<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X|QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: April 4, 1998
OR
|_|TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________ to __________________
Commission File Number 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-0905052
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3601 E. UNIVERSITY DRIVE
PHOENIX, ARIZONA 85034
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code:
602/437-1520
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
At May 5, 1998, 6,674,492 shares of the Registrant's Common Stock, and 119,906
shares of the Registrant's Preferred Stock were outstanding.
<PAGE> 2
BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
Index
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION.......................................................................... 2-7
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)........................................................ 2
April 4, 1998 and September 27, 1997
Consolidated Statements of Income (Unaudited).................................................. 3
Second Quarter and Six Months Ended
April 4, 1998 and March 29, 1997
Consolidated Statements of Cash Flows (Unaudited).............................................. 4
Six Months Ended April 4, 1998 and
March 29, 1997
Notes to Consolidated Financial................................................................ 5
Statements (Unaudited)
Item 2. Management's Discussion and Analysis................................................ 6
of Financial Condition and Results
of Operations
PART II OTHER INFORMATION.......................................................... 8
Item 4. Submission of Matters to a Vote of Security Holders................................. 8
Item 6. Exhibits and Reports on Form 8-K.................................................... 9
</TABLE>
1
<PAGE> 3
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
April 4, 1998 September 27, 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 11 $ 1,218
Accounts receivable, net 5,760 4,476
Inventories 7,718 8,158
Prepaid expenses 438 539
Deferred income taxes 2,782 2,782
- ----------------------------------------------------------------------------------
Total Current Assets 16,709 17,173
Property, Plant and Equipment, net 2,636 2,642
Deferred Income Taxes 138 492
Other Assets, net 1,228 1,202
- ----------------------------------------------------------------------------------
Total Assets $20,711 $21,509
- ----------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 884 $ 1,608
Accounts payable 1,453 1,987
Accrued salaries and benefits 1,281 1,953
Accrued expenses 260 503
Reserve for loss on discontinued operation 870 1,300
- ----------------------------------------------------------------------------------
Total Current Liabilities 4,748 7,351
Long-Term Debt 5,765 4,546
Other Long-Term Liabilities 339 339
- ----------------------------------------------------------------------------------
Total Liabilities 10,852 12,236
- ----------------------------------------------------------------------------------
Shareholders' Equity 9,859 9,273
Total Liabilities and Shareholders' Equity $20,711 $21,509
- ----------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(Restated See Note 4)
- -------------------------------------------------------------------------------------------------------
Second Quarter First Six Months
----------------------- -----------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 5,694 $ 5,577 $ 11,693 $ 10,613
Cost of sales 3,437 3,311 6,949 6,275
- -------------------------------------------------------------------------------------------------------
Gross margin 2,257 2,266 4,744 4,338
- -------------------------------------------------------------------------------------------------------
Expenses:
Selling, general and administrative 1,230 1,464 3,059 2,842
Product development 204 132 334 216
Interest expense 163 98 304 203
Other income, net (228) (161) (207) (280)
- -------------------------------------------------------------------------------------------------------
Total expenses 1,369 1,533 3,490 2,981
- -------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 888 733 1,254 1,357
Income tax expense 332 283 489 524
- -------------------------------------------------------------------------------------------------------
Income from continuing operations 556 450 765 833
- -------------------------------------------------------------------------------------------------------
Discontinued Operations
Electromechanical segment
Loss from operations, net of income tax
expense/(credit) of $0, ($18), $0 and $26 $ 0 (52) $ 0 (6)
- -------------------------------------------------------------------------------------------------------
Income from discontinued operations $ 0 (52) $ 0 (6)
- -------------------------------------------------------------------------------------------------------
NET INCOME 556 398 765 827
- -------------------------------------------------------------------------------------------------------
Earnings per share, continuing operations $ 0.07 $ 0.06 $ 0.09 $ 0.10
Earnings per share, discontinued operations $ 0.00 $ (0.01) $ 0.00 $ 0.00
- -------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE: $ 0.07 $ 0.05 $ 0.09 $ 0.10
- -------------------------------------------------------------------------------------------------------
</TABLE>
Earnings per share-assuming dilution is the same as earnings per share and thus
is not shown separately.
See Notes to Consolidated Financial Statements
3
<PAGE> 5
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FIRST SIX MONTHS
-----------------------
APRIL 4, MARCH 29,
1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 765 $ 827
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 320 277
Deferred income tax expense 354 464
Net changes in balance sheet accounts:
Accounts receivable (1,284) (944)
Inventories 440 (357)
Prepaid expenses 101 34
Accounts payable (534) 763
Accrued salaries & expenses (915) (677)
Reserve for loss from discontinued operations (430) 0
Other (25) 42
- ----------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (1,208) 429
- ----------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (351) (377)
Proceeds from sale of property, plant and equipment 36 0
- ----------------------------------------------------------------------------------
Net cash used in investing activities (315) (377)
- ----------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Borrowings under long-term debt 1,207 117
Retirement of long-term debt (712) (261)
Payment of dividends on preferred stock (180) (180)
Issuance of common stock 1 241
Other 0 (6)
- ----------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 316 (89)
- ----------------------------------------------------------------------------------
Net change in cash (1,207) (37)
Cash at beginning of period 1,218 108
- ----------------------------------------------------------------------------------
Cash at end of period $ 11 $ 71
- ----------------------------------------------------------------------------------
</TABLE>
See notes to Consolidated Financial Statements
4
<PAGE> 6
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of April 4, 1998 and September 27, 1997, the
consolidated statements of income for the second quarter and six months ended
April 4, 1998 and March 29, 1997, and the consolidated statements of cash flows
for the first six months ended April 4, 1998 and March 29, 1997, have been
prepared by the Registrant without audit. In the opinion of management, all
adjustments which are of a normal recurring nature necessary to present fairly
such financial statements have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial statements
be read in conjunction with the consolidated financial statements and notes
thereto included in the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 27, 1997. The results of operations for the above noted
periods ended are not necessarily indicative of the operating results for the
full year.
2. INVENTORIES
Inventories consist of the following (in thousands):
- --------------------------------------------------------------------------------
April 4, 1998 September 27, 1997
- --------------------------------------------------------------------------------
Raw Materials $1,947 $3,277
Work-in-process 4,950 4,258
Finished Goods 821 623
------ ------
$7,718 $8,158
====== ======
- --------------------------------------------------------------------------------
3. EARNINGS PER SHARE (EPS) DISCLOSURES:
The Company has adopted the provisions of the Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128") effective January 3, 1998.
