<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 [FEE REQUIRED]
For the quarterly period ended: January 3, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to ________
Commission File Number 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
INDIANA 35-0905052
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
3601 EAST UNIVERSITY DRIVE
PHOENIX, ARIZONA 85034
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/437-1520
</TABLE>
5080 N. 40TH ST., PHOENIX, AZ 85018
(Former Address if changed since last report.)
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 February 5, 1998, 6,674,492 shares of the Registrant's Common Stock were
outstanding.
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BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARY
INDEX
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION................................................................... 2-9
Item 1. Financial Statements
Consolidated Balance Sheets
January 3, 1998, (Unaudited) and
September 27, 1997.................................................... 2
Consolidated Statements of Income
First Quarter Ended
January 3, 1998 and December 28, 1996, (Unaudited).................... 3
Consolidated Statements of Cash Flows
First Quarter Ended January 3, 1998 and
December 28, 1996, (Unaudited) ....................................... 4
Notes to Consolidated Financial
Statements (Unaudited)................................................ 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations......................................................... 7
PART II OTHER INFORMATION....................................................................... 9
Item 6. Exhibits and Reports on Form 8-K........................................ 9-10
</TABLE>
1
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
January 3, 1998 September 27, 1997
(UNAUDITED)
- ------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current Assets
Cash $ 15 $ 1,218
Accounts receivable, net 5,023 4,476
Inventories, net 8,239 8,158
Prepaid expenses 368 539
Deferred income taxes 2,782 2,782
- ------------------------------------------------------------------------------------------------
Total Current Assets 16,427 17,173
Property, Plant and Equipment, net 2,654 2,642
Deferred Income Taxes 353 492
Other Assets, net 1,195 1,202
- ------------------------------------------------------------------------------------------------
Total Assets $ 20,629 $ 21,509
- ------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 612 $ 1,608
Accounts payable 1,416 1,987
Accrued salaries and benefits 1,235 1,953
Accrued expenses 286 503
Reserve for loss on discontinued operation 887 1,300
- ------------------------------------------------------------------------------------------------
Total Current Liabilities 4,436 7,351
Long-Term Debt 6,461 4,546
Other Long-Term Liabilities 339 339
- ------------------------------------------------------------------------------------------------
Total Liabilities 11,236 12,236
- ------------------------------------------------------------------------------------------------
Shareholders' Equity 9,393 9,273
- ------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $20,629 $21,509
- ------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the Consolidated Financial Statements
2
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Quarter Ended
January 3, 1998 December 28, 1996
(Restated - See Note 4)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales $ 5,999 $ 5,036
Cost of sales 3,512 2,964
- ---------------------------------------------------------------------------------------------------------
Gross margin 2,487 2,072
- ---------------------------------------------------------------------------------------------------------
Expenses:
Selling, general and administrative 1,829 1,378
Product development 130 84
Interest expense 141 105
Other expense (income), net 20 (119)
- ---------------------------------------------------------------------------------------------------------
Total expenses 2,120 1,448
- ---------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 367 624
Income tax expense 157 241
- ---------------------------------------------------------------------------------------------------------
Income from continuing operations 210 383
- ---------------------------------------------------------------------------------------------------------
Discontinued operations:
Electromechanical segment
Income from operations, net of income tax
expense of $0 and $44 0 46
- ---------------------------------------------------------------------------------------------------------
Income from discontinued operations 0 46
- ---------------------------------------------------------------------------------------------------------
NET INCOME $ 210 $ 429
- ---------------------------------------------------------------------------------------------------------
Earnings per share, continuing operations $ 0.02 $ 0.04
Earnings per share, discontinued operations 0.00 0.01
- ---------------------------------------------------------------------------------------------------------
Net income per share $ 0.02 $ 0.05
- ---------------------------------------------------------------------------------------------------------
</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
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Quarter Ended
January 3, 1998 December 28, 1996
(Restated - See Note 4)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 210 $ 429
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 174 134
Reserve for loss from discontinued operations (413) 0
Deferred income tax expense 139 237
Net changes in balance sheet accounts:
Accounts receivable (547) 113
Inventories (81) 44
Prepaid expenses 171 (16)
Other assets 7 22
Accounts payable (571) 333
Accrued expenses (935) (654)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided (used in) by operating activities (1,846) 642
- --------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (222) (185)
Proceeds from sales of property, plant and equipment 36 0
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (186) (185)
- --------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Borrowings under long-term debt 1,090 0
Retirement of long-term debt (171) (167)
Issuance of common stock 0 232
Payment of preferred stock dividends (90) (90)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 829 (25)
- --------------------------------------------------------------------------------------------------------------------
Net change in cash (1,203) 432
Cash at beginning of period 1,218 108
- --------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 15 $ 540
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to Consolidated Financial Statements
4
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of January 3, 1998, the consolidated
statements of income for the first quarter ended January 3, 1998 and December
28, 1996, and the consolidated statements of cash flows for the first quarter
ended January 3, 1998 and December 28, 1996, 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 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 quarter ended
January 3, 1997, are not necessarily indicative of the operating results for the
full year.
