U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the fiscal year ended September 30, 1997
Commission File Number 2-17411
BOONTON ELECTRONICS CORPORATION
A New Jersey corporation
IRS Employer Identification No. 22-1543137
Mailing Address:
25 Eastmans Road, Parsippany, NJ 07054-0465
(973) 386 9696
Securities registered under Section 12(b)
of the Exchange Act: None
Securitiesregistered under Section 12(q)
of the Exchange Act:
Common Stock, par value $.10 per share
Check whether the Company (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Company's net revenues for the year ended September 30, 1997 were
$7,209,057.
The aggregate market value of the voting stock held by nonaffiliates of the
Company on December 2, 1997 was $838,157.
The number of shares outstanding of the Company's Common Stock, par value $.10
on share on December 2, 1997 was 1,644,301.
Portions of the 1997 Annual Report of Company are incorporated in Parts I,II and
III of this From 10-KSB. This report consists of 60 consecutively numbered
pages. The Exhibit Index appears on page 36.
1
<PAGE>
INFORMATION REQUIRED IN REPORT
PART I
Item 1. Description of Business.
-----------------------
(a) Business Development.
---------------------
The Company is a New Jersey corporation organized in 1947. On
September 7, 1993 the Company and its subsidiaries, Boonton International
Sales Corporation and Integra, Inc., filed separate, voluntary petitions
for reorganization under Chapter 11 of Title 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the District of
New Jersey. On August 4, 1994 the Company filed a consensual Plan of
Reorganization with the bankruptcy court and an Order Confirming Debtors'
Plan of Reorganization was entered on November 15, 1994.
The Company has accounted for all transactions related to the Chapter
11 proceedings in accordance with the Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization under the Bankruptcy
Code" issued by the American Institute of Certified Accountants in
November 1990. Accordingly, all pre-petition liabilities that were
impaired by the Plan of Reorganization are reported separately in the
Company's consolidated balance sheet as "Chapter 11 Settlement", current
and noncurrent.
The success of the Companys' Plan of Reorganization was due primarily
to the sale of its land and facility in Randolph, New Jersey and the
termination of an overfunded employees' defined benefit pension plan. The
Company has relocated its entire operation to the Township of Hanover,
New Jersey. Further details regarding the lease are provided in Item
2.(a) below and "Note 8" to the accompanying consolidated financial
statements.
(b) Business of Company.
--------------------
(1) The Company designs and produces electronic testing and measuring
instruments including power meters, voltmeters and modulation meters.
Recent models are microprocessor controlled and are often used in
computerized automatic testing systems. The Company's equipment is
marketed throughout the world to commercial and government customers
in the electronics industry.
(2) The Company markets and distributes its products throughout the
United States and abroad through some 15 domestic sales
representatives and 24 foreign distributors. Representatives sell on
a commission basis, while distributors buy products for resale at
discounted ex-factory prices. Its representatives and distributors
also handle the products of other manufactures, although these are
not generally competitive with the Company's products except that
some items handled by foreign distributors may be somewhat
competitive.
(3) Not applicable.
(4)The Company is in competition with many other manufacturers,
several of which are substantially larger than the Company and have
far larger professional staffs and far greater financial and
technical resources. Of these, Hewlett-Packard is believe to account
for approximately 60% of the domestic market and, together with other
larger companies (including Tektronix, Fluke, Giga-tronics,
2
<PAGE>
and Keithley Instruments in the United States, and Marconi
Instruments, Mitsubishi and Anritsu abroad) accounts for
approximately 90% of the worldwide market in electronic
instrumentation.
(5) The Company obtains raw materials from a variety of sources.
Neither the sources nor the availability of essential raw materials
are considered to play any significant part in the Company's
business.
(6) During this fiscal year approximately 21% of the Company's sales
were made to the United States Government and agencies thereof. The
Company believes that an additional substantial portion of purchases
made by its non-Governmental customers are related to the filling of
orders placed with such customers by the United States Government and
agencies thereof. The Company is not able to determine the percentage
of sales associated with purchases from non-Governmental customers
that are related to the filling of orders placed by the United States
Government and agencies thereof.
(7) The trademark "Boonton" was registered in the United States
Patent and Trademark Office on February 18, 1997 (Reg. No.
2,038,515). The Company does not have any other patents, trademarks,
licenses, franchises, concessions, royalty agreements or labor
contracts.
(8) Not applicable.
(9)Under established United States Government contract procedures,
substantially all of the Company's Government contracts are subject
to cancellation, in which case the Company would be entitled to
recover its costs incurred to the date of cancellation plus a
reasonable profit thereon. The cancellation costs and a reasonable
profit are determined in accordance with standard Government
accounting practices.
(10) During the fiscal year ended September 30, 1997, the Company
spent approximately $735,528 on company-sponsored research and
development activities. The Company spent approximately $921,927 on
such activities during the fiscal year ended September 30, 1996. The
Company does not currently have any customer-sponsored research and
development activities.
(11) The New Jersey Department of Environmental Protection (the
"NJDEP") has conducted an investigation concerning disposal, at a
facility in New Jersey previously leased by the Company, of certain
materials formerly used by the Company's manufacturing operations at
that site and the possible effect of such disposal on the aquifer
underlying the property. The disposal practices and the use of the
materials in question were discontinued in 1978. The Company has
cooperated with the NJDEP investigation and has been diligently
pursuing the matter in an attempt to resolve it as rapidly as NJDEP
operating procedures permits.
The Company and the NJDEP have agreed upon a plan to correct
ground water contamination at the site, located in the Township of
Parsippany-Troy Hills, pursuant to which wells have been installed at
an estimated cost to the Company of $300,000. The plan contemplates
that the wells will be operated and that soil and water samples will
be taken and analyzed until such time (which the Company is unable to
predict) as contamination levels satisfactory to the NJDEP are
attained. Operating expenditures incurred by the Company during the
fiscal
3
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year ended September 30, 1997 in connection with the site amounted to
approximately $43,173. The Company estimates that operating
expenditures in this regard during the current fiscal year, including
the costs of operating the wells and taking and analyzing soil and
water samples, will amount to approximately $52,000. (12) As of
September 30, 1997 the Company had 48 full time employees.
Item 2. Description of Property.
------------------------
(a) On September 28, 1994, the Company sold its facility in Randolph,
New Jersey to NTV Realty, Inc. The proceeds of the sale of the land and
building, $2,300,000, were immediately transferred to United Jersey Bank in
accordance with the Company's Plan of Reorganization. The Company entered into a
lease agreement, effective October 1, 1994, with 25 Eastmans Road Associates,
Ltd. to lease approximately 30, 000 square feet of a facility located in Hanover
Township, New Jersey. The term of the lease agreement is for seven years
beginning on October 1, 1994 and ending on September 30, 2001. The lease also
contains an option to extend the term of the lease by five years.
(b) and (c) Not applicable.
Item 3. Legal Proceedings.
------------------
(a) Reference is made to the discussion in Item 1.(a) above regarding
the status of the Company's Chapter 11 Plan of Reorganization. The principal
parties are the Company, its subsidiaries and its creditors. As noted, the
Company's Plan of Reorganization was confirmed on November 15, 1994.
Reference is made to the discussion in Item 1.(b)(11) above regarding
an investigation by the NJDEP concerning certain discontinued disposal practices
of the Company and their effect on the soil and ground water at a certain
facility formerly occupied by the Company. No administrative or judicial
proceedings have been commenced in connection with such investigation. The owner
of the Parsippany-Troy Hills facility has notified the Company, that if the
investigation proves to interfere with the sale of the property, it may seek to
hold the Company liable for any resulting damages. Since may 1983, the owner has
been on notice of this problem and has failed to institute any legal proceedings
with respect thereto. While this does not bar the owner from instituting a suit,
it is the opinion of the Company's legal counsel that it is doubtful that the
owner would prevail on any claim due to the fact that such a claim would be
barred by the statute of limitations.
(b) Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Not applicable.
4
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PART II
Item 5. Market for the Company's Common Equity and Related Stockholder
Matters.
--------------------------------------------------------------
(a) Market Information.
-------------------
(1) The Company's common stock is traded (symbol "BOON") on the OTC
Bulletin Board. The following is the range of high and low bid
information for the Company's common stock for each quarterly period
within the two most recent fiscal years. These prices represent
inter-dealer quotations, do not include markups, markdowns or
commissions, and do not necessarily represent actual transactions.
FOR THE QUARTER ENDED HIGH LOW
--------------------- ---- ---
12/31/95 3 1 5/8
3/31/96 3 2 1/8
6/30/96 2 7/16 1 13/16
9/30/96 2 1 1/2
12/31/96 1 5/8 1 1/4
3/31/97 1 3/8 1 1/8
6/30/97 1 7/16 1 1/16
9/30/97 1 1/4 1 1/8
(2) Not applicable.
(b) Holder.
-------
There were 669 record holders of the Company's common stock as of
December 9, 1997.
(c) Dividends.
----------
(1) There were no cash dividends declared on the Company's common
stock for the fiscal years ended September 30, 1997 and 1996.
(2) Not applicable.
Item 6. Management's Discussion and Analysis.
-------------------------------------
(a) Results of Operations.
----------------------
(i) 1997 versus 1996
----------------
Net sales of $7,209,057 for the fiscal year 1997 were $1,170,721
or 19.4% above the prior year. Domestic sales increased $1,400,296 which
reflected a recovery from the overall industry decline experienced in fiscal
1996 an included with an increase of $607,603 in military contract revenues
which resulted from the major Air Force contracts awarded in August 1996.
International sales declined by $229,575 from the prior year as a result of
economic difficulties in Europe.
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The company had a gross income of $3,068,958 or 42.6% of sales.
Commission expense decreased to 9.9% sales versus 10.6% of sales for the prior
year due to the increased military contract revenues which carry a lower
commission rate. There was a profit from operations of $71,845 versus a loss
from operations of $448,315 for the prior year. During the year management
continued to take steps to reduce operating costs. With the exception of
commission expense all other categories of operating expense decreased in total
by $156,276 when compared to fiscal 1996.
Other expenses increased to $40,501 in fiscal 1997 versus $25,886 in
fiscal 1996. The increase was primarily due to increased interest expense
associated with the increased borrowings pursuant to the New Jersey Economic
Development Authority (NJEDA) direct loan. The company borrowed an additional
$394,071 under the NJEDA loan during the fiscal year, however, it should be
noted that no further borrowings shall occur subsequent to July 31, 1997. There
was a $51,660 gain realized from the sale of assets which resulted from the
Company's sale of all of machine shop equipment. The machine shop department was
eliminated during the fiscal year with all machined parts now being purchased
from outside sources.
The profit before taxes and special charges was $31,344 versus a prior
year loss of $474,201. There were no taxes or special charges during the fiscal
year resulting in a net income of $31,344 or $0.02 earnings per share versus a
prior year net loss of $1,049,679 or $0.72 loss per share.
Accounts receivable increased to $1,051,887 from the prior year end
balance of $971,342, however, the average collection period declined to 51.2
days from the prior year's 59.9 days. Inventories increased to $1,306,115 from a
$1,210,940 prior year balance. It should be noted that $51,820 of the increase
in inventories was associated with the capitalization of demonstrator equipment.
The average production inventory turnover increased to 3.4 times as compared to
a prior year's 2.8 times. The current ratio was 2.2 to 1 versus a prior year's
2.3 to 1. The working capital at year end was $1,603,146 versus the prior year's
$1,495,987. The Company's order backlog at September 30, 1997 was $1,176,115 as
compared to its backlog at September 30, 1996 which was $1,362,193.
It is important to note that after six years of losses the Company
reported a profit before taxes and special charges of $31,344 for the fiscal
year ended September 30, 1997. The Company attained its goal of $7.2 million in
revenues for the fiscal year and management expects to match or exceed that
level of revenues in fiscal year 1998. Also the Company, in August 1997, was
notified of an military contract award for the Marines that upon completion
should total approximately $1 million in revenues.