SFAS 128 requires the presentation of basic and diluted earnings per share.
Basic EPS is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
is computed giving effect to all dilutive potential common shares that were
outstanding during the period. Dilutive potential common shares consist of the
incremental common shares issuable upon exercise of stock options. All prior
period earnings per share amounts have been restated to comply with the SFAS
128.
In accordance with the disclosure requirements of SFAS 128, a reconciliation of
the numerator and denominator of basic and diluted EPS is provided as follows
(in thousands, except per share amounts).
5
<PAGE> 7
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SECOND QUARTER ENDED
FISCAL 1998 FISCAL 1997
- ---------------------------------------------------------------------------------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings from continuing
operations, net of tax $556,000 $450,000
Less: preferred stock
dividends 90,000 90,000
- ---------------------------------------------------------------------------------------------------------------------
BASIC EPS
Earnings applicable to
Continuing operations, net of
tax 466,000 6,674,497 $0.07 360,000 6,658,980 $0.06
EFFECT OF DILUTIVE SECURITIES
Common stock options 171,603 14,693
- ---------------------------------------------------------------------------------------------------------------------
DILUTED EPS
Earnings from continuing
operations available to
common stock holders $466,000 6,846,100 $0.07 $360,000 6,673,673 $0.06
======== ========= ===== ======== ========= =====
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
FIRST SIX MONTHS
FISCAL 1998 FISCAL 1997
- ---------------------------------------------------------------------------------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings from continuing $765,000 $833,000
operations, net of tax
Less: preferred stock
dividends $180,000 $180,000
- ---------------------------------------------------------------------------------------------------------------------
BASIC EPS
Earnings applicable to
continuing operations, net of
tax 585,000 6,674,495 $0.09 $653,000 6,610,843 0.10
EFFECT OF DILUTIVE SECURITIES
Common stock options 96,589 10,351
- ---------------------------------------------------------------------------------------------------------------------
DILUTED EPS
Earnings from continuing
operations available to
common stock holders $585,000 6,771,084 $0.09 $653,000 6,621,194 $0.10
======== ========= ===== ======== ========= =====
</TABLE>
The convertible preferred stock, which was convertible to 1,598,346 common
shares on April 4, 1998 and on March 29, 1997, which could potentially dilute
basic EPS in the future was not included in the computation of diluted EPS
because to do so would have been antidilutive for the periods presented.
Options to purchase 78,000 shares of common stock at prices ranging from $2.56
to $3.56 per share were outstanding during the first quarter and six months of
1998 but were not included in the computation of diluted EPS because the option
exercise price was greater than the average market price of the common shares.
These options expire at various times through December, 2007.
6
<PAGE> 8
4. DISCONTINUED OPERATIONS
In December, 1997 the Board of Directors decided to sell its Technologies
division. The results of operations for the six months and quarter ended March
29, 1997, have been restated to reflect this division as a discontinued
operation. Thus, this division is reflected as a discontinued operation for all
periods presented in the Company's Statement of Income. As of September 27,
1997, the Company recorded a reserve of $1,300,000 for estimated future
operating losses of the Technologies division and the estimated costs and losses
associated with the disposition.
During the first six months of fiscal 1998, the Technologies division incurred
losses of $390,000 which, combined with $40,000 of additional cost associated
with the disposition, leaves a reserve balance of $870,000 on April 4, 1998.
While the estimated net future loss is based on management analysis, it is
difficult to estimate what the Company may ultimately realize on the sale of
this division. What the Company could eventually realize may differ materially
in the near term from the amounts assumed in arriving at the estimated net loss.
The following table reflects the results of the discontinued operations:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
- -------------------------------------------------------------------------------------------
TECHNOLOGIES DIVISION
OPERATING RESULTS FISCAL, 1998 FISCAL, 1997 FISCAL, 1998 FISCAL, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $2,471,000 $1,121,000 $4,105,000 $2,573,000
Gross margin $ 522,000 $ 343,000 $ 626,000 $ 850,000
Product development $ 35,000 $ 43,000 $ 84,000 $ 62,000
Operating expenses $ 464,000 $ 370,000 $ 932,000 $ 768,000
</TABLE>
The components of net assets of discontinued operations included in the
Company's Consolidated Balance Sheets at April 4, 1998 and September 27, 1997
are as follows:
<TABLE>
<CAPTION>
TECHNOLOGIES DIVISION APRIL 4, 1998 SEPTEMBER 27, 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Receivables, net $ 1,743,000 $ 1,089,000
Inventories 2,635,000 1,958,000
Other current assets 317,000 385,000
Property and equipment 666,000 700,000
Accounts payable and other current liabilities
(1,057,000) (694,000)
Long-term debt (27,000) (41,000)
------------- ------------
Net Assets $ 4,277,000 $ 3,397,000
============= ============
</TABLE>
5. SUBSEQUENT EVENTS
On April 30, 1998, the company sold certain land and building in Acton,
Massachusetts for approximately $1,200,000. No significant gain or loss was
realized on the sale. As of April 4, 1998, the land and buildings are included
in other assets. The proceeds were used to retire the Industrial Revenue Bonds
and repay $950,000 of the Bank One term loan.
On May 3, 1998, the Company entered into a definitive agreement to merge with
Electronic Designs, Inc. (EDI). Under the terms of the agreement, each share of
EDI's common stock will be
7
<PAGE> 9
exchanged for 1.375 shares of Bowmar common stock.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, certain matters
discussed here contain forward-looking statements. The words "believe", "expect"
and "anticipate" identify forward-looking statements which speak only as of the
date the statement is made. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, some of which cannot be predicted or quantified and are beyond
the Company's control. Potential risks and uncertainties include but are not
limited to such factors as the ability of the Company to identify a potential
buyer for the Technologies division and to conclude a beneficial agreement in a
timely fashion, the ability of the Company to conclude such a sale without
substantial disruption to the business of the Technologies division, demand for
the products of the White Microelectronics division, the instability of the
Asian markets, the ability of the Company to penetrate successfully the
commercial market for microelectronic products, demand for microelectronic
products generally, industry competitiveness, reductions in price and other
risks of doing business generally. In light of these risks and uncertainties,
there can be no assurance that the forward-looking information contained in this
document will in fact transpire or prove to be accurate. Actual results may
differ materially from those in the forward-looking statements.
