, the then current term of Shore's employment
determined in accordance with this paragraph 1.
2. Duties; Location. Shore shall have the titles of Chairman of the
Board, President and Chief Executive officer of the Company during the
employment term and such offices shall have the responsibilities as
provided in the By-laws of the Company as in effect on the date hereof and
Shore shall perform the duties and services incident to his positions.
Shore shall be entitled to relinquish one or more of such titles, so long
as he retains at least one of such titles and performs the duties and
services incident to the positions) for which he retains the title(s) .
Shore's primary place of employment will be located within the Village of
Lake Success, New York or such other location in Nassau County, New York
as may be acceptable to Shore.
3. Principal Occupation; Competition. (a) Shore shall devote his
full time, effort and attention during regular business hours to the
business and affairs of the Company.
(b) During the employment term, Shore shall not, without the
prior permission of the Board of Directors, directly or indirectly engage
or be interested in any other business enterprise which is competitive
with the Company; provided, however, that nothing in this Agreement shall
restrict Shore from owning or dealing in investments or securities except
for those relating to any business which has any business relations with
the Company or which is competitive with the Company, unless the
securities of such business are listed on a national securities exchange
or traded in the over-the-counter market and the interest of Shore does
not exceed one (1%) percent of the outstanding securities of that business
or unless, in each instance, prior written permission of the Board of
Directors has been obtained.
4. Compensation; Benefits. In consideration of the duties and
services to be rendered hereunder, the Company shall pay to Shore and
Shore shall accept the compensation and benefits hereinafter provided.
(a) The Company shall pay Shore a base salary at the rate
of $350,000 per year or such other greater amount as shall be determined
from time to time by the Board of Directors or the CEO Compensation
Committee of the Board of Directors (the "base salary"), payable in as
nearly equal weekly installments as is practicable, or in such other
manner as shall be mutually agreeable to Shore and the Company. The CEO
Compensation Committee of the Board of Directors shall review Shore's base
salary at least annually during the employment term not later than July 31
of each year subsequent to 1994 and shall take any action such Committee
considers appropriate to increase the base salary.
(b) As additional compensation, the Company shall pay
Shore an amount ("additional compensation") equal to two and one-half
percent (2-1/2%) of the After-Tax Net Earnings (as defined below) of the
Company for any Fiscal Year in excess of an amount equal to ten (10%)
percent of Stockholder's Equity (as defined below) of the Company for such
Fiscal Year, which additional compensation shall not, in any event, exceed
$250,000 per year.
(c) For purposes of this Agreement, the following shall
apply:
(i) The term "After-Tax Net Earnings" shall mean
the consolidated net earnings of the Company and its
subsidiaries after all taxes, for the applicable period,
determined by Ernst & Young or any other firm of
independent certified public accountants of recognized
national standing selected by the Company (the "Accoun-
tants"), in accordance with generally accepted account-
ing principles consistently applied. Without limiting
the generality of the foregoing, all base salary (but
not additional compensation) and the benefits and
expenses paid to or accrued for the benefit of Shore
with respect to such period by the Company pursuant to
this Agreement shall be deducted in determining After-
Tax Net Earnings.
(ii) The term "Stockholders' Equity" for a Fiscal
Year shall mean the stockholders, equity of the Company
as at the beginning of each such Fiscal Year, as deter-
mined by the Accountants by reference to the audited
consolidated balance sheet of the Company and its
subsidiaries as at the end of the immediately preceding
Fiscal Year as included in the Annual Report on Form 10-
K of the Company and, in each case, determined in
accordance with generally accepted accounting principles
consistently applied.
(iii) The term "Fiscal Year" shall mean the fiscal
year of the Company, commencing with the fiscal year
starting March 1, 1993. Should the employment term
terminate on any date other than the last day of a
Fiscal Year, then the additional compensation shall be
based upon the full Fiscal Year in which termination of
the employment term shall have occurred, but shall be
prorated in the proportion that the number of calendar
months of such Fiscal Year which shall have elapsed at
the time of termination of the employment term (includ-
ing the month of termination of the employment term)
bears to 12.
(iv) Computations of After-Tax Net Earnings and
Stockholders' Equity shall be determined by the Accoun-
tants within ninety (90) days after the end of each
Fiscal Year. The Company shall furnish to Shore a
reasonably detailed computation of the amount of
additional compensation to which Shore is entitled.
Such additional compensation shall be payable on or
before twenty (20) days after the computations of After-
Tax Net Earnings and Stockholders' Equity. The
Company's audited financial statements for each Fiscal
Year prepared by the Accountants shall be conclusive and
binding on the Company and Shore with respect to
computations of After-Tax Net Earnings.