2. INVENTORIES
Inventories consist of the following (in thousands of dollars):
<TABLE>
<CAPTION>
- --------------------------- ----------------------- ---------------------------
JANUARY 3, 1998 SEPTEMBER 27 1997
- --------------------------- ----------------------- ---------------------------
<S> <C> <C>
Raw materials $ 2,842 $ 3,277
Work-in-process 4,823 4,258
Finished goods 574 623
- --------------------------- ----------------------- ---------------------------
Total Inventories $ 8,239 $ 8,158
- --------------------------- ----------------------- ---------------------------
</TABLE>
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
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<TABLE>
<CAPTION>
- -------------------------------- ------------------------------------------------------------------------------------
FIRST QUARTER ENDED
JANUARY 3, 1998 DECEMBER 28, 1996
- -------------------------------- ----------------------------------------- ------------------------------------------
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 $210,000 $383,000
Less: preferred stock
dividends 90,000 90,000
- -------------------------------- ------------- ---------------- ---------- ------------- ---------------- -----------
BASIC EPS
Earnings applicable to
continuing operations, net of
tax 120,000 6,674,492 $0.02 293,000 6,563,311 $0.04
EFFECT OF DILUTIVE SECURITIES
Common stock options 162,697 3,660
- -------------------------------- ------------- ---------------- ---------- ------------- ---------------- -----------
DILUTED EPS
Earnings from continuing
operations available to
common stock holders $120,000 6,837,189 $0.02 $293,000 6,566,971 $0.04
======== ========= ===== ======== ========= =====
</TABLE>
The convertible preferred stock, which was convertible to 1,598,346 common
shares on January 3, 1998 and 1,598,907 on December 28, 1996, 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 58,000 shares of common stock at prices ranging from $2.56
to $3.56 per share were outstanding during the first quarter of 1998 but were
not included in the computation of diluted EPS because the options exercise
price was greater than the average market price of the common shares. These
options expire at various times through December, 2007.
4. DISCONTINUED OPERATIONS
In December, 1997 the Board of Directors decided to sell its Technologies
division. The results of the operations for the quarter ended December 28, 1996,
have been restated to reflect this division as a discontinued operation, thus,
this division is reflected as discontinued operations for all periods presented
in the Company's Statement of Income. For the fiscal year ended 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 quarter ended January 3, 1998, the Technologies division incurred
losses of $413,000 which offset the reserve, resulting in a reserve balance of
$887,000 on January 3, 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. Therefore, 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>
FIRST QUARTER ENDED
- ---------------------------- ---------------------------------------------------
TECHNOLOGIES DIVISION
OPERATING RESULTS JANUARY 3, 1998 DECEMBER 28, 1996
- ---------------------------- ------------------------ -------------------------
<S> <C> <C>
Net sales $ 1,634,000 $ 1,452,000
Gross margin $ 104,000 $ 507,000
Product development $ 49,000 $ 19,000
Operating expenses $ 468,000 $ 398,000
</TABLE>
6
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The components of net assets of discontinued operations included in the
Company's Consolidated Balance Sheets at January 3, 1998 and September 27, 1997
are as follows:
<TABLE>
<CAPTION>
TECHNOLOGIES DIVISION JANUARY 3, 1998 SEPTEMBER 27, 1997
- ---------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Receivables,net $ 1,263,000 $ 1,089,000
Inventories 2,412,000 1,958,000
Other current assets 240,000 385,000
Property and equipment 669,000 700,000
Accounts payable and other current liabilities (788,000) (694,000)
Long-term debt (27,000) (41,000)
----------- -----------
Net Assets $ 3,769,000 $ 3,397,000
=========== ===========
</TABLE>
5. REDUCTION AND RELOCATION OF THE CORPORATE OFFICE
In January 1998 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.
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(s) 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 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. First, the Board of Directors has
determined to seek a buyer for the Company's Technologies division. Although the
Company has received several unsolicited inquiries from third parties interested
in acquiring the division, it 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.
7
<PAGE> 9
In January, 1998 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.
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 $413,000 was used in the first quarter of fiscal
1998. The following discussion takes into account the treatment of the
Technologies division as a discontinued operation.