INTRODUCTION
As previously disclosed, the Board of Directors has determined to implement a
series of actions expected to strategically reposition the Company, reduce
corporate overhead and realign management. Although the Board of Directors has
determined to seek a buyer for the Company's Technologies division, the Company
is not yet in serious discussions with any particular potential buyers. The
Company has retained an investment advisor to assist in its efforts to sell this
division. There can be no assurance that the Board of Directors will be able to
identify a suitable buyer, or any buyer at all, or that if a sale is concluded
it will be on terms and conditions advantageous to the Company. Based on the
decision to sell the Technologies division, the division has been accounted for
as a "discontinued operation". Accordingly, a $1.3 million reserve for
anticipated losses and the cost of disposition was recorded in the fourth
quarter of fiscal 1997 of which $430,000 was used in the first six months of
fiscal 1998. The following discussion takes into account the treatment of the
Technologies division as a discontinued operation.
In addition, the Board of Directors reduced and relocated the Company's
corporate headquarters. The Company will operate exclusively out of the new
White Microelectronics division facility located in Phoenix, Arizona. To cover
the expenditures related to the reduction and relocation, the Company incurred
an approximate $400,000 charge in the first quarter of 1998.
RESULTS OF OPERATION
Net Sales
Sales for the second quarter of Fiscal 1998 were $5,694,000 compared to prior
year sales for the second quarter of $5,577,000 (restated). The increase in
sales was a result of increased sales of plastic packaged SRAM products.
The Company has seen some decline in bookings affecting the fourth quarter,
which management believes is primarily a result of the current Asian economic
situation. Given the softness in the
8
<PAGE> 10
fourth quarter bookings and the current situation in the military markets, the
Company now believes that changes in defense spending could have an adverse
effect on the Company's overall results. Thus the Company is continuing to
pursue its goal of reduced dependency on the defense industry by pursuing
commercial business while emphasizing niche military markets where it has a
competitive advantage.
Gross Margin
Gross margins for the second quarter of fiscal 1998 were very similar to the
same period of fiscal 1997. Gross margin for the first six months of fiscal 1998
increased by $406,000 over the same period for fiscal 1997 primarily as a result
of increased sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the second quarter of fiscal
1998 decreased $234,000 versus the same period in fiscal 1997. The decrease is
due primarily to the savings realized as a result of the Company's decision to
reduce and relocate its corporate headquarters in Phoenix, Arizona. The increase
of $217,000 in expenses for the first six months of fiscal 1998 as compared to
the same period in fiscal 1997 was due to the $400,000 charge taken in the first
quarter of 1998 for the reduction and relocation of its corporate headquarters.
Product Development Expenses
Product development expenses for the second quarter of fiscal 1998 were
approximately $72,000 higher than the same period of fiscal 1997 and were
$118,000 higher for the first six months of fiscal 1998 as compared to the same
period of fiscal 1997. The increases were a result of a commercial product
development at the microelectronics segment.
Interest Expense
Interest expense for the second quarter and the first six months in fiscal 1998
increased by $65,000 and $101,000, respectively, as compared to the same periods
of fiscal 1997. The increase is primarily a result of additional borrowings to
complete the Company's leasehold improvements for the new facility and to
finance increasing receivables.
Other Income
Other income was greater for the second quarter of fiscal 1998 by $67,000
compared to the same period of fiscal 1997. The increase in other income in the
second quarter is due to a tax settlement, which resulted in $292,000 of income.
The reason the increase in other income was not higher in the quarter was the
loss of rental income as a result of the lease expiration on the Company's
building in Acton, Massachusetts in February, 1997 combined with the additional
expenses incurred in fiscal 1998 to maintain and prepare the property for sale.
Additionally there was a gain from the sale of a stock investment in the second
quarter of 1997. Other income for fiscal 1998 was down for the first six months
of fiscal 1998 as compared to the same period of fiscal 1997 because of the loss
of rental income as explained above.
Provision for Income Taxes
The provision for income taxes increased by approximately $49,000 for the second
quarter of fiscal 1998 and decreased by $35,000 for the six months of fiscal
1998 as compared to the same fiscal
9
<PAGE> 11
1997 periods. The higher income before income taxes caused the increase in the
second quarter and the lower income before income taxes over the first six
months of fiscal 1998 resulted in a lower income tax expense as compared to the
same period of fiscal 1997.
FINANCIAL CONDITION AND LIQUIDITY
As of April 4, 1998, working capital had increased to $11,961,000 from
$9,822,000 as of September 27, 1997, principally as a result of the
profitability of the Company and reduction in current liabilities.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
During the second quarter of fiscal 1998 the Company executed a modification to
its credit facility with Bank One, which extended the Company's due date on its
revolving line of credit to February 28, 2000 and modified certain restrictive
covenants.
The Company's operations used approximately $1,208,000 cash in the first six
months of fiscal 1998. The Company expects that revenues from operations, when
combined with the Company's available credit facilities, should be sufficient in
management's opinion to fund the Company's cash needs for the foreseeable
future.
RECENT DEVELOPMENTS
On April 30, 1998, the Company sold certain land and a building in Acton,
Massachusetts for approximately $1,200,000. No significant gain or loss was
realized on the sale. As of April 4, 1998, the land and buildings are included
in other assets.
On May 3, 1998, the Company entered into an Agreement and Plan of Merger (the
"Agreement") with Electronic Designs, Inc., a Delaware corporation ("EDI") and
Bravo Acquisition Subsidiary, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company formed for the purpose of entering into the Agreement
("Acquisition Subsidiary"). Pursuant to the Agreement, Acquisition Subsidiary
will merge with and into EDI and EDI will be the surviving, wholly owned
subsidiary corporation of the Company. Each issued and outstanding share of
EDI's common stock, par value $.01 per share, will be converted into the right
to receive 1.375 shares of the Company's common stock, stated value $.10 per
share (the "Exchange Ratio"). The Company will assume all outstanding options
and warrants of EDI, amended to take into account the Exchange Ratio. Pursuant
to the Agreement, Hamid Shokrgozar, President and Chief Executive Officer of the
Company, will be the president and chief executive officer of the combined
company and Don McGuinness, EDI's Chairman and Chief Executive Officer, will be
the Chairman of the combined company.
The merger is subject to the approval of the shareholders of each of the Company
and EDI, as well as certain regulatory approvals.
10
<PAGE> 12
PART II OTHER INFORMATION
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on February 5, 1998.