(d) It is contemplated that, during the employment term
and the consulting period (as hereinafter defined), Shore may be required
to incur out-of-pocket expenses in connection with the performance of his
duties hereunder and in promoting the business of the Company and its
subsidiaries, including expenses incurred for travel and business
entertainment. Accordingly, the Company shall pay, or reimburse Shore
for, all reasonable out-of-pocket expenses incurred by Shore in connection
with the performance of his duties hereunder.
(e) In recognition that Shore will be required to do a
considerable amount of local driving in connection with his duties
hereunder, the Company shall, during the employment term and the
consulting period (as hereinafter defined), provide Shore with the full-
time use of one (1) new or late-model automobile comparable to that
provided by the Company to Shore as of the date of this Agreement. In
addition, the Company shall pay, or reimburse Shore for, all expenses
incident to Shore's operation of such automobile, including, without
limitation, gasoline, oil, repairs, maintenance, parking expenses and
such insurance as Shore reasonably deems appropriate.
(f) During the employment term and the consulting period
(as hereinafter defined), Shore shall be entitled to participate in all
life insurance, medical insurance, disability insurance, retirement,
pension, profit-sharing, stock option or other benefits presently or
during the employment term and the consulting period (as hereinafter
defined) made available by the Company to its senior executive officers.
without limiting the generality of the foregoing, the Company shall
maintain in effect during the employment term and the consulting period
(as hereinafter defined) life insurance and medical insurance coverage for
the benefit of Shore and his family, at least equal to the coverage
provided as of the date of execution of this Agreement. Notwithstand-
ing any other provisions of this Agreement, the Company shall continue to
provide medical insurance coverage, including, without limitation, major
medical, hospitalization and dental coverage, to Shore and his family, at
least equal to the coverage provided as of the date of this Agreement,
subsequent to the employment term hereunder at all time during Shore's
lifetime including, without limitation, during the consulting period
contemplated by paragraph 5 hereof and subsequent to Shore's retirement as
a consultant, and if Shore's wife shall survive him, the Company shall
continue to provide such insurance coverage for Shore's wife during her
lifetime.
(g) Shore shall be entitled, during the employment term,
to four (4) weeks vacation during each twelve (12) month period, such
vacation to be taken at such time or times as shall be mutually agreeable
to Shore and to the Company. Such vacation shall be forfeited to the
extent not utilized during the applicable twelve (12) month period.
(h) Pursuant to the original Agreement, the Company
previously issued to Shore a non-qualified stock option to purchase an
aggregate of 50,000 shares of the Company's Common Stock exercisable in
whole at any time or in part from time to time commencing upon the date a
stock option plan and agreement was approved by the holders of a majority
of the Company's outstanding Common Stock entitled to vote and in
accordance with such plan and agreement. This Agreement shall not in
any respect modify Shore's rights in respect of such option.
(i) Each year during the employment term and the
consulting period (as hereinafter defined), an amount equal to the excess
of (i) the sum of (x) the amount contributed by the Company to the Park
Electrochemical Corp. Employees, Profit-Sharing Plan, as amended (the
'Plan"), for such year plus (y) any amounts forfeited by other partici-
pants in the Plan during such year, which sum, but for the limitations
imposed by section 415 of the Internal Revenue Code of 1986, as amended,
and by Section 4.14 of the Plan, would have been allocated to Shore's
account under the Plan, over (ii) the amount of contributions and
forfeitures actually credited to Shore's account for such year, shall be
credited by the Company to the separate account previously established and
currently maintained by the Company for shore pursuant to the Original
Agreement (the "Account"). In addition, interest shall be credited
annually to the Account at the same rate as net income, gains or profits
are earned on the Plan assets. Payments to Shore from the Account shall
be made as and when distributions are made to Shore from the Plan and in
the same proportion of the Account which the Plan distribution bears to
Shore's account balance under the Plan. The parties recognize and agree
that the payments to be made by the Company to Shore from the Account are
unsecured obligations of the Company, that Shore is only a general
creditor of the Company in that respect and that the amounts in the
Account are assets of the Company which are available to satisfy the
claims of the Company's creditors generally.
5. Consultancy. At any time after the date hereof Shore
shall have the right, to be exercised as herein provided, to retire from
full-time employment with the Company and become a consultant. Upon the
effective date of such retirement and for a period of five years
thereafter (the "consulting period"), Shore shall make himself available
to advise and consult with officers and other employees of the Company so
that the Company may continue to have the benefit of his experience and
knowledge of the affairs of the Company and of his reputation and contacts
in the industries in which the Company is engaged in business. During the
consulting period, Shore shall be available to officers and other
employees of the Company from time to time and at reasonable times by
telephone, mail or in person; provided, however, that his failure to give
advice and counsel by reason of illness or absence due to travel or any
other reasons, except continuous willful refusal, shall not affect his
right to receive compensation during the consulting period. Shore shall
be free, during the consulting period, to devote the balance of his time
and attention to such other business enterprises or activities as he may
see fit, subject to the restrictive covenant hereinafter contained.