6
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(ii) 1996 versus 1995
----------------
Net sales of $6,038,336 for the fiscal year 1996 were $798,912 or 11.7%
below the prior year. Domestic sales decreased $655,547 which, as noted in the
Form 10-QSB filed for June 30, 1996, was attributable to an overall decline in
the industry in the United States. It is significant to note that there was a
$271,169 increase in military contract revenues during the year. In addition the
Company received two significant contract awards from the United States Air
Force in August 1996 which will total approximately $1.7 million in revenues
upon completion. International sales declined by $143,365 below the prior year.
This trend is not expected to continue in fiscal 1997 as greater emphasis will
be placed on the Southeast Asia region which has shown recent indications of
development.
The Company had a gross profit of $2,629,756 or 43.6% of sales versus a
prior year gross profit of $2,948,485 or 43.1% of sales. Commission expense
increased to 10.6% of sales versus 8.5% of sales for the prior year primarily
due to international sales, which carry a high commission rate and were 42.3% of
revenues in fiscal 1996 versus 39.5% of sales in fiscal 1995. There was a loss
from operations of $448,315 versus an income from operations of $163,032 for the
prior year. The loss in 1996 was partially attributable to the reduced volume
but was also impacted by certain costs that were non-recurring in nature. These
costs, which represent 46.2% of the loss from operations, were "CE" mark audit
fees of $108,525, funds provided for new technology research at the New Jersey
Institute of Technology totaling $65,000, and severance expense for the former
president of $33,920. Management of the Company has already instituted steps to
reduce operating costs in fiscal 1997 which steps include reductions in wages
and payroll taxes due to personnel reductions. Further cost reductions will be
implemented as identified by management as fiscal 1997 progresses.
Other expenses of $25,886 were below the prior years $245,527. This
decrease was primarily because there were no moving expenses or Chapter 11
expenses in fiscal 1996. The loss before taxes and special charges was $474,201
versus a loss of $82,495 for the prior year. The special charges of $350,405 was
primarily a result of costs, and accrued costs for work to be performed in 1997,
associated with further environmental delineation work performed at a site
formerly leased by the Company. This work is being performed in order to obtain
a "Conditional No Further Action Letter" from the New Jersey Department of
Environmental Protection (NJDEP) which would allow the Company to finalize the
groundwater remediation program as discussed at Item 1.(b) (11) above. The loss
per share before special charges was $.48 versus earnings per share of $.17 for
the prior year. The net loss per share was $.72.
7
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Accounts receivable decreased to $971,342 from a prior years $1,011,980
and the average collection period increased to 59.9 days from 53.8 days for the
prior year. Inventory of $1,210,940 was comparable to the prior year. The
average inventory turnover decreased, due to the reduced sales volume, to 2.8
versus a prior years 3.6. The current ratio was 2.3 to 1 versus a prior years
3.0 to 1. Working capital declined to $1,495,987 versus a prior years
$1,827,718. The decline in working capital was due primarily to the accrued
environmental costs for the work to be performed in fiscal 1997, reduction of
deferred tax assets and increased accounts payable balances. The Company's
backlog at September 30, 1997 was $1,362,193 which included $512,000 for the
military contracts.
The Company has prepared an operating plan for fiscal 1997 which
anticipates a 19% increase in revenue and a net income of approximately
$200,000. The 1997 first quarter revenues were approximately $1.8 million which
supports, on an annualized basis, the expected increase in revenues. The
military contracts awarded in fiscal 1996 contributed approximately $265,000 to
the first quarter 1997 revenues. The Company's backlog as of December 31, 1996
was $1,296,718 which included an additional $546,000 for the military contracts.
An additional $299,000 was released by the Air Force in November 1996 against
these contracts.
(b) Liquidity and Capital Resources.
--------------------------------
The Company's working capital for the fiscal years ended September 30,
1997 and 1996 was $1,603,146 and $1,495,987, respectively.
Under the conditions set forth in the Plan of Reorganization (see Item
1.(a) above), the Revolving Credit and Loan Agreement, dated August 15, 1990, as
amended by Letter Agreement dated May 1, 1992, secured by assets and/or
collateral as set forth in such agreement, between the Company and United Jersey
Bank was satisfied by payments totaling $3,000,000. The $3,000,000 in payments
consist of the following: $2,300,000 from the proceeds the Company realized from
the sale of the facility and land in Randolph, New Jersey; $150,000 realized
from the sale of excess inventory and assets; $150,000 consisting of three
$50,000 payments in June, July and August of 1994; and a $400,00 note payable,
at 8% interest, payable in $25,000 monthly installments of principal and
interest commencing September 1994 and continuing until January 1996. As of
January 1996, the commitment to United Jersey Bank was completed. The third
payment to the unsecured creditors was made in October 1997. The Company expects
to finance the $153,372 balance due unsecured creditors from operations in
fiscal 1998.
On February 6, 1995, The Board of Directors loaned $300,000 at 14%
interest per annum to the Company. Initially these loans were to be repaid by
April 1995 however due to the Company's need to maintain the use of the proceeds
from these loans repayment was waived. Effective September 1, 1995, the interest
rate for these loans was reduced to 9% per annum. Repayment of these loans is
now covered by a Subordination Agreement by and between the Directors and the
New Jersey Economic Development Authority (NJEDA) in accordance with the terms
of a loan the Company has with NJEDA which is discussed below.
8
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On July 31, 1996, the Company executed a Direct Loan Agreement by and
between the Company and the NJEDA. The agreement provided for a direct loan of
$500,000 at 6 3/4% per annum. The proceeds of the loan are to be used primarily
for the acquisition of capital assets. As of September 30, 1997, the Company had
used $484,090 of the loan amount and had repaid principal of $45,361.
Total debt-to-capital at September 30, 1997 was 83.2% compared to 72.5%
the prior year end. During 1998 the Company expects to finance capital spending
and working capital requirements with cash provided from operations.
Item 7. Financial Statements.
---------------------
Reference is made to the financial statements and supplementary data
appearing on the pages of this report set forth below.
Page(s)
-------
Independent Auditors' Report 17
Balance Sheet as of September 30, 1997 and 1996 18
Statements of Operations for the Years
Ended September 30, 1997, 1996 and 1995 19
Statements of Changes in Stockholders Equity
for the Years Ended September 30, 1997, 1996 and 1995 20
Statements for Cash Flows for the Years Ended
September 30, 1997, 1996 and 1995 21
Notes to Financial Statements 23
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
-----------------------------------------------------------------------
Not applicable.
PART III
Item 9. Directors and Executive Officers of the Company.
------------------------------------------------
Listed below are the names and ages of the directors of the Company,
all positions and offices held by each such person and the period or periods
during which he has served in such positions and offices. All are now directors
and were elected to their present term of office at Annual Meetings of
Shareholders as set forth in the table below. The By-Laws of the Company provide
for a Board of Directors consisting of up to seven members. The candidacy of
none of the directors is the subject of any arrangement or understanding between
such director and any other person or persons, except the directors and officers
of the Company acting solely in that capacity.
9
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All of the directors listed below have been engaged for the past five
years in the "Principal Occupation" listed below.
<TABLE>
<CAPTION>
Position with Issuer Period As
Name Age and Principal Occupation Director
- ---- --- ------------------------ --------
Elected 1997 with terms expiring in 2000:
- ----------------------------------------
<S> <C> <C> <C>
John M. Young 79 Director, retired Vice 1947 - Present
President and Operations
Manager of the Corporation
Abel Sheng 56 Director, President, Raamco 1996 - Present
International, Inc. and 1991 - 1994
Sidco Investments, Inc.,
Investment companies
Elected 1996 with terms expiring in 1999:
- -----------------------------------------
Daniel Auzan 54 Director, Chairman of 1996 - Present
The Board, President
Directeur General,
General de Mesure et de
Maintenance Electronique,
S.A.
Otto H. York 87 Director, Vice Chairman 1969 - Present
Of the Board, President,
York Resources, Inc.
Elected 1995 with terms expiring in 1998:
- -----------------------------------------
Jack Frucht 83 Director; retired Chairman 1947 - Present
of the Board and Chief Exe-
cutive Officer of the Corporation
Ronald T. DeBlis 73 Director; retired Dun & 1981 - Present
Bradstreet
Appointed 1997 with term expiring in 1998:
- ------------------------------------------
Yves Guyomar 60 Director, President and 1997 - Present
CEO of the Corporation
</TABLE>
10
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================================================================================
Listed below are the names and ages of the executive officers of the
Company and the period during which they have served as such. Each such officer
generally serves for a term of one year at the pleasure of the Board of
Directors. The selection of none of the officers is the subject of any
arrangement or understanding between such officer and any other person or
persons, except the directors and officers of the Company acting solely in that
capacity.
Position with Issuer Period As
Name Age and Principal Occupation Officer
- ---- --- ------------------------ -------
Yves Guyomar 60 President and Chief Executive 1997 - Present
Officer
John E. Titterton 48 Vice President Finance and 1986 - Present
Secretary/Treasurer
================================================================================
Mr. Guyomar is employed as President and CEO of the Company for a period
expiring April 15, 1999 pursuant to an agreement that provides for an annual
salary of $140,000. This agreement provides that if Mr. Guyomar's employment is
terminated by the Company during the term of the agreement other than for
"cause" (as defined in the agreement) the Company will continue to pay his
salary through the end of the term.
Mr. Guyomar was a member of the Board of Directors and Sales and
Marketing Director of General Electronique, Brive, France in 1996. Previously
from 1982 to 1995 he was General Manager of the Technique and Industrial Center
for TRT, a subsidiary of Phillips, in Brive. The Technique and Industrial Center
had a staff of 1,000 employees which included 100 engineers and technicians in
Research and Development. The center specialized in Radio Frequency equipment
for military applications and in microwave link for public and private
communication. Mr. Guyomar, from the University of Lille, Lille, France, holds a
Diploma of Engineering in electronics and microwave. He was appointed President
and CEO by the Board of Directors in April 1997.
Mr. Titterton was employed as Vice President and Controller of Ruesch
Machine Company, a wholly-owned subsidiary of Met-Coil Systems Corporation,
prior to his entering the employ of the Company in October 1986. Prior thereto,
he was employed as a Senior Accountant by Price Waterhouse. Mr. Titterton holds
a Bachelor of Arts degree in Economics/Accounting from Rutgers University,
Newark College of Arts and Sciences.
Item 10. EXECUTIVE COMPENSATION.
----------------------
(a) EXECUTIVE COMPENSATION:
----------------------
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the Chief Executive Officer
("CEO") of the Company. There were no executive officers of the Company other
than the CEO whose compensation exceeded $100,000 with respect to the fiscal
years ended September 30, 1997, 1996, 1995.
11
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<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Name and Annual Compensation Compensation All other
Principal Position Year Salary Bonus Other Awards Compensation
- ------------------ ---- ------ ----- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Yves L. Guyomar 1997 $105,000 N/A N/A N/A N/A
President & CEO
Ronald T. DeBlis 1996 N/A N/A N/A N/A N/A
President & CEO
Otto H. York 1996 N/A N/A N/A N/A N/A
President & CEO
Holmes Bailey 1996 $ 72,962 N/A N/A N/A $32,308
President & CEO
Holmes Bailey 1995 $140,000 N/A N/A N/A $13,124
President & CEO
</TABLE>
Note: Pre-requisites and other personal benefits, securities or property to each
officer did not exceed either $50,000 or 10% of such executives salary and bonus
(b) Board of Directors Compensation:
-------------------------------
Those Directors of the Company who are not salaried officers (Messrs.
Auzan, DeBlis, Frucht, Sheng, York and Young) are paid Directors' fees at the
rate of $10,000 per year, in quarterly installments, plus $500 per scheduled
meeting of the Board or any committee. The Board has, by resolution, agreed to
be paid fifty percent (50%) of their fees for fiscal year 1997 and 1996
respectively.