(b) At that meeting all of the then current directors were re-elected. The vote
was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name For Withhold Authority
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas K. Lanin 6,154,793 132,669
Steven P. Matteucci 6,170,693 116,769
Dan L. McGurk 6,171,088 116,374
Thomas M. Reahard 6,171,193 116,269
Edward A. White 6,160,381 127,081
</TABLE>
(c) At that meeting the shareholders ratified the selection of Coopers &
Lybrand L.L.P. as the Company's independent auditors for fiscal 1997.
The vote was as follows:
For 6,196,360
Against 41,108
Abstain 49,994
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
2. Agreement and Plan of Merger, dated as of May 3, 1998, by and among
Bowmar Instrument Corporation, Bravo Acquisition Subsidiary, Inc. and
Electronic Designs, Inc. (Previously filed as Exhibit 2 to the
Registrant's Form 8-K filed May 6, 1998 and incorporated herein by this
reference).
3.1 Amended and Restated Articles of Incorporation. (Previously filed as
Exhibit A to the Registrant's definitive Proxy Statement prepared in
connection with the 1993 Annual Meeting of Shareholders, which is
incorporated herein by this reference.)
3.2 Amended and Restated Code of By-laws, as further amended on July 28,
1995. (The former having been previously filed as Exhibit 3 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993, and the latter having been previously filed as Exhibit 5(a)
to the Current Report on Form 8-K dated October 16, 1995, both of which
are incorporated herein by this reference.)
4.1 Indenture, Bowmar Instrument Corporation 13-1/2% Convertible
Subordinated Debentures due December 15, 1995. (Previously filed as
Exhibit 4.4 to the Registration Statement of Form S-7, File No.
2-70025, on November 25, 1980, which is incorporated herein by this
11
<PAGE> 13
reference.)
4.2 Amended and Restated Articles of Incorporation (See Exhibit 3.1, above.)
4.3 Rights Agreement, dated as of December 6, 1996 between Bowmar
Instrument Corporation and American Stock Transfer and Trust
Corporation. (Previously filed as Exhibit 5C to the Form 8-K filed by
the Registrant on December 19, 1996.)
10.4(h) Fourth Amendment to Credit Agreement, dated as of March 16, 1998 by and
between Bowmar Instrument Corporation and Bank One, Arizona, NA.
10.4(i) Promissory Note Modification Agreement dated March 16, 1998 by and
between Bowmar Instrument Corporation and Bank One, Arizona NA.
10.4(j) Executive Employment Agreement by and between Hamid Shokrgozar and
Bowmar Instrument Corporation.
27 Financial Data Schedule.
b. Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
BOWMAR INSTRUMENT CORPORATION
/s/Joseph G. Warren, Jr.
- -----------------------------
Joseph G. Warren, Jr.
Vice President Finance
Dated: May x, 1998
12
<PAGE> 1
Exhibit 10.4(h)
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Amendment ("Amendment") is made as of the 16th day of March, 1998
by and between BOWMAR INSTRUMENT CORPORATION, an Indiana corporation (the
"Borrower") and Bank One, Arizona, NA (the "Bank").
WHEREAS, the Borrower and the Bank entered into a Loan Agreement, dated
August 28, 1995 as amended (if applicable) (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning ascribed
in the Credit Agreement.
2. The definition of "RLC Maturity Date" on the eighth page of the Loan
Agreement is hereby amended in its entirety to read as follows:
"RLC Maturity Date" means February 28, 2000.
3. Sections 10.8 (a), (c) and (e) are hereby amended in their entirety
to read as follows:
(a) The Current Ratio to be less than 2.0 to 1.0 at the end of any
quarterly accounting period of Borrower.
(c) Its Tangible Net Worth to be less than $7,600,000.00 at the end of
any quarterly accounting period of Borrower.
(e) Its Debt Coverage Ratio to be less than 2.3 to 1.0 from 3-31-98
thru 6-30-98, from 6-30-98 and thereafter the Debt Coverage Ratio to be
less than 2.5 to 1.0 at the end of any quarterly accounting period of
Borrower.
4. Section 10.8 (b) is hereby deleted in its entirety.
5. The Borrower represents and warrants that (a) the representations
and warranties contained in the Credit Agreement are true and correct in all
material respects as of the date of this Amendment, (b) no condition, act or
event which could constitute an Event of Default under the Credit Agreement
exists, and (c) no condition, event, act or omission has occurred, which, with
the giving of notice or passage of time, would constitute an Event of Default
under the Credit Agreement.
6. The Borrower agrees to pay all fees and out-of-pocket disbursements
incurred by the Bank in connection with this Amendment, including legal fees
incurred by the Bank in the preparation, consummation, administration and
enforcement of this Amendment.
7. This Amendment shall become effective only after it is fully
executed by the Borrower and the Bank and the Bank shall have received from the
Borrower the following documents: (i) Business Loan Application, and (ii)
Promissory Note Modification Agreement. Except as amended by this Amendment, the
Credit Agreement shall remain in full force and effect in accordance with its
terms.
8. This Amendment is a modification only and not a novation. Except for
the above-quoted modification(s), the Credit Agreement, any agreement or
security document, and all the terms and conditions thereof, shall be and remain
in full force and effect with the changes herein deemed to be incorporated
therein. This Amendment is to be considered attached to the Credit Agreement and
made a part thereof. This Amendment shall not release or affect the liability of
any guarantor, surety or endorser of the Credit Agreement or release any owner
of collateral securing the Credit Agreement. The validity, priority and
enforceability of the Credit Agreement shall not be impaired hereby. To the
extent that any provision of this Amendment conflicts with any term or condition
set forth in the Credit Agreement, or any agreement or security document
executed in conjunction therewith, the provisions of this Amendment shall
supersede and control. Borrower acknowledges that as of the date of this
Amendment it has no offsets with respect to all amounts owed by Borrower to Bank
and Borrower waives and releases all claims which it may have against Bank
arising under the Agreement on or prior to the date of this Amendment.
1
<PAGE> 2
9. The Borrower acknowledges and agrees that this Amendment is limited
to the terms outlined above, and shall not be construed as an amendment of
any other terms or provisions of the Agreement; The Borrower hereby
specifically ratifies and affirms the terms and provisions of the Agreement.
Borrower releases Bank from any and all claims which may have arisen, known
or unknown, in connection with the Credit Agreement on or prior to the date
hereof. This Amendment shall not establish a course of dealing or be
construed as evidence of any willingness on the Lender's part to grant other
or future amendments, should any be requested.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the day and year first above written.