During the consulting period, Shore's compensation shall be equal to sixty
(60%) percent of the base salary in effect at the time of Shore's
retirement from full-time employment and, except as otherwise specifically
provided herein, he shall not be entitled to additional compensation with
respect to any period after the date of his retirement from full-time
employment. Commencing on the first anniversary of Shore's retirement
from full-time employment and on each subsequent anniversary of Shore's
retirement from full-time employment during the consulting period, Shore's
compensation pursuant to this paragraph 5 shall be adjusted to take
account of increases in the cost of living during the consulting period by
increasing Shore's compensation during the consulting period by that
percentage which shall equal the percentage by which the Consumer Price
Index-All Urban Consumers published by the United States Department of
Labor (or any successor or similar index if such Consumer Price Index
shall no longer be published) most recently available on such anniversary
of Shore's retirement shall exceed the Consumer Price Index-All Urban
Consumers most recently available one year prior to such anniversary. All
of the other provisions of this Agreement, including the benefits pursuant
to paragraph 4(d) and (e) and the insurance benefits pursuant to paragraph
4(f), shall be applicable during the consulting period; provided, however,
that, if Shore shall die during the consulting period, the provisions of
paragraph 6 hereof shall become applicable and shall replace all of the
terms and provisions of this paragraph 5 and in the event of the
disability (as defined in paragraph 7 hereof) of Shore for a period of 12
consecutive months during the consulting period, the provisions of
paragraph 7 hereof shall become applicable and shall replace all of the
terms and provisions of this paragraph 5.
Shore's right to retire from full-time employment shall be
invoked by a written notice to the Company to that effect, specifying an
effective date (on the first day of a month), not less than ninety days
from the date such notice is given, as of which he desires to retire from
full-time employment with the Company. on such effective date, Shore's
duties as a consultant and advisor shall commence on the terms and
conditions herein provided.
6. Death. In the event of the death of Shore during the
employment term or the consulting period, the employment or consultancy,
as the case may be, of Shore hereunder shall terminate without any further
liability of the Company to Shore except (a) as provided in paragraph 4(f)
hereof with respect to health insurance coverage for Shore's wife, (b)
payment of unreimbursed expenses incurred by Shore prior to his death, (c)
payment of base salary and additional compensation, if any, or consultant
compensation, as the case may be, computed up to the end of the month
following the month in which Shore's death occurs, (d) if Shore's death
occurs during the employment term, the Company shall pay Shore's wife, or
such other beneficiary as he may designate in writing (or failing such
designation, to his estate), an amount equal to sixty percent (60%) of the
base salary that otherwise would have been payable to Shore for the
remainder of the employment term in effect on the date of his death, such
amount to be payable in equal monthly installments over the remainder of
such employment term, (e) if Shore's death occurs during the consulting
period, the Company shall pay Shore's wife, or such other beneficiary as
he may designate in writing (or failing such designation, to his estate),
an amount equal to sixty percent (60%) of the base salary as in effect
immediately prior to the commencement of the consulting period for the
remainder of the consulting period in effect on the date of his death,
such amount to be payable in equal monthly installments over the remainder
of such consulting period, and (f) if Shore's wife shall be living on the
last day of the employment term in effect on the date of his death or the
consulting period in effect on the date of his death, as the case may be,
then the Company shall make payments to Shore's wife, in as nearly equal
weekly installments as is practicable, or in such other manner as shall be
mutually agreeable to Shore's wife and the Company, at a rate equal to
sixty percent (60%) of Shore's base salary (as in effect at the date of
Shore's death, if he dies during the employment term, or as in effect
immediately prior to commencement of the consulting period, if he dies
during the consulting period), for the remainder of her life.