(c) Aggregated Fiscal Year-End Option Values:
----------------------------------------
Not applicable.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The following tabulation lists, as to (I) each present Director of the
Company, (ii) each other person known to the Company to be the beneficial owner
of more than five percent of the voting common stock of the Company, and (iii)
all Directors and officers as a group, the number and percentage of the
Company's voting common stock owned by each beneficial owner, Director and group
on the date indicated. Except as reflected in the tabulation, all shares of
common stock are directly owned by the named individual and group members, and
such individuals and group member possess sole voting and investment power with
respect to such shares.
12
<PAGE>
Number of Shares
Beneficially Owned Percentage
Beneficial Owner on December 9, 1997 of Ownership
- --------------------------------------------------------------------------------
Daniel Auzan (Director) *
c/o General Electronique SA
ZI de Bracheux
16 rue Joseph Cugnot
60000 Beauvais
France
Ronald T. DeBlis (Director) 63,648 3.87%
37 Farmstead Road
Short Hills, NJ 07087
Jack Frucht (Director) 36,782 2.24%
380 Mountain Road, Apt. #512
Union City, NJ 07087
Otto H. York (Director) 181,087 11.01%
130 Hempstead Court
Madison, NJ 07940
John M. Young (Director) 130,606** 7.94%
9749 Maplecrest Circle, S.E.
Lehigh Acres, FL 33936
G.E.M. USA, Inc. 268,016 16.30%
Sidco Investment, Inc. 151,304 9.20%
Holmes Bailey 212,500 12.92%
280 The Orchard at Heath Village
Schooleys Mt. Road
Hackettstown, NJ 07840-4031
All directors and officers 844,043*** 50.94%
as a group (8 persons)
- --------------------------------------------------------------------------------
* Mr. Auzan is the indirect beneficial owner of the shares owned by
G.E.M. USA, Inc.
** Includes 6,000 shares owned by his wife, to which Mr. Young is claims
beneficial ownership.
*** Includes 12, 500 shares which may be acquired on exercise of
outstanding options.
- --------------------------------------------------------------------------------
Item 12. Certain Relationships and Related Transactions.
----------------------------------------------
None.
13
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Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Exhibits: (See Page 36 for Index to Exhibits filed in the Annual
Report on Form 10-KSB for the year ended September 30, 1997.)
Exhibit 3.1 Certificate of Amendment of the Certificate of
Incorporation of the Company filed February 28, 1991. Filed
as an Exhibit in the Annual Report on Form 10-K for the year
ended September 30, 1991, and incorporated herein by
reference.
3.2 Articles of Incorporation of the Company as amended to date.
Filed as an Exhibit in the Annual Report on Form 10-K for
the year ended September 30, 1991, and incorporated herein
by reference.
3.3 By-Laws of the Company as amended to date. Filed as an
Exhibit in the Annual Report 10-K for the year ended
September 30, 1991, and incorporated herein by reference.
10.1 1987 Incentive Stock Option Plan, 1987 Employee Stock
Purchase Plan and 1987 Stock Option Program for Non-Employee
Directors and form of option grant(s) thereunder. Filed as
an Exhibit in the Annual Report on Form 10-K for the year
ended September 30, 1988, and incorporated herein by
reference.
10.2 Report on Form 8-K dated December 23, 1994 for "Other
Events", "order Confirming Debtors' Plan of Reorganization",
effective November 15, 1994. Filed as an Exhibit in the
Annual Report on Form 10-KSB for the year ended September
30, 1994, and incorporated herein by reference.
10.3 Lease Agreement with Eastmans Road Associates, Ltd.
Effective October 1, 1994. Filed as an Exhibit in the Annual
Report on Form 10-KSB for the year ended September 30, 1994,
and incorporated herein by reference.
10.4 Employment Agreement with Holmes Bailey dated January 1,
1995. Filed as an Exhibit in the Annual Report on Form
10-KSB for the year ended September 30, 1995, and
incorporated herein by reference.
10.5 Report on Form 8-K dated September 27, 1995 for "Other
Events", "Letter of Intent", effective September 25, 1995.
Filed as an Exhibit in the Annual Report on Form 10-KSB for
the year ended September 30, 1995, and incorporated herein
by reference.
10.6 Report on Form 8-K dated December 15, 1995 for "Other
Events", "Letter of Intent", effective December 5, 1995.
Filed as an Exhibit in the Annual Report on Form 10-KSB for
the year ended September 30, 1996, and incorporated herein
by reference.
10.7 Report on Form 8-K dated February 26, 1996 for "Other
Events", "Purchase of Treasury Stock", effective February
23, 1996. Filed as an Exhibit in the Annual Report on Form
10-KSB for the year ended September 30, 1996, and
incorporated herein by reference.
10.8 Report on Form 8-K dated March 18, 1996 for "Other Events",
"Purchase of Treasury Stock", effective March 7, 1996. Filed
as an Exhibit in the Annual Report on Form 10-KSB for the
year ended September 30, 1996, and incorporated herein by
reference.
14
<PAGE>
10.9 Report on Form 8-K dated January 7, 1997 for "Other Events",
"Purchase of Stock", effective December 9, 1996. Filed as an
Exhibit in the Annual Report on Form 10-KSB for the year
ended September 30, 1996, and incorporated herein by
reference.
10.10 Report on Form 8-K dated June 18, 1997 for "Other Events",
"Purchase of Stock", effective June 9, 1997. Filed as an
Exhibit in the Annual Report on Form 10-KSB for the year
ended September 30, 1997.
10.11 Report of on Form 8-K dated July 7, 1997 for "Other Events",
"Purchase of Stock" and "Appointment of President and CEO",
effective June 30, 1997. Filed as an Exhibit in the Annual
Report on Form 10-KSB for the year ended September 30, 1997.
10.12 Employment Agreement with Yves Guyomar effective April 16
1997. Filed as an Exhibit in the Annual Report on Form
10-KSB for the year ended September 30, 1997.
10.13 Shared Manufacturing and Facilities Agreement between
Boonton Electronics Corporation and G.E.M. Illinois, Inc.
dated October 1, 1997. Filed as an Exhibit in the Annual
Report on Form 10-KSB for the year ended September 30, 1997.
27. Financial Data Schedule
Exhibits (2),(4), (9), (13), (16),(18),(19),(21),(22),(23),(24) and (28), as
defined in Regulation S-B, Item 601, are omitted because they are not
applicable.
Exhibit (11) is omitted because the computation can be readily determined from
the financial statements in Item 7. Above.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, the Company has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BOONTON ELECTRONICS CORPORATION
-------------------------------
(Company)
By /s/ YVES GUYOMAR
-----------------------------
Yves Guyomar, President and
Chief Executive Officer
Date: January 9, 1998
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
By /s/ RONALD T. DEBLIS Director January 9, 1998
-----------------------
Ronald T. DeBlis
By /s/ YVES GUYOMAR Director, President and January 9, 1998
----------------------- Chief Executive Officer
Yves Guyomar (principal executive officer)
By /s/ JACK FRUCHT Director January 9, 1998
-----------------------
Jack Frucht
By /s/ OTTO H. YORK Director, Vice Chairman January 9, 1998
----------------------- of the Board
Otto H. York
By /s/ JOHN E. TITTERTON Secretary and January 9, 1998
----------------------- Treasurer (principal
John E. Titterton financial and accounting
officer)
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Shareholders
Boonton Electronics Corporation and Subsidiaries
We have audited the accompanying Balance Sheet of Boonton Electronics
Corporation as of September 30, 1997 and the related Statements of Operations,
Changes, in Stockholders' Equity and Cash Flows for the year then ended. We have
also audited the Consolidated Balance Sheets of Boonton Electronics Corporation
and Subsidiaries as of September 30, 1996 and 1995, and the related Consolidated
Statements of Operations, Changes in Stockholders' Equity and Cash Flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
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 financial statements referred to above present
fairly, in all material respects, the financial position of Boonton Electronics
Corporation as of September 30, 1997 and Boonton Electronics Corporation and
Subsidiaries as of September 30, 1996 and 1995, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.
By /s/ I. WEISMANN ASSOCIATES
---------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Morristown, New Jersey
November 7, 1997
17
<PAGE>
<TABLE>
<CAPTION>
BOONTON ELECTRONICS CORPORATION
BALANCE SHEETS
September 30,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 121,620 $ 113,041
Trade receivable (Note 1) 1,051,887 971,342
Inventories (Notes 1 & 3) 1,306,115 1,210,940
Deferred tax benefit (Note 10) 81,058 81,058
Prepaid expenses 333,325 230,340
----------- -----------
Total current assets 2,894,005 2,606,721
----------- -----------
Property and equipment - net (Notes 1 & 4) 534,023 163,858
----------- -----------
Other assets:
Deferred tax benefit (Note 10) 988,651 988,651
Deposits 71,169 67,768
----------- -----------
Total other assets 1,059,820 1,056,419
----------- -----------
Total assets $ 4,487,848 $ 3,826,998
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Note payable (Note 6) $ 63,379 $ 10,503
Related party loans (Note 6) 93,530 43,530
Accounts payable 800,931 469,882
Other current liabilities 284,528 538,328
Unsecured claims payable (Chapter 11 settlement)
- Current (Notes 2) 48,491 48,491
----------- -----------
Total current liabilities 1,290,859 1,110,734
Note payable - noncurrent (Note 6) 375,351 77,837
Related party loans (Note 6) 218,970 218,970
Unsecured claims payable (Chapter 11
settlement) noncurrent (Note 2) 153,372 201,505
----------- -----------
Total liabilities 2,038,552 1,609,046
----------- -----------
Commitments and Contingencies (Note 8)
Stockholders' equity:
Common stock (Note 9) 163,659 155,659
Capital in excess of par 4,613,637 4,421,637
Deficit (2,328,000) (2,359,344)
----------- -----------
Total stockholders' equity 2,449,296 2,217,952
----------- -----------
Total liabilities and stockholders' equity $ 4,487,848 $ 3,826,998
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
<TABLE>
<CAPTION>
BOONTON CORPORATION
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30,
-------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 7,209,057 $ 6,038,336 $ 6,837,248
Cost of sales 4,140,099 3,408,580 3,888,763
----------- ----------- -----------
Gross profit 3,068,958 2,629,756 2,948,485
----------- ----------- -----------
Operating expenses:
Commissions 715,835 640,517 586,969
Research and development 735,528 921,827 783,132
Other operating expenses 1,545,750 1,515,727 1,415,352
----------- ----------- -----------
Total operating expenses 2,997,113 3,078,071 2,785,453
----------- ----------- -----------
Income/(loss) from operations 71,845 (448,315) 163,032
----------- ----------- -----------
Other (income)/expense:
Interest expense 47,823 27,709 44,181
Chapter 11 expense -- -- 34,037
Gain on sale of assets (51,660) (1,000) (21,771)
Environmental expense 43,173 51,879 66,539
Moving expense -- -- 98,516
Interest income (4,257) (39,390) (3,859)
Other (income)/expense: 5,422 (13,312) 27,884
----------- ----------- -----------
Total other/(income) expense 40,501 25,886 245,527
----------- ----------- -----------
Income/(loss) before taxes and special
charges 31,344 (474,201) (82,495)
Income taxes/(benefit) -- 225,073 (316,339)
----------- ----------- -----------
Income/ (loss) before special charges
31,344 (699,274) 233,844
Special charges (Note 12) -- (350,405) --
----------- ----------- -----------
Net income/(loss) $ 31,344 $(1,049,679) $ 233,844
=========== =========== ===========
Earnings/(Loss) per common share
(Note 13):
Earnings/(loss) from
continuing operations $ .02 $ (.48) $ .17
Special charges -- (.24) --
----------- ----------- -----------
Net earnings/(loss) $ .02 $ (.72) $ .17
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
<TABLE>
<CAPTION>
BOONTON ELECTRONICS CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
Common Stock
------------ Additional Retained Treasury
Number of Paid-in Earnings/ Shares At
of Shares Par Value Capital (Deficit) Cost Total
---------- --------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance 9/30/94 1,492,085 $ 149,209 $ 4,359,556 $(1,117,342) $(1,002,729) $ 2,388,694
Exercise of stock
options 30,000 3,000 28,875 -- -- 31,875
Treasury stock
reissued -- -- -- (57,314) 70,438 13,124
Net income -
year ended
9/30/95 -- -- -- 233,844 -- 233,844
----------- ----------- ----------- ----------- ----------- -----------
Balance 9/30/95 1,522,085 152,209 4,388,431 (940,812) (932,291) 2,667,537