BORROWER:
BANK ONE, ARIZONA, NA BOWMAR INSTRUMENT CORPORATION,
an Indiana corporation
By: /s/ Chad Christian By: /s/ Joseph G. Warren, Jr.
------------------- ---------------------------
Name: Chad Christian Name: Joseph G. Warren, Jr.
Title: Vice President Title: Vice President
2
<PAGE> 1
Exhibit 10.4(i)
PROMISSORY NOTE MODIFICATION AGREEMENT
This Agreement is made and entered into on March 16, 1998 ("Agreement Date"), to
be effective as of March 16, 1998 ("Effective Date"), by and between BOWMAR
INSTRUMENT CORPORATION, an Indiana corporation (if more than one, jointly and
severally, "Maker") and Bank One, Arizona, NA ("Bank One"),
WITNESSETH:
WHEREAS, Maker heretofore executed a promissory note in the amount of
$4,000,000.00 dated, August 28, 1995 in favor of Bank One as same may have been
amended or modified from time to time ("Promissory Note"); and, WHEREAS, Maker
hereby acknowledges, agrees, verifies, ratifies and affirms that as of Agreement
Date, the outstanding principal balance on the Promissory Note is ONE MILLION
FIVE HUNDRED FOUR THOUSAND NINE HUNDRED THREE AND 55/100 DOLLARS ($1,504,903.55)
plus accrued interest and charges; and, WHEREAS, the Promissory Note has at all
times been, and is now, continuously and without interruption outstanding in
favor of Bank One; and WHEREAS, Maker has requested that the Promissory Note be
modified to the limited extent as hereinafter set forth; and, WHEREAS, Bank One
has agreed to such modification; NOW THEREFORE, by mutual agreement of the
parties and in mutual consideration of the agreements contained herein and for
other good and valuable considerations, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree that the Promissory Note is
modified as hereinafter indicated.
1. ACCURACY OF RECITALS.
Maker acknowledges the accuracy of the Recitals, stated above.
2. MODIFICATION OF PROMISSORY NOTE.
2.1 The maturity date of the Promissory Note is changed from February
28, 1999 to February 28, 2000.
2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Maker shall fail to comply with
any of the covenants of Maker herein or if any representation or warranty by
Maker or by any guarantor herein is materially incomplete, incorrect, or
misleading as of the date hereof. As used in this Agreement, "Loan Documents"
shall include the Promissory Note and all documents executed by Maker(s) or
others in connection with the Loan which is represented by the Promissory Note.
2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENT AND COLLATERAL.
The Loan Documents are ratified and affirmed by Maker and shall remain in full
force and effect as modified herein. Any property or rights to or interest in
property granted as security in the Loan Documents shall remain as security for
the loan and the obligations of Maker in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Maker represents and warrants to Bank One:
4.1 No default or event of default under any of the Loan Documents as
modified hereby, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
conditions of Maker or any other person whose financial statement has been
delivered to Bank in connection with the Promissory Note from the most recent
financial statement received by Bank.
4.3 Each and all representations and warranties of Maker in the Loan
Documents are accurate on the date hereof.
4.4 Maker has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Promissory Note and Loan Documents as modified herein are the
legal, valid, and binding obligation of Borrower, enforceable against Maker in
accordance with their terms.
1
<PAGE> 2
4.6 Maker is validly existing under the laws of the State of its formation or
organization and has the requisite power and authority to execute and deliver
this Agreement and to perform the Loan Documents as modified herein. The
execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Maker. This Agreement has been duly executed and delivered on
behalf of Maker.
5. BORROWER COVENANTS.
Maker covenants with Bank One.
5.1 Maker shall execute, deliver, and provide to Bank One such
additional agreements, DOCUMENTS, AND instruments as reasonably required by Bank
One to effectuate the intent of this Agreement.
5.2 Maker fully, finally, and forever releases and discharges Bank One
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, cause of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity of Maker, whether now known or unknown to Maker, (i) in respect of the
Loan, the Loan documents, or the actions or omissions of Bank One in respect of
the Loan or the Loan Documents and (ii) arising from events occurring prior to
the date of this Agreement. As used in this Agreement, "Loan Documents" shall
include the Promissory Note and all documents executed by Maker(s) in connection
with the Loan which is represented by the Promissory Note.
5.3 Contemporaneously with the execution and delivery of this
Agreement, Maker has paid to Bank:
5.3.1 All accrued and unpaid interest under the Promissory
Note and all amounts, other THAN interest and principal, due and payable by
Maker under the Loan Documents as the date hereof.
5.3.2 All the internal and external costs and expenses
incurred by Bank One in connection with thus Agreement (including, without
limitation, inside and outside attorneys, appraisal, appraisal review,
processing, title, filing, and recording costs, expenses, and fees).
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank One shall not be bound by this Agreement until (i) Bank One has executed
and delivered this Agreement, (ii) Maker has performed all of the obligations of
Maker under this Agreement to be performed contemporaneously with the execution
and delivery of this Agreement, (iii) each guarantor(s) of the Loan, if any, has
executed this Agreement and (iv) if required by Bank One, Maker and any
guarantor(s) have executed and delivered to Bank One an arbitration resolution,
and an environmental questionnaire, and an environmental certification and
indemnity agreement.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Maker and Bank One in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Maker and Bank One and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Maker, provided, however, Maker may not assign any of its right
or delegate any of its obligation under the Loan Documents and any purported
assignment or delegation shall be void.
9. CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically from one document.
2
<PAGE> 3
11. NOT A NOVATION.
This Agreement is a modification only and not a novation. Except for the
above-quoted modification(s), the Promissory Note, any agreement or security
document, and all the terms and conditions thereof, shall be and remain in full
force and effect with the changes herein deemed to be incorporated therein. This
Agreement is to be considered attached to the Promissory Note and made a part
thereof. This Agreement shall not release or affect the liability of any
guarantor, surety or endorser of the Promissory Note or release any owner of
collateral securing the Promissory Note. The validity, priority and
enforceability of the Promissory Note shall not be impaired hereby.
BOWMAR INSTRUMENT CORPORATION,
an Indiana corporation
By: /s/ Joseph G. Warren, Jr.
---------------------------
Name: Joseph G. Warren, Jr.
Its: Vice President
BANK ONE'S ACCEPTANCE
The foregoing Promissory Note Modification Agreement is hereby agreed to and
acknowledged this 16th day of March, 1998.