7. Disability. (a) In the event of the disability (as defined
below) of Shore for a period of twelve (12) consecutive months during the
employment term or consulting period, the employment or consulting, as the
case may be, of Shore hereunder shall terminate without further liability
of the Company to Shore, except that (i) the Company shall pay Shore an
amount equal to sixty (60%) percent of the base salary for the balance of
the employment term or the consulting period, as the case may be, (ii) the
Company shall pay Shore his additional compensation, if any, computed up
to the end of the month following the month in which Shore became
disabled, (iii) the provisions regarding benefits pursuant to paragraph
4(d) and (e) and regarding the insurance benefits pursuant to paragraph
4(f) shall remain applicable for the balance of the employment term or the
consulting period, as the case may be, and thereafter as provided in
paragraph 4(f) hereof, and (iv) in the event Shore shall remain disabled
beyond the employment term or the consulting period, as the case may be,
the Company shall pay Shore $10,000 per month until the earlier of the (x)
the death of Shore, or (y) the termination of Shore's disability.
(b) For purposes of this Agreement, the term disability shall
mean Shore's inability, because of illness or incapacity, physical or
mental, to perform substantially all of the duties and services to be
performed by him hereunder. The determination of a physician jointly
appointed by the Company and Shore or any member of his immediate family
as to whether or not Shore has become disabled shall be conclusive and
binding on the Company and Shore.
(c) Nothing herein contained shall prevent the Company from
satisfying its obligations to Shore or his wife hereunder by means of the
purchase of insurance upon terms and conditions acceptable to Shore or, if
Shore is deceased, acceptable to his wife, provided that the Company shall
remain liable to Shore or his wife, as the case may be, for the benefits
herein provided to the extent that any insurer fails to pay the full
amounts required under this Agreement.
8. Non-Exclusive. The benefits provided in this Agreement
shall not be exclusive and shall not prejudice or limit any plan or policy
of the Company which may hereafter be granted by action of the Board of
Directors.
9. Certain Computations. In the event of the termination of
the employment term, the consulting period, Shore's employment hereunder
or Shore's consultancy hereunder on any date other than the last day of a
Fiscal Year, including, without limitation, by reason of the death or
disability of Shore, the additional compensation, if any, required to be
paid need not be paid by the Company until thirty (30) days after the
computation of the amount in accordance with paragraph 4(c)(iv). The
Company shall not be required to make any computation with respect to
After-Tax Net Earnings or stockholder's Equity except after the end of any
Fiscal Year. If a computation with respect to After-Tax Net Earnings
shall be required for a period of less than a Fiscal Year, such computa-
tion may be made by taking a proportionate part of that particular Fiscal
Year.
10. Trade Secrets; Confidentiality. Shore recognizes and
acknowledges that confidential information of various kinds, including
lists of the Company's customers and vendors, as they may exist, from time
to time, and other trade secrets, are valuable, special and unique assets
of the Company's business. Shore shall not, during or after his
employment, except in accordance with his employment, disclose or cause or
permit to be disclosed any list or similar means of identification of the
Company's customers or vendors or other trade secrets to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever. The provisions of this paragraph 10 shall not apply to
information generally known to the public or the trade or information
available in trade or other publications.
11. Non-Competition. Shore shall not, for a period of one (1)
year after the termination of his employment, directly or indirectly: (a)
induce any person connected with or employed by the Company or any
subsidiary of the Company to leave the employ of the Company or such
subsidiary; or (b) solicit the employment of any such person on his own
behalf or on behalf of any other person firm, corporation, association or
other entity.
12. Entire Agreement. This Agreement constitutes 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.
13. Successors and Assigns. This Agreement 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 Agreement 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 Agreement and become obligated to perform all of the terms and
conditions hereof and Shore's obligations hereunder shall continue in
favor of such corporation.
14. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been given when delivered personally against receipt or three (3)
days after being mailed, by registered or certified mail, return receipt
requested, addressed to the party to whom directed at the address first
above written or to such other address as any party may hereafter
designate to the other by notice similarly given.
15. 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.
16. Governing Law. This Agreement 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 Agreement as of the date first above written.
PARK ELECTROCHEMICAL CORP.
By: /s/ Brian E. Shore
Title: Executive Vice President
/s/ Jerry Shore
Jerry Shore
APPROVED by the CEO Compensation Committee of the Board of
Directors of Park Electrochemical Corp. as of April 1, 1994.