Exercise of stock
options 34,500 3,450 33,206 -- -- 36,656
Treasury stock
reissued -- -- -- (368,853) 932,291 563,438
Net (loss) - year
ended 9/30/96 -- -- -- (1,049,679) -- (1,049,679)
----------- ----------- ----------- ----------- ----------- -----------
Balance 9/30/96 1,556,585 155,659 4,421,637 (2,359,344) -- 2,217,952
Exercise of stock
option 80,000 8,000 192,000 -- -- 200,000
Net income -
year ended
9/30/97 -- -- -- 31,344 -- 31,344
----------- ----------- ----------- ----------- ----------- -----------
Balance 9/30/97 1,636,585 $ 163,659 $ 4,613,637 $(2,328,000) $ -- $ 2,449,296
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
BOONTON ELECTRONICS CORPORATION
STATEMENTS OF CASH FLOWS
Years Ended September 30,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 31,344 $(1,049,679) $ 233,844
Adjustments to reconcile net income:
Depreciation and amortization 60,398 27,335 26,294
Deferred taxes -- 223,873 (316,339)
(Gain) on sale of equipment (51,660) (1,000) (21,771)
Decrease (increase) in current assets:
Accounts receivable (80,545) 40,638 (7,616)
Inventories (95,175) (7,582) (251,438)
Prepaid expenses (102,985) 33,230 281,904
Increase (decrease) in current liabilities:
Accounts payable 331,049 181,754 159,953
Accrued expenses (253,800) 120,566 (58,320)
Chapter 11 settlement-current -- (53,024) (10,854)
----------- ----------- -----------
Net cash provided (used) by operating
activities (161,374) (483,889) 35,657
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of assets 51,660 1,000 21,771
Purchase of equipment (430,563) (89,024) (71,647)
Proceeds from cash surrender of life
insurance policies -- -- 245,190
Other (3,401) -- (421)
----------- ----------- -----------
Net cash provided (used) by investing
activities $ (382,304) $ (88,024) $ 194,893
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE>
<TABLE>
<CAPTION>
BOONTON ELECTRONICS CORPORATION
STATEMENTS OF CASH FLOWS
Years ended September 30,
-----------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from financing activities:
Treasury stock reissued $ -- $ 932,291 $ 70,438
Excess cost of treasury stock reissued -- (368,853) (57,314)
Increase in notes payable 394,071 90,019 --
Payments on loans (43,681) (99,444) (279,902)
Related party borrowings 50,000 -- 300,000
Payments on related party loans -- -- (37,500)
Chapter 11 settlement-noncurrent (48,133) (52,283) (13,771)
Payment of borrowings on life insurance
policies -- -- (229,921)
Proceeds from stock options exercised 200,000 36,656 31,875
--------- --------- ---------
Net cash provided (used) by financing
activities 552,257 538,386 (216,095)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents
8,579 (33,527) 14,455
Cash and cash equivalents at beginning
113,041 146,568 132,113
--------- --------- ---------
Cash and cash equivalents at ending $ 121,620 $ 113,041 $ 146,568
========= ========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 1,425 $ 1,025 $ 7,125
========= ========= =========
Interest paid $ 33,575 $ 33,082 $ 38,808
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
DESCRIPTION OF BUSINESS:
A. The Company is a New Jersey corporation organized in 1947. The
Company designs and produces electronic testing and measuring
instruments including power meters, voltmeters and modulation meters.
Recent models are microprocessor controlled and are often used in
computerized automatic testing systems. The Company's equipment is
marketed throughout the world to commercial and government customers
in the electronics industry.
The Company markets and distributes its products throughout the
United States and abroad through some 15 domestic sales
representatives and 24 foreign distributors. Representatives sell on
a commission basis, while distributors buy products for resale at
discounted ex-factory prices. Its representatives and distributors
also handle the products of other manufacturers, although these are
not generally competitive with the Company's products except that
some items handled by foreign distributors may be somewhat
competitive.
B. Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
C. The company accounts for uncollectible accounts under the direct
write-off method whereas generally accepted accounting principals
require provision for such expenses under the allowance method. The
effect of using this method approximates the allowance method as all
amounts are deemed to be fully collectible.
D. Inventories - stated at the lower of cost or market determined by the
first-in, first-out (FIFO) method.
E. Property, plan and equipment - Depreciation and amortization are
calculated by the straight-line method for financial reporting
purposes at rates based on the following estimated useful lives:
Building and improvement 39
Machinery and equipment 5-10
Office furniture and fixtures 5-10
Transportation equipment 3
23
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
The accelerated cost recovery system and modified accelerated cost
recovery system is used for income tax purposes. Cost of major
renewals and betterments that extend the life of the property and
equipment are capitalized. Expenditures for maintenance and repairs
are charged to expenses as incurred.
F. Financial Risk - The Company regularly maintains bank account
balances in excess of FDIC insurable limit.
G. Income Taxes - The Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
which requires a company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have
been recognized in a Company's financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined
based on the differences between the financial statement carrying
amounts and tax basis of assets and liabilities using expected tax
rates in effect in the years in which the differences are expected to
reverse. The Company recognized the benefit of net operating loss
carryforwards applying the valuation allowance which requires that
the tax benefit be limited based on the weight of available evidence
and the probability that some portion of the deferred tax asset will
not be realized.
H. Financial Instruments - The Company's financial instruments include
cash, cash equivalents, trade receivables and payables, long-term
debt and loans from related parties for which carrying amounts
approximate fair value. It is not practicable to estimate the fair
value of related party loans and long-term debt.
I. Stock-Based Compensation - The Company has elected to follow Account
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB25) and related interpretations in accounting for its
employee stock options. Under APB25, because the exercise price of
employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recorded.
Effective October 1, 1997, the Company has adopted the disclosure
only provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (Statement 123).
24
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 2 - PROCEEDINGS UNDER CHAPTER:
The Company operated under Chapter 11 proceedings for the period
September 7, 1993 through November 15, 1994 when, on the later date, the order
confirming the Plan of Reorganization was entered by the United States
Bankruptcy Court, District of New Jersey subject to the court closing the case
180 days after said entry (Local Rule 25(a)) cause for extension of time in
closing case (Local Rule 25(b)) and filing of application for allowance of fees
and allowance within 90 days after entry of final order confirming plan (Local
Rule 25(c)).
In accordance with S.A.S. Sections 560.03, the Company has adjusted
downward all liability accounts that were affected by the confirmed Plan of
Reorganization entered on November 15, 1994. Therefore, the financial statements
reflect the maximum liabilities to creditors under the Chapter 11 proceedings
and the Plan of Reorganization. The settlement of unsecured claims under the
confirmed Plan of Reorganization totaling 35% of allowed claims for accounts
payable and accrued expenses provided for the following payments to be made
subsequent to November 15, 1994:
%
--
10 From after tax proceeds from termination of the company's
pension plan
5 One year after initial payout
5 Two years after initial payout
15 Three years after initial payout
Pre-petition liabilities in accordance with the November 15, 1994
confirmed plan of reorganization were compromised of the following:
Accounts payable $ 702,233
Accrued expenses:
Commissions payable 126,370
Vacation pay 96,250
Severance pay 25,108
Other 78,282
-----------
Total September 30, 1994 1,028,243
Court authorized payments/adjustments (75,073)
-----------
Balance subject to settlement 953,170
Amount discharged and/or paid to date 751,307
-----------
Chapter 11 settlement total September 30, 1997 $ 201,863
===========
25
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
NOTE 3 - INVENTORIES
September 30,
-------------
1997 1996
---- ----
<S> <C> <C>
Raw material $ 639,045 $ 468,619
Work in process 577,337 688,273
Finished Goods 89,733 54,048
------------- -------------
Total inventories $ 1,306,115 $ $1,210,940
============= =============
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT:
September 30,
-------------
1997 1996
---- ----
Building and improvements $ 62,329 $ 61,054
Machinery and equipment 1,657,819 1,512,488
Office furniture and fixtures 582,518 444,959
Transportation equipment 13,188 13,188
------------- -------------
Total 2,315,854 2,031,689
Less Accumulated depreciation 1,781,831 1,867,831
------------- -------------
Net depreciated cost $ 534,023 $ 163,858
============= =============
</TABLE>
NOTE 5 - RESULTS OF OPERATIONS:
The Company reported a profit before taxes of $31,344 for the current
fiscal year ended spetember 30, 1997.
The loss for the fiscal year ended September 30, 1996 was primarily
attributable to; a) the reduced sales volume; b) recurring costs for research
and development in connection with the approval for a "CE" mark necessary for
international sales and; c) severance pay for a former employee.
26
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 6 - NOTES PAYABLE
September 30,
-------------
1997 1996
----------- -----------
A. Board of Directors:
Notes, subordinated to NJEDA
loan, dated February 6, 1995,
payable in monthly installments
of $5,449 including interest
at 9% per annum through
September 30, 2001: $ 262,500 $ 262,500
Less current portion 43,530 43,530
----------- -----------
Noncurrent portion $ 218,970 $ 218,970
=========== ===========
Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted
to $24,757 and $24,019, respectively. No principal payments were made due to
these notes being subordinated to the NJEDA loan.
September 30,
-------------
1997 1996
----------- -----------
B. New Jersey Economic Development
Authority:
Notes, dated July 31, 1996, payable in
monthly installments of $1,352
including interest at 6.75% per
annum through June 30, 2003: $ 438,730 $ 88,340
Less current portion 63,379 10,503
----------- -----------
Noncurrent portion $ 375,351 $ 77,837
=========== ===========
Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted
to $23,066 and $1,042, respectively. Future principal payments under the terms
of the agreement are as follows:
Fiscal Year Amount
----------- ---------
1998 $ 63,379
1999 67,855
2000 72,647
2001 77,778
2002 83,271
2003 73,800
--------
TOTAL: $438,730
========
27
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 7 - CONCENTRATION OF CREDIT RISK:
The Company maintains cash and cash equivalents at three financial
institutions that are insured by the Federal Deposit Insurance Corporation
(FDIC) and/or Securities Investor Protection Corporation (SIPC). The Company at
times during the year had amounts in these institutions that exceeded insurable
limits of $100,000 FDIC and $500,000 SIPC. In the normal course of business the
Company extends unsecured credit to customers in the United States and Asia.
NOTE 8 - COMMITMENTS AND CONTINGENCIES:
Commitments:
A. Retirement Plans:
Effective July 1, 1989, the Company adopted a defined contribution
plan for all eligible employees. In accordance with Internal
Revenue Code Section 401(k), the plan provides for elective
deferral of up to 15% of total compensation. The plan further
provided for a Company matching contribution of 25% of the
elective deferral amount of each participant that did not exceed
6% of total compensation. Effective January 1, 1994, the matching
Company contribution was suspended due to the company's financial
condition and pending reorganization. Effective October 1, 1995,
the Company reinstated a matching contribution at 50% of the
elective deferral amount for each participant that does not exceed
6% of total compensation. The amounts charged to operations were
$37,581 and $46,151 for the years ended September 30, 1997 and
1996, respectively.