BANK ON ARIZONA, NA
By: /s/ Chad Christian
---------------------------
Name: Chad Christian
Its: Vice President
3
<PAGE> 1
Exhibit 10.4(j)
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of ______________,
1998, and is entered into by and between Hamid Shokrgozar ("Executive") and
Bowmar Instrument Corporation, an Indiana corporation, including its divisions
Bowmar Technologies and White Microelectronics ("Bowmar").
WHEREAS, Bowmar desires to continue Executive's employment as the
President and Chief Executive Officer of the White Microelectronics division of
Bowmar ("White") through January 1, 1998 and thereafter employ Executive as the
President and Chief Executive Officer of Bowmar, and the Executive desires to be
employed in those capacities;
WHEREAS, Bowmar desires to facilitate organizational discussions
pertaining to corporate affiliations by removing personal employment security
issues from the process and providing severance benefits which will best serve
its interest in retaining key employees; and
WHEREAS, Executive will report to the Bowmar Board of Directors;
NOW THEREFORE, Executive and Bowmar hereby agree that Executive will
render services to Bowmar on the following terms and conditions:
1. Employment/Director Consideration. Upon the terms and subject to the
conditions contained herein, Executive hereby agrees to provide full-time
services to Bowmar as its President and Chief Executive Officer. During the term
hereof, Executive agrees to devote his best efforts to the business of Bowmar,
and shall perform his duties in a diligent, trustworthy, business-like manner,
all for the purpose of advancing the business of Bowmar. Executive shall not
work for or receive compensation from any other entity for services performed or
to be performed by him during the term of this Agreement, except with the prior
written consent of
<PAGE> 2
Bowmar's Board of Directors. Executive will be considered for election to
Bowmar's Board of Directors at its meeting scheduled on April 30, 1998. If
Executive is not elected as a member of the Board of Directors at that meeting,
he may elect to terminate his employment with Bowmar and will be paid the
termination benefits set forth in Section 7(b)(i) to (v).
2. Duties. Executive shall perform the duties of President and Chief
Executive Officer of White and President and Chief Executive Officer of Bowmar
in accordance with the policies and practices of Bowmar, as they may be amended
from time to time. Those duties may be changed or modified in the discretion of
Bowmar's Board of Directors.
3. Term of Agreement. This Agreement shall be effective beginning on
October 1, 1997 and shall continue until September 30, 1999, except as provided
herein. It shall thereafter renew automatically for another two-year term,
unless thirty (30) or more days prior to such renewal date either of the parties
notifies the other in writing of its intention not to renew.
4. Base Salary and Benefits. Effective January 2, 1998, Bowmar shall
pay Executive a base salary of One Hundred Eighty Thousand Dollars ($180,000)
per annum, payable in bi-weekly installments, less applicable tax withholding
and salary deductions ("Base Salary"). Executive shall be entitled to
participate in the fringe benefit programs generally available to senior
executives of Bowmar, as they may be modified from time to time.
5. Incentive Compensation. Executive shall be eligible to receive
incentive compensation in accordance with the terms of the White
Microelectronics/Bowmar Bonus Plan as it may be amended. Thereafter, Executive
shall participate in the Bowmar incentive compensation plan or White
Microelectronics Bonus Plan, as they may be amended, as determined by Bowmar's
Board of Directors ("Incentive Compensation").
2
<PAGE> 3
6. Stock Options. During the term of this Agreement, Executive shall
participate in Bowmar's Employee Stock Option Plan in accordance with the terms
and conditions of the Plan, as it may be amended.
7. Termination and Termination Benefits. The Executive's employment
hereunder shall terminate under the following circumstances:
(a) Termination by Bowmar For Cause. Bowmar may terminate the
employment of Executive for cause at any time upon written notice to Executive
specifying the cause for termination. For purposes of this Section, "for cause"
shall mean discharge resulting from a determination by Bowmar that the Executive
has: (i) been convicted of a criminal offense involving dishonesty, fraud,
theft, embezzlement, breach of trust or moral turpitude; (ii) performed an act
or failed to act, which, if he were prosecuted and convicted, would constitute a
crime or offense involving money or property of Bowmar; (iii) violated the
provisions of Section 8 pertaining to confidential information; or (iv)
willfully refused to perform the duties reasonably assigned to Executive and
consistent with his status as President and Chief Executive Officer of White and
Chief Executive Officer of Bowmar, provided however that this Section 7(a)(iv)
shall not apply following a Change in Control as defined in Section 7(d).
In the event of Executive's termination by Bowmar under this
Section 7(a), Bowmar shall have no further obligation to Executive except for
any amounts earned by, or accrued for, Executive under any employee benefit
plans in which the Executive is then a participant, earned and unpaid salary,
accrued and unused vacation pay, and any rights of Executive under any bonus or
stock option agreement, which right has been earned by Executive at the time of
such termination pursuant to the terms of such plan or agreement. Executive
shall not be entitled to any further Base Salary, Incentive Compensation,
Severance Pay, fringe
3
<PAGE> 4
benefits, additional stock options, or any other compensation or benefits,
except as otherwise provided herein. A termination by Bowmar under this Section
7(a) shall not prejudice any remedy to which Bowmar may be entitled, either at
law or in equity or under this Agreement.
(b) Termination by Bowmar Without Cause. Executive's
employment under this Agreement may be terminated without cause at any time by
Bowmar upon written notice to Executive and, upon such termination, Executive
shall be entitled to the following benefits:
(i) Severance Payment. Bowmar will pay Executive a
single, lump sum "Severance Payment" which shall be the greater of: (a)
Executive's Base Salary for the remaining term of this Agreement or (b) an
amount equal to twelve months of Executive's total current Base Salary and
Incentive Compensation paid for the calendar year immediately preceding the
termination, less all applicable taxes and other withholding.
(ii) Benefit Continuation. Bowmar will continue
benefit contributions (medical, dental, disability and life) on behalf of
Executive for the greater of: (a) the remaining term of this Agreement; or (b)
twelve (12) months; provided, however, that benefits will be terminated if
Executive becomes eligible for such benefits through reemployment or otherwise.
In the event that Bowmar is unable to continue such contributions or secure
replacement coverage, then it shall pay to Executive the premium cost for such
coverage. Executive shall not participate in any other Bowmar benefit plans
except for any amounts earned by, or accrued for, Executive under any employee
benefit plans in which the Executive is then a participant, earned and unpaid
salary and accrued and unused vacation pay and any rights of Executive under any
bonus or stock option agreement, which right has been earned by Executive at the
time of such termination pursuant to the terms of such plan or agreement.