/s/ Anthony Chiesa
Anthony Chiesa
/s/ Lloyd Frank
Lloyd Frank
/s/ Norman M. Schneider
Norman M. Schneider
EXHIBIT 10.14(c)
AMENDMENT TO SECOND EXTENSION OF LEASE
This Amendment to Second Extension of Lease made as of the
19th day of May 1994 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 (hereinafter referred to as the
"Indenture") as extended in accordance with its terms by an
Extension of Lease dated May 30, 1986 and a Second Extension of
Lease dated as of May 30, 1991 (the "Second Extension"); and
WHEREAS, pursuant to the Second Extension, the lease term was
to expire on May 31, 1994 unless the Tenant exercised its option to
extend the lease term for a two-year term to expire on May 31, 1996;
and
WHEREAS, the parties by letter dated February 9, 1994, have
agreed to amend the Second Extension to extend the term of the lease
for a period of one (1) year, through May 31, 1995, with an option
to extend said lease term for an additional six (6) month period;
NOW THEREFORE, the Landlord and Tenant hereby agree that all
the provisions of the Indenture, Extension and the Second Extension
are incorporated herein by reference and shall remain in full force
and effect through May 31, 1995 except as modified as follows:
1. Article I, Section 1 is amended in part to provide that
the leased premises shall, for as long as the Tenant shall require
during the term of the lease, include an additional ONE THOUSAND
(1000) square feet of space on the third floor. The rent for this
additional space shall be as described in paragraph 4 below.
2. Article II, Section 1 is amended in part to provide
that the lease shall be extended for a term of one (1) year,
beginning June 1, 1994 and ending May 31, 1995.
3. Article II, Section 2 is amended to provide that if the
Tenant is not in material default in any respect under the
Indenture, the Extension or this Amended Second Extension, 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 November 30, 1995, 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 March 1, 1995, 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 I of the Indenture.
4. Article III, Section I is amended by revising Paragraph
A to state the minimum rent for Tenant's use of the premises from
the beginning of the extended term shall be ONE DOLLAR AND NINETY
CENTS ($1.90) per square foot (THIRTY-TWO THOUSAND THREE HUNDRED
DOLLARS ($32,300)) per year for the first year of this Amended
Second Extension of Lease (through May 31, 1995), and during the
term of the extension pursuant to the option described in Section 3
above (through November 30, 1995), payable in equal monthly
installments of TWO THOUSAND SIX HUNDRED NINETY-ONE DOLLARS AND
SIXTY-SEVEN CENTS ($2,691.67) in advance from the first day of each
month and proportionately at said rate for any partial month.
In addition, the minimum rent for the Tenant's use of the
additional space described in paragraph 1 above shall be TWO HUNDRED
DOLLARS ($200) per month.
5. Landlord and Tenant agree that all remaining provisions
of said Indenture, the Extension and the Second Extension shall
remain in full force and effect through the extended term of said
lease except to the extent that said terms are inconsistent with the
provisions of this Amended Second Extension.
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.
Executed in duplicate.
DIELECTRIC POLYMERS, INC.,
TENANT
Dated: 5/19/94 By /s/ Lawrence G. Kuntz
President
HOLYOKE SUPPLY COMPANY, INC.,
LANDLORD
Dated: 5/19/94 By /s/ Daniel C. Moriarty
President
EXHIBIT NO. 11.01
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY-DILUTED EARNINGS PER COMMON SHARE
(In thousands, except per share data)
Fiscal year ended
1994 1993 1992
ADJUSTMENT OF NET EARNINGS:
Net earnings $8,062 $2,265 $1,315
Adjustments resulting from assumed
conversion of 7.25% convertible
subordinated debentures:
Reduction of interest expense
and amortization of deferred
debt financing costs 2,476 2,481 2,481
Related tax effect on above (867) (844) (844)
Net earnings as adjusted $9,671 $3,902 $2,952
ADJUSTMENT OF WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUT-
STANDING:
Weighted average number of
common shares outstanding 3,993 4,534 4,528
Add weighted average shares
assumed to be issued upon:
Conversion of convertible
subordinated debentures 1,610 1,613 1,613
Exercise of stock options 124
Adjusted weighted average number
of common shares outstanding
during the period 5,727 6,141 6,141
NET EARNINGS PER SHARE FULLY-DILUTED $ 1.69 $ .63 $ .48
_____________________________________
*Calculations of fully diluted earnings per share for the fiscal years ended
February 28, 1993 and March 1, 1992 are antidilutive. Accordingly, the Consoli-
dated Statement of Earnings reflects the primary earnings per share of $.50 for
the 1993 fiscal year and $.29 for the 1992 fiscal year.
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
Skunk Works, Inc. New York
Technocharge Limited England
Tweedbank P.C.B. Supplies Limited Scotland
Zin-Plas Corporation Michigan
Zin-Plas of Canada, Inc. Canada
EXHIBIT 24.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Post-Effective
Amendment to Registration Statement No. 33-6029 of Park Electrochemical
Corp. on Form S-2 and the Post-Effective Amendments to Registration
Statement No. 33-16650 and No. 33-3777 on Form S-8 of our report dated May
6, 1994 appearing in this Annual Report on Form 10-K of Park Electrochemi-
cal Corp. for the fiscal year ended February 27, 1994.
Ernst & Young
New York, New York
May 25, 1994