B. Employee Stock Options Plans:
On February 26, 1987, the Stockholders approved the 1987 Incentive
Stock Option Plan, the 1987 Employee Stock Purchase Plan and the
1987 Stock Option Program for Non-Employee Directors. Subject to
the provisions of these plans, an aggregate of 150,000 shares of
the Company's stock was made available for option purchases;
namely, 75,000 shares, 37, 500 shares and 37,500 shares,
respectively. The plans ended effective December 1996 and no
further grants may be made for options.
28
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Option
-------
Price per Share Number of Shares
--------------- ----------------
Shares under option at
September 30, 1994 $3.00 50,000
Granted $1.0625 130,000
Exercised $1.0625 (30,000)
Expired $1.0625 (18,750)
Expired/surrender $3.00 (50,000)
---------
Shares under option at
September 30, 1995 $1.0625 81,250
Exercised $1.0625 (34,500)
Expired $1.0625 (250)
---------
Shares under option at
September 30, 1996 $1.0625 46,500
Expired $1.0625 (20,000)
---------
Shares under option at
September 30, 1997 $1.0625 26,500
=========
Lease Commitments
Subsequent to the sale of the Company's facility in Randolph,
New Jersey on September 28, 1994, the company entered into a
seven year lease for its present office and manufacturing
facility in Hanover Township, New Jersey with a five year
renewal option. Rent charged to operations for the fiscal year
ended September 30, 1997 was $227,400. Annual rent for the
initial seven year term is $227,400 for the first four years
and $300,00 for years five through seven.
Future minimum lease payments required under the operating
lease are as follows:
Fiscal Year Amount
----------- ------
1998 $227,400
1999 300,000
2000 300,000
2001 300,000
The Company leases office equipment under a five-year
operating lease with an option to upgrade after three years
that it intends to exercise. The annual lease payment for the
term of the lease is $17,617. Future lease payments required
under the operating lease are as follows:
29
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Fiscal Year Amount
----------- ------
1998 $17,617
1999 17,617
2000 17,617
2001 1,468
Contingencies:
A. Environmental Contingencies:
Following an investigation by the New Jersey Department of
Environmental Protection (NJDEP) of the Company's waste
disposal practices at a certain site that it formerly leased,
the Company put a ground water management plan into effect as
approved by the Department. Costs associated with this site
are charged directly to income as incurred. The owner of this
site has notified the Company that if the NJDEP investigation
proves to have interfered with a sale of the property, the
owner may seek to hold the Company liable for any loss it
suffers as a result. However, corporate counsel has informed
management that, in their opinion, the lessor would not
prevail in any lawsuit filed due to the imposition by law of
the statute of limitations.
Costs charged to operations in connection with the water
management plan amounted to $43,173 and $51,879 for the years
ended September 30, 1997 and 1996, respectively. The Company
estimates the expenditures in this regard for the fiscal year
ending September 30, 1998 will amount to approximately
$52,000. The Company will continue to be liable under the plan
in all future years until such time as the NJDEP releases it
from all obligations applicable thereto.
B. Contingent Subscription and Option Agreement:
On June 30, 1997, the Board of Directors of Boonton
Electronics Corporation (BEC) agreed to enter into a
Subscription and Option Agreement with G.E.M. USA, Inc. (GEM),
a wholly-owned subsidiary of General de Mesure et de
Maintenance Electronique, S.A. (GMME), whereby GEM shall have
the option to buy 435,984 shares of the common stock of BEC at
an option price of $3.24 per share. The term of the option
agreement shall be for a period of two years. GEM paid BEC
$25,000 for this option and simultaneously purchased 7,716
shares of BEC's common stock from the corporation for $25,000.
30
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Further, on June 30, 1997, the Board of Directors of BEC
resolved to enter into a Shared Facilities Agreement with B&K
Precision, Inc. (B&K), a wholly-owned subsidiary of GEM, as
additional consideration for the above noted option. B&K shall
pay BEC a monthly management fee of $15,000 and shall also pay
rent at the same price per square foot as BEC for the area
sublet to B&K.
The effective date of both of the above noted agreements was
October 1, 1997, one day subsequent to the fiscal year end,
September 30, 1997. The company also received the payment of
$50,000 on October 1, 1997.
C. Income Tax Contingencies:
The Company's income tax returns filed for the fiscal years
ended September 30, 1994, 1995 and 1996 are subject to review.
NOTE 9 - COMMON AND TREASURY STOCK:
<TABLE>
<CAPTION>
September 30,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
Common Stock:
$.10 par value, authorized 5,000,000
shares, issued and outstanding 1,636,585
shares and 1,556,585 shares, respectively. $163,659 $155,659
======== ========
</TABLE>
NOTE 10 - INCOME TAXES:
The components of the deferred tax asset are:
September 30,
-------------------------------
1997 1996
----------- -----------
Deferred tax asset $ 2,867,591 $ 3,799,877
Less: Valuation allowance (1,797,882) (2,730,168)
----------- -----------
Net deferred tax asset $ 1,069,709 $ 1,069,709
=========== ===========
Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes", requires that the Company record a valuation allowance when it is
"more likely than not that some portion or all of the deferred tax assets will
not be realized". It further states that "forming a conclusion that a valuation
allowance is not needed is difficult when there is negative evidence such as
cumulative losses in recent years".
31
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
The ultimate realization of this deferred income tax asset depends on
the ability to generate sufficient taxable income in the future. The Company is
undergoing substantial restructuring changes and has made strategic realignments
of its operations in association with its Plan or Reorganization that management
believes will result in future profitability. While it is management's belief
that these measures will allow the total deferred income tax asset to be
realized by future operating results, the losses in recent years and a desire to
be conservative make it appropriate to record a valuation allowance.
Accordingly, the Company has provided a valuation allowance (based on
estimated future taxable income) for the portion of the total deferred income
tax asset that will not be realized as related to the operating loss
carryforward.
Income tax laws allow for the utilization of loss carryforwards over
periods not to exceed 15 and 7 years for Federal and State purposes,
respectively. If the Company is not able to generate sufficient taxable income
in the future through operating results, increases in the valuation allowance
will be required through a charge to expense (reducing stockholder's equity). In
the event the Company reports sufficient profitability to use all of the
deferred income tax assets, the valuation allowance will be eliminated through a
credit to expense (increasing stockholder's equity).
The provision for income taxes consists of the following:
September 30,
-------------
1997 1996
--------- ---------
Current:
Federal $ 443,904 $ --
State 129,125 1,200
--------- ---------
573,029 1,200
--------- ---------
Deferred:
Federal (443,904) 198,510
State (129,125) 25,363
--------- ---------
(573,029) 223,873
--------- ---------
Total $ -- $ 225,073
========= =========
32
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
The following is a reconciliation of income taxes of the federal statutory rate
with income taxes recorded by the Company:
September 30,
----------------------
1997 1996
--------- ---------
Computed income taxes at statutory rate $ 573,029 $(280,366)
Recognition of net operating loss (573,029) (139,441)
Increase(decrease) in tax asset valuation allowance (932,286) 651,765
IC-DISC dissolution 932,286 (6,885)
--------- ---------
Expense (Benefit) $ -- $ 225,073
========= =========
The Company has net operating loss carryforwards for federal and state
purposes approximating $6,266,666 and $8,188,055 that will not begin to expire
until the year 2011and 2003 respectively. These loss carryforwards can be
utilized to reduce future taxable income dollar for dollar.
In May 1997, the Company dissolved Boonton International Sales
Corporation (BIS) (former wholly-owned subsidiary) and received a Certificate of
Dissolution from the state of New Jersey. BIS, as an Interest Charge Domestic
International Sales Corporation (IC-DISC), had $1,456,000 of deferred income.
The deferred income became taxable to the Company upon the dissolution of BIS
and therefore reduced the deferred tax asset and related valuation allowance
accordingly.
NOTE 11 - SEGMENT INFORMATION:
The Company is engaged in the manufacture and sale of electronic test
and measurement equipment and management considers its business as a single
segment for reporting purposes.
A. The Company's export sales were as follows:
Years Ended % of
September 30, Amount Total Sales
------------- ------ -----------
1997 $2,369,499 33%
1996 2,599,074 42%
1995 2,702,439 40%
33
<PAGE>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
B. Customers sales to domestic government agencies were as follows:
Years Ended % of
September 30, Amount Total Sales
------------- ------ -----------
1997 $1,514,792 21%
1996 907,189 15%
1995 636,020 9%
NOTE 12 - SPECIAL CHARGES:
In accordance with the GMME agreement, the Company was required to
obtain an agreement, acceptable to GMME, with the New Jersey Department of
Environmental Protection for finalizing the clean-up of a site it formerly
leased. In order to fulfill this requirement, it was necessary for the Company
to incur and accrue charges of $271,772, for the year ended September 30, 1996,
from its environmental consultants and counsel that were deemed not to be in the
ordinary course of business. Other components of the total special charge amount
of $350,405 in 1996 were $45,000 for anticipated settlement for the Sharkey
Landfill and $33,633 penalty from the NJDEP for a missed monitoring event at the
site formerly leased.
NOTE 13 - EARNINGS PER SHARE:
Earnings/(loss) per share have been computed by dividing net earnings
/(loss) by the weighted average number of common shares outstanding of 1,621,462
for 1997, 1,460,730 for 1996 and 1,341,785 for 1995. Options to purchase a total
of 443,700 shares of common stock at $3.24 per share were not included because
the exercise price exceeded the average market price which would result in
antidilution. Incentive stock options to purchase 26,500 shares in 1997, 46,500
shares in 1996 and 81,250 shares in 1995 were not included because they were
insignificant.
34
<PAGE>
<TABLE>
<CAPTION>
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 14 - QUARTERLY FINANCIAL DATA:
SEPTEMBER 30, 1997 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR.
- ------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $1,811,075 $1,793,647 $1,798,348 $1,805,987
Gross Profit 823,780 788,830 744,175 712,173
Net income/(loss) 25,377 31,204 (15,182) (10,055)
Earnings/(loss)
per share .02 .02 (.01) (.01)
SEPTEMBER 30, 1996 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR.
- ------------------ -------- -------- -------- --------
Sales $1,632,222 $1,559,269 $1,410,126 $1,436,719
Gross Profit 803,166 766,387 644,537 415,666
Net income/(loss) 52,710 (47,683) (294,884) (759,822)
Earnings/(loss)
per share .04 (.04) (.19) (.53)
</TABLE>
35
<PAGE>
BOONTON ELECTRONICS CORPORATION
INDEX TO EXHIBITS FILED
IN THE ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED SEPTEMBER 30, 1997
10.10 Report on Form 8-K dated June 18, 1997 for "Other
Events", "Purchase of Stock", effective June 9, 1997.
Filed as an Exhibit in the Annual Report on Form 10-KSB
for the year ended September 30, 1997. . . . . . . . . . . . . 37
10.11 Report of on Form 8-K dated July 7, 1997 for "Other
Events", "Purchase of Stock" and "Appointment of
President and CEO", effective June 30, 1997. Filed as an
Exhibit in the Annual Report on Form 10-KSB for the year
ended September 30, 1997. . . . . . . . . . . . . . . . . . . . 38
10.12 Employment Agreement with Yves Guyomar effective April 16
1997. Filed as an Exhibit in the Annual Report on Form
10-KSB for the year ended September 30, 1997. . . . . . . . . . 40
10.13 Shared Manufacturing and Facilities Agreement between
Boonton Electronics Corporation and G.E.M. Illinois, Inc.
dated October 1, 1997. Filed as an Exhibit in the Annual
Report on Form 10-KSB for the year ended September 30,
1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
27. Financial Data Schedule. . . . . . . . . . . . . . . . . . . .. 59
36
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d) OF
The SECURITIES ACT OF 1934
Date of Report: June 9, 1997
BOONTON ELECTRONICS CORPORATION
A New Jersey corporation
IRS Employer Identification No. 22-1543137
25 Eastmans Road, Parsippany, NJ 07054-0465
(201) 386-9696
Item 5. OTHER EVENTS
On June 9, 1997, O.E.M. USA, Inc. (GEM), a wholly-owned
subsidiary of General de Mesure et de Maintenance Electronique S.A. (GMME), did
not exercise its option to purchase an additional 443,700 shares of the common
stock of Boonton Electronics Corporation (BEC), as provided for in the
Subscription and Option Agreement dated October 21, 1996, by and between BEC and
GMME. Although no extension has been provided to GEM and or GMME for the option
to purchase additional shares of BEC common stock, discussions between the
parties are expected to continue during BEC's Fourth Fiscal Quarter of 1997.