4
<PAGE> 5
(iii) Outplacement Assistance. Bowmar will provide
executive-level outplacement services to Executive at the outplacement provider
of his choice for a period not to exceed twelve (12) months in the maximum
amount of $25,000.
(iv) Attorneys' Fees. Bowmar will reimburse Executive
for all reasonable attorneys' fees incurred in connection with enforcing the
terms of this Agreement following termination of employment in the maximum
amount of $25,000, except as otherwise provided in Section 14.
(v) Stock Options. All Bowmar stock options
previously granted to Executive will vest immediately upon termination and
Executive shall have a period of twelve (12) months thereafter to exercise said
options.
(c) Termination by Executive Without Cause. Executive may
terminate this Agreement at any time upon thirty (30) days' prior written notice
to Bowmar. In the event of such termination, Bowmar shall have no further
obligations to Executive under this Agreement except for any amounts earned by,
or accrued for, Executive under any employee benefit plans in which the
Executive is then a participant, earned and unpaid salary and accrued and unused
vacation pay and any rights of Executive under any bonus or stock option
agreement, which right has been earned by Executive at the time of such
termination pursuant to the terms of such plan or agreement. Executive shall not
after termination be entitled to Base Salary, Incentive Compensation, Severance
Pay, fringe benefits, additional stock options, or any other compensation or
benefits. Bowmar may, in its sole discretion, accept Executive's resignation and
terminate his employment prior to the expiration of the thirty (30) day notice
period and pay Executive's compensation for the notice period (or remaining term
thereof).
5
<PAGE> 6
(d) Termination of Executive Following a Change in Control. In
the event that a Change in Control occurs when the remaining term of this
Agreement is less than eighteen (18) months, then this Agreement shall be
automatically renewed for a period of eighteen (18) months following the
effective date of the Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean: any sale of all or substantially all of the
assets of Bowmar; or merger or consolidation involving Bowmar, unless the
stockholders of Bowmar receive in the transaction, with respect to their stock
in Bowmar, stock or other securities representing a majority in voting interest
of the acquiring entity's equity securities; or any sale of a majority voting
interest of the outstanding stock of Bowmar by the holders thereof in a single
transaction or series of related transactions. For a period of eighteen (18)
months following the effective date of a Change in Control, the Executive may
terminate the Agreement by written notice to Bowmar's Board of Directors (or its
successor) subsequent to the occurrence of any of the following events:
(i) Notice of termination or a material change in the
nature or scope of Executive's responsibilities, title, authority, reporting
relationship, powers, functions or duties from the responsibilities, title,
authority, reporting relationship, powers, functions or duties exercised by the
Executive immediately prior to the Change in Control; or
(ii) A decrease in the total annual compensation or
benefits payable to Executive other than as a result of a decrease in
incentive-based compensation payable to the Executive and to all other executive
officers of Bowmar on the basis of Bowmar's financial performance;
(iii) A requirement imposed by Bowmar that Executive
relocate to an office that is more than fifty (50) miles distant from the office
at which he is employed or the
6
<PAGE> 7
home at which he resides immediately prior to the Change in Control or an
increase in Executive's business travel; or
(iv) Failure of Bowmar's successor to assume its
obligations hereunder following a Change in Control.
In the event the Executive terminates this Agreement under the
terms of this Section 7(d), he shall be paid a lump-sum amount equal to one and
one-half (1-1/2) times Executive's combined current Base Salary and Incentive
Compensation paid for the calendar year immediately preceding the termination,
as well as the additional benefits set forth in Section 7(b), less all
applicable taxes and other withholding. In the event of such termination, Bowmar
shall have no further obligations to Executive under this Agreement except for
any amounts earned by, or accrued for, Executive under any employee benefit
plans in which the Executive is then a participant, earned and unpaid salary and
accrued and unused vacation pay and any rights of Executive under any bonus or
stock option agreement, which right has been earned by Executive at the time of
such termination pursuant to the terms of such plan or agreement.
(e) Non-Renewal Severance Payment. In the event that Bowmar
gives notice of its intention not to renew this Agreement in accordance with
Section 3, it shall, upon the termination of Executive's employment, pay
Executive in a single lump sum an amount equal to the Severance Payment set
forth in Section 7(b)(i), and provide the other benefits set forth in Sections
7(b)(ii) to (v). Bowmar shall have no further obligations to Executive except
for any amounts earned by, or accrued for, Executive under any employee benefit
plans in which the Executive is then a participant, earned and unpaid salary and
accrued and unused vacation pay and any rights of Executive under any bonus or
stock option agreement, which right has been
7
<PAGE> 8
earned by Executive at the time of such termination pursuant to the terms of
such plan or agreement.
(f) Illness, Incapacity, or Death. In the event of illness or
incapacity of Executive, Bowmar shall continue Executive's Base Salary for a
period of ninety (90) days or such time as the Executive is eligible for
consideration for long-term disability benefits, whichever occurs last. If
Executive is unable to perform the essential elements of his job due to illness
or incapacity for a period greater than ninety (90) days, Bowmar may elect, in
its sole determination, to terminate this Agreement with no further obligation
to Executive, except for any amounts earned by, or accrued for, Executive under
any employee benefit plans in which the Executive is then a participant, earned
and unpaid salary and accrued and unused vacation pay and any rights of
Executive under any bonus or stock option agreement, which right has been earned
by Executive at the time of such termination pursuant to the terms of such plan
or agreement. If Executive should die during the term of this Agreement,
Executive's heir shall be paid by Bowmar a total amount equal to ninety (90)
days' Base Salary, be entitled to whatever rights the heir may have under
Executive's stock option plan and be granted applicable COBRA rights; Bowmar's
remaining obligations hereunder shall terminate as of the end of the month in
which Executive's death occurs.
8. Confidential Information. In view of the fact that Executive's work
for Bowmar will bring him into close contact with many confidential affairs and
plans of Bowmar not readily available to the public, Executive agrees to keep
secret and retain in the strictest confidence all confidential matters of
Bowmar, including, without limitation, trade "know-how," secrets, customer and
prospect lists, pricing policies, prices, costs, operational and development
methods, and other business affairs of Bowmar (but excluding all information in
the public domain)
8
<PAGE> 9
learned by him heretofore or hereafter, and not to disclose them to anyone
outside of Bowmar, either during or after his employment with Bowmar, except in
the course of performing his duties hereunder or with Bowmar's express written
consent. Executive further agrees to deliver promptly to Bowmar, on termination
of his employment, or at any time Bowmar may so request, all memoranda, notes,
records, reports, manuals, drawings, blueprints, computer records and other
documents (and all copies thereof) relating to Bowmar's business and all
property associated therewith, which he may then possess or have under his
control. Executive acknowledges and understands that his obligations with
respect to confidential information shall survive the termination of this
Agreement.