EXHIBITS: None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOONTON ELECTRONICS CORPORATION
By /s/ JOHN E. TITTERTON
---------------------------------------
John E. Titterton, Vice President Finance
Secretary/Treasurer
Dated: June 18, 1997
37
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report: June 30, 1997
BOONTON ELECTRONICS CORPORATION
A New Jersey Corporation
IRS Employer Identification No. 22-1543137
25 Eastmans Road, Parsippany, NJ 07054-0465
(973) 386-9696
Item 5. OTHER EVENTS
------------
On June 30, 1997, the Board of Directors of Boonton Electronics
Corporation (BEC) agreed to enter into a Subscription and Option Agreement with
G.E.M. USA, Inc. (GEM), a wholly-owned subsidiary of General de Mesure et de
Maintenance Electronique, S.A. (GMME), whereby GEM shall have the option to buy
435,984 shares of the common stock of BEC at an option price of $3.24 per share.
The term of the option agreement shall be for a period of wo years. GEM shall
pay BEC $25,000 for this option and shall simultaneously purchase 7,716 shares
of BEC's common stock from the corporation for $25,000.
Further, on June 30, 1997, the Board of Directors of BEC resolved to
enter into a Shared Facilities Agreement with B&K Precision, Inc. (B&K), a
wholly-owned subsidiary of GEM, as additional consideration for the above noted
option. B&K shall pay BEC a monthly management fee of $15,000 and shall also pay
rent at the same price per square foot as BEC for the area sublet to B&K. This
agreement shall reduce BEC's overhead costs substantially and shall improve
BEC's results of operations.
In addition, at the Board of Directors meeting held on June 30, 1997,
in accordance with the by-laws of the corporation, Yves Guyomar, President and
CEO of BEC, was appointed to serve as a member of the Board of Directors until
the next election of directors at BEC's 1998 Annual Meeting of Shareholders.
Victor Tolan resigned his seat on the Board in order to accommodate Mr.
Guyomar's appointment.
38
<PAGE>
EXHIBITS: None
--------
SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOONTON ELECTRONICS CORPORATION
By /s/ JOHN E. TITTERTON
------------------------------------------
John E. Titterton, Vice President Finance,
Secretary/Treasurer
Dated: July 7, 1997
39
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of this 16th day of April, 1997 by and
between BOONTON ELECTRONICS CORPORATION, a New Jersey corporation, having an
address at 25 Eastman's Road, Parsippany, New Jersey, (hereinafter referred to
as "Company"), and YVES GUYOMAR, an individual having an address at c/o 25
Eastman's Road, Parsippany, New Jersey (hereinafter referred to as "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Company desires to employ Employee and Employee
desires to be employed by the Company in accordance with the terms and
conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants
herein after contained, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. Company agrees to employ Employee and Employee
agrees to serve Employer upon the terms and conditions hereinafter set forth.
2. TERM. Employee's employment hereunder shall be effective
and shall commence as of April 16, 1997 (the "Commencement Date") and shall
terminate on April 15, 1999 (the "Term").
3. COMPENSATION.
(a) SALARY. Company shall pay Employee for all services
rendered hereunder a salary at the rate of $140,000.00 per year payable in
accordance with the Company's regular payroll practice (the "Salary").
(b) BENEFITS. During the Term of this Agreement and in
addition to the Salary, Company shall provide to Employee the general benefits
provided to all employees of the Company.
(c) VACATION. Employee shall be entitled to four (4) weeks
vacation with pay per year and holidays in accordance with Company's policies in
effect from time to time.
(d) TAXES. Employee understands that any and all payments
provided in this Agreement shall be subject to such tax treatment as applies
thereto, and to such withholding, if any, as may be required under applicable
tax laws.
(e) AUTOMOBILE. The Company hereby agrees to provide
Employee with an automobile throughout the Term of this Agreement. All costs
associated with the insurance and maintenance of the automobile shall be borne
solely by the Company.
40
<PAGE>
4. DUTIES AND POSITION.
(a) Employee shall be employed as the President of the
Company and shall assume and perform all of the duties and responsibilities
customarily assigned to and performed by the President of a public company,
together with such additional duties and responsibilities as may be specifically
assigned to Employee by the Board of Directors of the Company.
(b) Employee shall devote his full time and undivided
attention to the affairs of the Company and will not at any time engage in any
other business activities which would interfere with the full performance of his
duties and responsibilities assigned hereunder.
5. TERMINATION.
(a) TERMINATION BY EMPLOYER FOR CAUSE. Company shall have
the right to terminate the employment of Employee under this Agreement without
prior notice to Employee, if Employee shall commit any material act of
malfeasance, disloyalty, dishonesty or breach of trust against Company or upon
Employee's conviction of, or plea of NOLO CONTENDRE to a felony. In the event
Employee's employment with Company shall terminate under the terms of this
Section 5(a), Company shall pay Employee any Salary due and owing Employee up to
and including the date of such termination and no further payments of any type
shall be payable to Employee.
(b) EMPLOYEEE'S DEATH OR DISABILITY. In the event of
the permanent disability or death of Employee during the Term hereof, Employee's
employment hereunder shall terminate and Company shall pay to Employee, or
Employee's estate, any Salary due and owing Employee up to and including the
date of such termination and no further payments of any type shall be payable to
Employee.
6. TRADE SECRET/CONFIDENTIAL INFORMATION.
(a) Employee recognizes and acknowledges that during the
course of his employment with Company he will have access to certain information
of the Company, which information shall be confidential in nature and/or
constitute trade secrets of the Company, and is therefore valuable, special and
unique property of the Company (hereafter "Confidential Information"). Such
Confidential Information shall include, without limitation, knowledge of
processes, plan, devices, customer lists, pricing, marketing plans and strategy,
research projects, business opportunities and similar such information.
(b) Except as may be required for use by Employee in the
regular course of business of the Company, Employee will not at any time, during
or after termination of his employment with the
41
<PAGE>
Company, use such Confidential Information or disclose any such Confidential
Information to any person or firm, corporation, association or other entity for
any reason or purpose whatsoever. In the event of a breach or what appears to
the Company to be a threatened reach by Employee of the provisions of this
paragraph, Company shall be entitled to appropriate injunctive relief,
restraining employee from using or disclosing, in whole or in part, such
Confidential Information. Nothing contained herein shall be construed as
prohibiting the Company from pursing any other remedies available to it in the
event of such breach or perceived breach, including the recovery of damages from
Employee.
7. SURVIVAL OF PROVISIONS. The provisions of Section 6 hereof
shall survive the termination or expiration of this Agreement, irrespective of
the reason therefor.
8. WAIVER. The failure of any party to insist upon strict
adherence to any term of the Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any waiver of
any breach of any provision of this Agreement shall not constitute a waiver of
any other breach of such provision or any provision hereof.
9. NOTICES. Any Notice or other communication under this
Agreement shall be in writing and shall be deemed duly given if delivered
personally or if mailed by Certified Mail (Return Receipt Requested), postage
prepaid, to the other party at the address indicated below (or at such other
address as shall be specified by Notice give pursuant hereto):
(a) To the Company:
Boonton Electronics Corporation
25 Eastman's Road
P.O. Box 465
Parsippany, New Jersey 07054-0465
Attn: John Titterton, Vice President - Finance
with a copy to:
--------------
Smith, Luhn & Doran, P.C.
Courthouse Plaza
60 Washington Street
Morristown, NJ 07960
Attn: Gregory Luhn, Esq.
42
<PAGE>
(b) To the Employee:
Boonton Electronics Corporation
25 Eastman's Road
P.O. Box 465
Parsippany, New Jersey 07054-0465
10. ASSIGNMENT. This Agreement and any rights of the parties
hereunder may not be transferred or assigned by either party hereto.
11. SEVERABILITY. The invalidity or unenforceability of any
term or provision of the Agreement shall not affect the validity or
enforceability of the remaining terms or provisions hereof, which shall remain
in full force and effect.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties as of the date hereof with respect to the
Employee's employment by the Company and may not be amended or terminated
orally. No modification hereof shall be valid unless in writing and signed on
behalf of the Company by an officer duly authorized by the Board of Directors,
and by the Employee.
13. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed therein.
14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original by which taken
together shall constitute the same instrument.
15. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, representatives, successors and assigns.
16. HEADINGS. Headings in this Agreement are included solely
as a matter of convenience for reference and are not intended to be a part of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
43
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
WITNESS: BOONTON ELECTRONICS CORPORATION
/s/ JOHN E. TITTERTON By: /s/ RONALD T. De Blis
- ------------------------------- -------------------------------
JOHN E. TITTERTON September 5, 1997 RONALD T. DE BLIS
Director, Chairman of
Compensation & Benefits
Committee
WITNESS: EMPLOYEE:
/s/ JOHN E. TITTERTON /s/ Yves Guyomar
- ------------------------------- -------------------------------
JOHN E. TITTERTON September 2, 1997 Yves Guyomar
44
SHARED MANUFACTURING AND FACILITIES AGREEMENT
DATED AS OF OCTOBER 1, 1997
BETWEEN
BOONTON ELECTRONICS CORPORATION
AND
G.E.M. ILLINOIS, INC.
45
<PAGE>
SHARED MANUFACTURING AND FACILITIES AGREEMENT
This Shared Manufacturing and Facilities Agreement ("Agreement") dated as of
October 1, 1997 is entered into between Boonton Electronics Corporation, a New
Jersey corporation ("Boonton"), and G.E.M. Illinois, Inc., a Delaware
corporation ("GEM").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Boonton leases approximately thirty thousand (30,000) square
feet of manufacturing, warehouse and office space, located at premises commonly
known as 25 Eastmans Road, Parsippany, New Jersey, pursuant to a lease agreement
dated September 24, 1994, by and between Boonton, as lessee, and Eastmans Road
Associates, Ltd., a New Jersey limited partnership ("Landlord"), as lessor, (as
complete copy of the Lease has been previously furnished to GEM. The real estate
and improvements thereon rented pursuant to the Lease are referred to herein as
the "Premises".
WHEREAS, GEM desires to relocate its B&K Precision manufacturing
operations (the "B&K Business") to the Premises; and
WHEREAS, the parties desire to share the Premise and certain other
items during the term of this Agreement and to share certain costs, in each case
subject to the terms and conditions of this Agreement.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. TERM. The term of this Agreement (the "Term") shall begin on and
include October 1, 1997 and shall end at 11:59 p.m. on September 30, 1999,
unless earlier terminated pursuant to Section 11, and may be extended by GEM to
the term of the Lease by GEM provided that GEM gives written notice to Boonton
of its intent to extend the Term on or before March 31, 1999. Thereafter, if
Boonton exercises its option to renew the lease GEM shall have the right to
extend the Term provided that written notice is given to Boonton within sixty
(60) days after Boonton exercises its option to renew the Lease.
2. RELOCATION OF B&K BUSINESS. GEM shall, solely at its expense (the
"Relocation Expense"), relocate its manufacturing operations to the Premises.
The Relocation Expense shall include all costs involved with the relocation of
personnel, machinery, equipment and inventory as well as costs associated with
the preparation of the
46
<PAGE>
Subleased Premises (as hereinafter defined) for the B&K Business.
Notwithstanding the above the parties agree that Boonton shall incur no
expenses, other than those expenses presently incurred in the ordinary course of
its business as currently operated, with respect to the relocation of GEM.
Further, any damages that are incurred to the Premises as the result of the
relocation of GEM shall be remedied at the sole cost and expense of GEM.
3. SEPARATE OPERATIONS. Except as otherwise provided in this
Agreement: (a) GEM shall operate the B&K Business at its expense separately from
the business of Boonton (the "Boonton Business"); and (b) Boonton shall operate
the Boonton Business at its expensed separately from the B&K Business.
4. SHARED SHIPPING FACILITIES.
(a) The loading dock and shipping and receiving area
(collectively, the "Shipping Area") in the Premises are currently used in the
Boonton Business. During the Term, GEM will, as part of the sublease described
in Section 6, have the right to share equally with Boonton the use of the
Shipping Area.
(b) Individuals mutually satisfactory to the parties will make
any needed decisions regarding the shares use of the Shared Shipping Area,
including decisions regarding the shared use of the Shared maintenance.
Currently, the persons designated to make such decisions are Victor Tolan and
Yves Guyomar. In each case, both GEM and Boonton will instruct such person to
make all such decisions fairly, reasonably, impartially, and with the goal of
enabling both GEM and Boonton to efficiently maximize production Notwithstanding
the foregoing, the parties hereto shall be entitled to binding arbitration
pursuant to Section 15.
5. EMPLOYEES.
(a) Each of Boonton and GEM shall employ its own separate
personnel and employees and shall be responsible for its own payroll and
benefits and in no event shall any GEM employee be deemed an employee of Boonton
nor shall any Boonton employee be deemed an employee of GEM.
(b) At all times during the Term, each party shall take
commercially reasonable steps: (i) to prevent labor disharmony between such
party and its employees (ii) to attempt promptly to restore labor harmony
between such party and its employees if any such labor disharmony between such
party and its employees if any such labor disharmony becomes actually known to
such party and (iii) to cause personnel entering the other party's work area to
comply with the rules and regulations in effect in that area. Nothing in this
Section 5(b) shall restrict any party's right to terminate the employment of any
employees or require any party to spend any money other than nominal amounts in
order to restore labor harmony.
47
<PAGE>
6. SUBLEASE.
(a) Boonton hereby subleases to GEM and GEM hereby subleases
from Boonton (the "Sublease"), subject to the terms and conditions of this
Agreement and the Lease: (i) the area in the Premises that is designated as the
"B & K Area" on EXHIBIT A comprised of approximately 11,500 square feet of
manufacturing, warehouse and office space, which area is not a single contiguous
area; and (ii) the area in the Premises that is designated as the "Shared Area"
on EXHIBIT A comprised of lobby, entryway, exits, corridors, rest rooms, loading
dock, lunch room, and other common areas and facilities on the Premises
(provided that the Shared Area shall be deemed to include rights of ingress and
egress to the Premises), which area is not a single contiguous area (the Shared
Area and the B&K Area are sometimes referred to herein collectively as the
"Subleased Premises").
(b) The term of the Sublease shall be the same as the Term of
this Agreement.
(c) GEM shall have the exclusive use of the B&K Area during the
Term for the purpose of conducting its business, subject to the right of entry
of the Landlord and any of the Landlord's mortgagees under Section 15b.(2) or
Section 21e of the Lease and to an equivalent right of entry on Boonton's part.
(d) GEM and Boonton shall each have the nonexclusive right (in
common with the Landlord and Landlord's other tenants, to the extent that they
have such right under the Lease) to use the Shared Area during the Term.
(e) Boonton shall have the exclusive use of the area of the
Premises designated as the "Boonton Area" on EXHIBIT A for the purpose of
conducting its business (the Boonton Area and the Shared Area are sometimes
referred to herein collectively as the "Boonton Premises"). The Boonton Area is
not being subleased to GEM.
(f) GEM shall use the Subleased Premises only for the purpose
of conducting the B&K Business. GEM shall use the Subleased Premises in a manner
that does not interfere with or hinder the operations of the Boonton Business in
the Boonton Premises or otherwise create a nuisance.
(g) GEM shall conduct its operations on the Subleased Premises
in a manner that does not violate, or cause Boonton to violate, the Lease.
(h) Boonton shall use the Boonton Premises only for the purpose
of conducting the Boonton Business. Boonton shall use the Boonton Premises in a
manner that does not interfere with or hinder the operations of the B&K Business
in the B&K Area or otherwise create a nuisance.
48
<PAGE>
(i) Boonton shall conduct Its operations on the Boonton
Premises in a manner that does not violate, or cause GEM to violate, the Lease.
(j) GEM will maintain the interior of the B&K Area in as good a
condition and state of repair as it is in on the date hereof (fire or other
casualty and ordinary wear and tear excepted).
(k) GEM shall not make any alterations, installations or
additions to the Subleased Premises without Boonton's prior written consent,
such consent not to be unreasonably withheld.
(l) Boonton represents as of the date hereof (i) that it is in
compliance with all Laws with respect to the physical condition of the Premises
and the use and occupancy and physical operations of the Premises. As used
herein, "Laws" means any and all laws, statutes, regulations, orders, or decrees
of, or agreements with, or permits from, any federal, foreign, state or local
government or other governmental or quasi-governmental authority, including
laws, statutes or regulations relating to equal employment opportunities, fair
employment practices, occupational health and safety, wages and hours and
discrimination.
(m) GEM shall pay to Boonton for each month, (i) rent (the
"Rent") in the amount of (x) $7,264.17 per month ($7.58 per square foot) with
respect to the period from October 1, 1997 to September 30, 1998, both
inclusive; and (y) $9,583.33 per month ($10.00 per square foot) with respect to
the period from October 1, 1998 to the end of the Term, both inclusive, and (ii)
a fee of $15,000 per month (the "Maintenance Fee") towards all costs incurred by
Boonton in operating and maintaining the Premises, including, without
limitation, use of the Shared Area, providing utilities, providing shipping and
receiving and engineering support, human resource support and day-to-day
management and supervision of the operations of the Premises. Payment for the
months October 1997, November 1997 and December 1997 shall be made on November
1, 1997, December 1, 1997 and January 1, 1998 respectively. Payment for January,
1998 shall be on January 15, 1998. Payments for all months thereafter shall be
on the first day of each month. Notwithstanding any provision to the contrary
herein, Rent and Maintenance Fees shall not be payable with respect to any
period after the date of termination of the Lease.
(n) If a fire or other casualty to the Premises damages the B&K
Area and the Boonton Area disproportionately, and results in an abatement of
rent under the Lease, such abatement of rent shall be allocated equitably
between the parties.
(o) On or prior to the end of the Term, GEM shall, at its sole
expense: (i) remove all of its inventory, equipment, machinery, furniture and
other tangible personal property and fixtures (the "GEM Property") from the
Premises and otherwise vacate
49
<PAGE>
the Subleased Premises; (ii) repair any damage caused by such removal; and (iii)
restore any condition created by the installation of the GEM Property at any
time on the Premises to the condition existing prior to such installation. Any
GEM Property not so removed on or prior to the end of the Term may be handled,
removed or stored by Boonton at the expense of GEM, and Boonton shall in no
event be responsible for the value, preservation or safekeeping thereof. GEM
shall pay Boonton for all storage charges incurred by Boonton regarding the GEM
Property while it is in Boonton's possession. All such property not removed from
the Premises or retaken from storage by GEM within thirty (30) days after the
Termination Date, shall, at Boonton's option, be conclusively deemed to have
been conveyed by GEM to Boonton as by bill of sale without further payment or
credit by Boonton to GEM.
(p) On the date hereof, Boonton shall provide to GEM an
estoppel and nondisturbance letter from the Landlord substantially in the form
set forth as EXHIBIT B.
7. ADDITIONAL COSTS. In addition to Rent and Maintenance Fees
which shall remain fixed throughout the Term, B&K shall bear its portion of any
increase in expenses not provided for in the Rent and Maintenance Fees which are
paid by Boonton during the Term and which result solely from the expansion of
the B&K Business after October 1, 1997.
8. INSURANCE.
(a) During the Term, Boonton shall maintain, at its sole
expense, insurance coverage in at least the amounts and types listed on SCHEDULE
8(A). Each of such insurance policies shall: (i) name GEM as an additional
insured; (ii) be written by an insurance company reasonably acceptable to GEM;
(iii) provide that should such insurance coverage be cancelled before the
expiration date thereof, the insurance company will endeavor to mail at least 30
days, prior written notice to GEM, but failure to mail such notice shall impose
no obligation or liability on the insurance company (or a similar provision to
this clause (iii)); and (iv) contain the insurer's standard waiver of
subrogation endorsement. Boonton has furnished GEM policies or certificates of
insurance evidencing such coverage (including the matters referred to in clause
(iii) and (iv) of the preceding sentence), and will furnish to GEM the same with
respect any renewal or substitute policy during the Term at least ten (10)
business days prior to the termination, cancellation or reduction of the
preceding policy.
(b) During the Term, GEM shall maintain, at its sole expense,
insurance coverage in at least the amounts and types listed on SCHEDULE 8(B).
Each of such insurance policies shall: (i) name Boonton as an additional
insured; (ii) be written by an insurance company reasonably acceptable to
Boonton; (iii) provide that should such insurance coverage be cancelled before
the expiration date
50
<PAGE>
thereof, the insurance company will endeavor to mail at least 30 days, prior
written notice to GEM, but failure to mail such notice shall impose no
obligation or liability on the insurance company (or a similar provision to this
clause (iii)); and (iv) contain the insurer's standard waiver of subrogation
endorsement. GEM has furnished to Boonton policies or certificates of insurance
evidencing such coverage (including the matters referred to in clause (iii) and
(iv) of the preceding sentence), and will furnish to Boonton the same with
respect to any renewal or substitute policy during the Term at least ten (10)
business days prior to the termination, cancellation or reduction of the
preceding policy.
9. WAIVER OF CLAIMS.
(a) Notwithstanding anything to the contrary herein, except for
claims arising from fraud, wilful misconduct or gross negligence that are not
covered by insurance in Boonton's favor, and except for any claim that is the
subject of indemnification pursuant to Section 10(b)(iv), Boonton waives all
claims against GEM and its affiliates, officers, directors, employees and
agents, for damages arising from the occurrence or existence of any of the
events or conditions set forth in Section 9(c) during the Term.
(b) Notwithstanding anything to the contrary herein, except for
claims arising from fraud, wilful misconduct or gross negligence that are not
covered by insurance in GEM's favor, and except for any claim that is the
subject of indemnification pursuant to Section l0(a)(iv), GEM waives all claims
against Boonton and its affiliates, officers, directors, employees and agents
for damages arising from the occurrence or existence of any of the events or
conditions set forth in Section 9(c) during the Term.
(c) For purposes of this Section 9, damages include (i)
casualty or accident in or upon the Premises; (ii) leaking of roofs, bursting,
stoppage or leaking of water, gas, sewer or steam pipes or equipment, including
sprinklers, (iii) wind, rain, ice, flooding, freezing, fire, explosion,
earthquake, excessive heat or cold, fire or other casualty, (iv) any heating,
cooling, ventilating, plumbing, electrical or other systems on the Premises, or
any machinery, equipment or fixtures being defective, out of repair, or failing,
and (iv) vandalism, theft, malicious mischief or other acts or omissions of any
other Persons (as defined herein) including contractors or invitees at the
Premises.
10.INDEMNIFICATION.