9. Violation of Covenants. If Executive violates any of his covenants
under Section 8, Executive agrees and acknowledges that such violation or
threatened violation will cause irreparable injury to Bowmar and that Bowmar
will be entitled to injunctive relief without the necessity of proving actual
damages.
10. Automobile Allowance. Bowmar shall pay an automobile allowance to
Executive in the amount of $850.00 per month, as it may be changed from time to
time, during the term of this Agreement.
11. Vacation. Bowmar will provide Executive with annual paid vacation
consistent with the policies of Bowmar applicable to senior executive staff, as
they may be changed from time-to-time.
12. Company Expenses. During the term of this Agreement, Bowmar will
reimburse Executive for reasonable authorized business expenses incurred on
behalf of Bowmar in accordance with Bowmar policies, as they may be amended.
9
<PAGE> 10
13. Assistance with Litigation. Executive shall make himself available,
upon the request of Bowmar or its counsel, to testify or otherwise assist in
litigation, arbitration or other disputes involving Bowmar during and following
the termination of this Agreement, so long as Executive receives reimbursement
for his reasonable out-of-pocket expenses. Executive will also make himself
available to the attorneys representing Bowmar for such purposes as they
reasonably deem necessary, including but not limited to, the review of
documents, discussion of the cases and preparation for trial. This Agreement is
not intended to and shall not be construed so as to in any way limit or affect
the testimony which Executive gives in any such litigation; it is understood and
agreed Executive will at all times testify fully, truthfully and accurately,
whether in deposition, trial or otherwise.
14. Arbitration. Any dispute, controversy, or claim arising out of or
relating to this Agreement or breach thereof, or arising out of or relating in
any way to the employment of Executive or the termination thereof, shall be
submitted to arbitration in Phoenix, Arizona, in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator may be entered
in any court in the State of Arizona, or in any other court of competent
jurisdiction. In reaching his or her decision, the arbitrator shall have no
authority to ignore, change, modify, add to or delete from any provision of this
Agreement, but is instead limited to interpreting this Agreement. The fees and
expenses of the arbitrator shall initially be shared equally by the parties and
the prevailing party shall be entitled to recover its fees and expenses incurred
in connection with the arbitration.
15. Governing Law. This Agreement has been entered into and shall be
interpreted in accordance with the laws of the State of Arizona.
10
<PAGE> 11
16. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the employment of Executive and there are no
representations, warranties or commitments other than those set forth herein.
This Agreement may be amended or modified only by an instrument in writing
executed by both of the parties hereto. This is an integrated agreement.
17. Effect of Agreement. This Agreement shall be binding upon the
parties and their respective heirs, executors, administrators, successors and
assigns. Executive shall not assign any rights or duties under this Agreement
without the written consent of the Bowmar Board of Directors. In the event of a
merger, sale, transfer, consolidation or reorganization involving Bowmar, this
Agreement shall continue in force and become an obligation of Bowmar or
successor entity.
18. Severability. If any provision of this Agreement as applied to
either party or to any circumstances shall be adjudged by a court or arbitration
to be void, voidable or unenforceable, the same shall in no way affect any other
provision of this Agreement. In case this Agreement, or any one or more of the
provisions hereof, shall be held to be invalid, illegal or unenforceable within
any governmental jurisdiction or subdivision thereof, this Agreement or any such
provision thereof shall not as a consequence thereof be deemed to be invalid,
illegal or unenforceable in any other governmental jurisdiction or subdivision
thereof.
19. Waiver. The waiver by either party of any term or condition of this
Agreement or any breach thereof shall not constitute a waiver of any other term
or condition or breach of this Agreement, nor shall it constitute a waiver of
the same term or condition in the future.
11
<PAGE> 12
20. Notices. Any notice or communication required or permitted to be
given to the parties hereto shall be delivered personally or be sent by United
States registered or certified mail, postage prepaid and return receipt
requested, and addressed or delivered as follows, or such other address as the
party addressed may be substituted by prior written notice pursuant to this
section:
(a) If to Executive: Hamid Shokrgozar
White Microelectronics/
Bowmar Instrument Corporation
3601 E. University Drive
Phoenix, AZ 85034-7217
(b) If to Bowmar: Chairman, Board of Directors
Bowmar Instrument Corporation
3601 E. University Drive
Phoenix, Arizona 85034-7217
with a copy to: Joseph T. Clees, Esq.
Bryan Cave
2800 North Central Avenue, Ste. 2100
Phoenix, Arizona 85004-1098
21. Representations by Executive. Executive represents and warrants
that he is not a party to or bound by any agreement or covenant that would
prohibit, restrict or inhibit in any way the full performance of his duties for
Bowmar under this Agreement. Executive further acknowledges that he has been
given the opportunity to consult with legal counsel regarding this Agreement.
22. Captions. Captions of this Agreement are inserted for convenience
and do not constitute a part hereof.
23. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same Agreement.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day and year first written above.
BOWMAR INSTRUMENT CORPORATION
By:
-----------------------------
Title: Chairman of the Board
----------------------
HAMID SHOKRGOZAR
---------------------------------
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-03-1998
<PERIOD-START> SEP-28-1997
<PERIOD-END> APR-04-1998
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 5,760
<ALLOWANCES> 0
<INVENTORY> 7,718
<CURRENT-ASSETS> 16,709
<PP&E> 8,477
<DEPRECIATION> (5,841)
<TOTAL-ASSETS> 20,711
<CURRENT-LIABILITIES> 4,748
<BONDS> 6,104
0
120
<COMMON> 672
<OTHER-SE> 9,067
<TOTAL-LIABILITY-AND-EQUITY> 20,711
<SALES> 11,693
<TOTAL-REVENUES> 11,693
<CGS> 6,949
<TOTAL-COSTS> 6,949
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 304
<INCOME-PRETAX> 1,254
<INCOME-TAX> 489
<INCOME-CONTINUING> 765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
<FN>
FULLY DILUTED EPS IS CONSIDERED TO BE THE SAME AS
PRIMARY EPS SINCE THE EFFECT OF THE POTENTIALLY
DILUTIVE PREFERRED STOCK IS ANTIDILUTIVE.
</FN>
</TABLE>