(a) Boonton shall indemnify and hold harmless GEM and its
directors, officers, employees and agents from and against any and all Damages:
(i) resulting from any breach by Boonton
of any of its obligations under this Agreement or the Lease (except for
51
<PAGE>
breaches of the Lease caused by any action or omission of GEM);
(ii) arising from the operation of the
Boonton Business during the Term;
(iii) arising from any failure during the
Term by Boonton or any of its employees or agents to comply with any applicable
Law; or
(iv) arising under or imposed by any
Environmental Law (as defined herein) or common law related to environmental
matters or contamination, including Damages related to the release by Boonton or
any entity for which it is legally responsible of a hazardous or toxic substance
or waste, including petroleum and related products, at, on or from:
(A) the Boonton Premises,
(B) any property or facility to which
wastes or byproducts generated by Boonton are sent for disposal or treatment, or
(C) the Subleased Premises prior to the
date hereof,
which Damages, in each case under this subparagraph (a) (iv), arise out of the
operations of Boonton.
(b) GEM shall indemnify and hold harmless Boonton and its
directors, officers, employees and agents from and against any and all Damages:
(i) resulting from any breach by GEM of any of its
obligations under this Agreement;
(ii) arising from the operation of the B&K Business during
the Term;
(iii) arising from any failure during the Term by GEM or
any of its employees or agents to comply with any applicable Law; or
(iv) arising under or imposed by any Environmental Law or
common law related to environmental matters or contamination, including Damages
related to the release by GEM or any entity for which it is legally responsible
of a hazardous or toxic substance or waste, including petroleum and related
products, at, on or from:
(A) the Subleased Area or
(B) any property or facility to which
wastes
52
<PAGE>
or byproducts generated by GEM are sent for disposal or treatment,
which Damages, in each case under this subparagraph (b) (iv), arise out of the
operations of GEM.
(C) For purposes of this Agreement:
(i) "Damages" means liabilities, damages, costs and
expenses (including reasonable attorneys' fees), except for any liabilities,
damages, costs or expenses that are covered by insurance proceeds actually paid
to the indemnitee (in the case of Section 11) or the Person waiving the claim
(in the case of Section 10); provided that, for purposes of this definition,
insurance proceeds do not include insurance deductible amounts; and
(ii) "Environmental Laws" means all federal, state
and local statutes, ordinances, rules, court orders, court decrees and
arbitration determinations, in each case pertaining to environmental matters or
contamination of any kind.
11.TERMINATION.
(a) Each party hereto may terminate this Agreement upon written
notice to the other party if the other party:
(i) fails to timely pay any amount due hereunder,
which failure continues for twenty (20) business days after written notice
thereof; or
(ii) fails to perform any other obligation hereunder,
which failure continues for fifteen (15) days after written notice thereof,
unless a shorter period is provided herein;
(b) GEM may terminate this Agreement upon written notice to
Boonton if Boonton is then entitled to terminate the Lease as a result of any
fire or other casualty or other governmental taking.
(c) GEM may terminate this Agreement if by 5:00 p.m. (E.D.T.)
August 15, 1997, Boonton has not provided a written representation that it has
obtained all consents necessary to sublease the Subleased Premises.
(d) This Agreement shall automatically terminate if the Lease
expires (without renewal or extension) or is terminated.
(e) Certain obligations, including, but not limited to the
following obligations (the "Surviving Obligations") shall survive the expiration
or earlier termination (for any reason) of this Agreement (the date of such
expiration or earlier termination being referred to herein as "Termination
Date"):
(i) indemnification obligations under Section 10;
53
<PAGE>
(ii) obligations of each party under Section 13;
and
(iii) payment obligations with respect to
arbitrator's fees pursuant to Section 15.
Without limitation of the foregoing, the Surviving Obligations shall survive the
giving of any notice in connection with (x) the termination of this Agreement or
(y) the exercise by the non-breaching party of any rights or remedies (including
any notice in any forcible entry and detainer action). No implication is
intended that the above listed obligations comprise all of the Surviving
obligations. The liability of a party for any breach(es) of this Agreement shall
survive the expiration or termination of this Agreement. Notwithstanding any
other provision of this Agreement to the contrary, in the event that GEM
terminates this Agreement prior to the end of the term for reasons other that
those set forth in Section 11(a), (b), (c) or (d), then in that event the
parties agree that GEM shall continue to pay on a monthly basis for the
remainder of the Term any and all Rent allocable to the additional 3,200 square
feet of space which Boonton was caused to lease from the Landlord to comply with
the terms of this Agreement and the Maintenance Fee for a period of three (3)
months from the date of sub termination.
12.NO PARTNERSHIP. The parties hereto are not partners. Neither
the execution, delivery or performance of this Agreement, nor any of the terms,
conditions or provisions hereof, shall create any partnership or joint venture
between the parties. Without limitation of the foregoing, the cost-sharing and
space-sharing aspects of this Agreement do not create any partnership
relationship. The obligations of Boonton and GEM hereunder are several and all
not intended to be and shall not be joint and several for any purpose or in any
instance. Nothing contained herein shall be as to authorize other party to
represent to the other or to contract on behalf of the other party. Each party
shall be solely and entirely responsible for the management of its respective
business and operations. At all times during the term of this Agreement, Boonton
and GEM shall enjoy all rights which allow independent and viable management in
the operation of their respective business.
13.RESTRICTIVE COVENANTS.
(a) GEM covenants that during the Term and continuing for one
(1) year from the Termination Date (regardless of the reason for expiration or
termination of the Term), GEM shall not, directly or indirectly, without
Boonton's prior written consent (which Boonton may refuse to give in Boonton's
sole discretion), solicit the employment of, or employ, any person who is
employed by Boonton as the date hereof or at any time during the Term.
(b) Boonton covenants that during the Term and continuing for
one (1) year from the Termination Date (regardless of why the Term was
terminated or expired), Boonton shall not, directly or
54
<PAGE>
indirectly, without GEM'S prior written consent (which GEM may refuse to give in
GEM'S sole discretion), solicit the employment of, or employ, any person who is
employed by GEM as of the date hereof or at any time during the Term.
(c) The parties hereto recognize that the time and scope
limitations set forth in this Section 13 are reasonable and are required for the
protection of the parties hereto and in the event that any such limitation is
deemed to be unreasonable by a court of competent jurisdiction, Boonton and GEM
agree to the reduction of any or all of said limitations to such a period or
scope as said court shall deem reasonable under the circumstances.
14.INJUNCTIVE RELIEF Boonton and GEM specifically recognize that
any breach of Section 13 will cause irreparable injury to the non-breaching
party and that actual damages may be difficult to ascertain, and in any event,
may be inadequate. Accordingly (and without limiting the availability of legal
or equitable, including injunctive, remedies under any other provisions of this
Agreement), Boonton and GEM agree that in the event of any such breach, the
non-breaching party shall be entitled to injunctive relief (without the
necessity of posting bond) in addition to such other legal and equitable
remedies that may be available.
15.ARBITRATION. Any dispute in relation to this Agreement shall be
exclusively settled as follows: The dispute shall be discussed by the parties
thereto in an attempt to reach an amicable solution. If such attempts fail
within thirty (30) days the matter shall be submitted to Daniel Auzan (as long
as he is a director of Boonton). If the dispute is not settled within thirty
days, either party may submit the issue to be settled by arbitration. Any
arbitration of this Agreement shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, using
three (3) arbitrators, with such arbitration to be held in Morristown, New
Jersey. Boonton and GEM shall each select one arbitrator, and the two
arbitrators so selected shall select the third arbitrator. The arbitrators' fees
shall be shared equally by the parties. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
16.UNAVOIDABLE DELAYS If either party fails to timely perform any
of the terms, covenants or conditions hereunder (other than the payment of
money) and such failure is due in whole or in part to any strike, lockout, labor
trouble, civil disorder, inability to procure materials or supplies, failure of
power, restrictive governmental laws or regulations, civil disorder,
insurrection, war, fuel shortages, accidents, casualties, acts of God, or any
other cause beyond the reasonable control of the party, then the time for
performance shall be extended by the period of delay resulting from such cause.
17.CONFIDENTIALITY. Boonton and GEM shall each respect and
55
<PAGE>
maintain the confidentiality of all the information about the other's activities
that comes to its knowledge in connection with this Agreement. Unless and only
to the extent that such information has previously been in the possession of the
recipient or is in the public domain, any information exchanged between Boonton
and GEM and any data derived therefrom shall be Confidential Information and all
intellectual property rights connected therewith and the right to use such
Confidential Information shall remain vested in the disclosing party. Each
recipient shall preserve and cause its officers, employees and agents to
preserve the secrecy of Confidential Information and shall not disclose or use
the same without the prior written consent of the disclosing party. Such consent
is deemed to have been given in respect of affiliates of GEM who are involved in
the business operation of provided that Boonton and GEM procure that such
affiliates observe the same standard of care and non-use of the Confidential
Information received as the parties observe pursuant to this clause. Such
consent is also deemed to have been given in respect of third parties to the
extent reasonably required to effect the purpose hereof. Each party shall ensure
that information proprietary to third parties is not disclosed to the other
party.
18.MISCELLANEOUS.
(a) NOTICES. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by facsimile, by
nationally recognized private courier, or by United States mail. Notices
delivered by mail shall be deemed to have been given three (3) business days
after being deposited in the United States mail, postage prepaid, registered or
certified mail, return receipt requested. Notices delivered by hand, by
facsimile, or by nationally recognized private courier shall be deemed to have
been given on the date of receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also delivered by hand, or
deposited in the United States mail, postage prepaid, registered or certified
mail, on or before two (2) business days after its delivery by facsimile. All
notices shall be addressed as follows:
If to Boonton:
Boonton Electronics Corporation
25 Eastmans Road
Parsippany, New Jersey 07054
Attention: President
Fax Number: (973) 386-9191
with a copy to:
Smith, Luhn & Doran, P.C.
Courthouse Plaza
60 Washington Street
Morristown, NJ 07960
Attention: Gregory Luhn, Esq.
56
<PAGE>
Telecopier: (973) 292-9168
If to GEM:
Victor Tolan, President
G.E.M. Illinois, Inc.
1031 Segovia Circle
Placentia, CA 92870
with a copy to:
Graham, Curtin & Sheridan
A Professional Association
4 Headquarters Plaza
Box 1991
Morristown, New Jersey 07962-1991
Attention: Joseph M. Lamastra
Telecopier: (973) 898-0107
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 17(a).
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties. The parties make no representations or warranties
to each other, except as expressly set forth in this Agreement.
(c) NON-WAIVER. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or conditions of
this Agreement, to exercise any right or privilege in this Agreement conferred,
or the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative the waiving party.
(d) APPLICABLE LAW. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction, effect and
in all other respects by the internal laws of the State of New Jersey applicable
to contracts made in that State.
(e) BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their successors and
permitted assigns. Nothin9 in this Agreement, express or implied, is intended to
confer on any Person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, including, without limitation,
third party
57
<PAGE>
beneficiary rights.
(f) ASSIGNABILITY. This Agreement shall not be assignable by
either party without the prior written consent of the other party.
(g) AMENDMENTS. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf of
each of the parties hereto.
(h) CONSTRUCTION. The headings contained in this Agreement are
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement. For purposes of this Agreement: (i)
"including" means including without limitation; and (ii) the terms 11herein",
'1hereunder" and "hereof" refer to this Agreement as a whole rather than just
the sections or subsections where such terms appear.
(i) REPRESENTATIVES.' If Yves Guyomar is unable to act for
Boonton pursuant to this Agreement, Boonton shall appoint a substitute
representative who is reasonably satisfactory to GEM. If Victor Tolan is unable
to act for GEM pursuant to this Agreement, GEM shall appoint a substitute
representative who is reasonably satisfactory to Boonton.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
BOONTON ELECTRONICS CORPORATION
By: /s/
------------------------------------------
Its: President
G.E.M. ILLINOIS, INC.
By: /s/ VICTOR TOLAN
------------------------------------------
Victor Tolan, President
58
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<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
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<TOTAL-LIABILITY-AND-EQUITY> 4,487,848
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