RESULTS OF OPERATION
NET SALES
Sales for the first quarter ended January 3, 1998 were $5,999,000 compared to
prior year sales for the first quarter of $5,036,000 (restated). The increase in
sales was a result of there being 14 weeks in the quarter ended January 3, 1998
as opposed to 13 weeks in the same quarter in the prior year. The remaining
increase was a result of increased demand for standard asynchronous SRAM
products in the quarter.
The Company continues to believe that changes in U. S. defense spending will not
have a material adverse effect on the Company's overall results, particularly on
the White Microelectronics division. The Company nevertheless continues 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 first quarter ended January 3, 1998, increased by $415,000
versus the similar period of fiscal 1997. The higher gross margin is primarily
attributable to the increased sales .
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter ended January
3, 1998, increased $451,000 versus the same period (restated) in fiscal 1997.
The increase is due to the $400,000 charge associated with the Company's
decision to reduce and relocate its corporate headquarters in Phoenix, Arizona.
The remaining increase was due to costs associated with increased sales and the
related additional week of expenses in fiscal 1998 as compared to fiscal 1997.
PRODUCT DEVELOPMENT EXPENSES
Product Development expenses for the first quarter ended January 3, 1998 were up
$46,000 as compared to the first quarter in the prior year. The increase
occurred as a result of increased expenses associated with the development of
new products for the commercial market. The Company expects increased expenses
for commercial product development will continue for fiscal 1998 as the Company
pursues its goal of expanding its commercial business.
INTEREST EXPENSE
Interest expense in the first quarter of fiscal 1998 increased $36,000 compared
to interest expense for the same period in fiscal 1997. The increase was due
primarily to the increase in borrowing for funds to finish the new facility
which was completed and occupied in October, 1997.
8
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OTHER INCOME
Other income for the first quarter ended January 3, 1998 decreased by $139,000
versus the same period in fiscal 1997. This was primarily due to the proceeds
received from the Company's leased facility in Acton, Massachusetts during the
first quarter of fiscal 1997. This lease expired February, 1997.
PROVISION FOR INCOME TAXES
The provision for income taxes decreased by $84,000 for the first quarter of
fiscal 1998 as compared to 1997. This decrease was primarily a result of lower
income before income taxes in fiscal 1998.
FINANCIAL CONDITION AND LIQUIDITY
In the first quarter of fiscal 1998 working capital increased to $11,991,000
from $9,822,000, principally as a result of reduction in current liabilities.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
The Company's operations used approximately $1,846,000 cash in the first quarter
of fiscal 1998. The Company anticipates that it will produce positive cash flow
for the remainder of the year, which, when combined with the Company's revolving
credit facility, should be sufficient in Management's opinion to fund the
Company's cash needs for the foreseeable future.
PART II
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS.
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).
4.2 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 5(c) to the Form 8-K filed by the Registrant on
December 19, 1996).
10.6* Executive Employment Agreement by and between the Company and Thomas
K. Lanin dated December 3, 1997.
9
<PAGE> 11
10.7* Executive Employment Agreement by and between the Company and Joseph
G. Warren, Jr. dated December 21, 1997.
10.8 Purchase and Sales Agreement dated December 5, 1997, concerning the
sale of the Acton Massachusetts property.
11 Computation of Earnings Per Share
27 Financial Data Schedule
b. REPORTS ON FORM 8-K.
Form 8-K dated December 4, 1997.
Form 8-K/A dated December 22, 1997.
* management compensatory contract, plan or arrangement
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: February 13, 1998
10
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EXHIBITS INDEX
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).
4.2 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 5(c) to the Form 8-K filed by the Registrant on
December 19, 1996).
10.6* Executive Employment Agreement by and between the Company and Thomas
K. Lanin dated December 3, 1997.
10.7* Executive Employment Agreement by and between the Company and Joseph
G. Warren, Jr. dated December 21, 1997.
10.8 Purchase and Sales Agreement dated December 5, 1997, concerning the
sale of the Acton Massachusetts property.
11 Computation of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
Exhibit 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of December 21,
1997, and is entered into by and between Joseph G. Warren, Jr. ("Executive") and
Bowmar Instrument Corporation, an Indiana corporation, including its divisions
Bowmar Technologies and White Microelectronics ("Bowmar").
WHEREAS, Bowmar desires to employ Executive as the Vice President
Finance, Chief Financial Officer, Secretary and Treasurer (hereinafter
collectively referred to as "Chief Financial Officer") and the Executive desires
to be employed in that capacity;
WHEREAS, Bowmar anticipates that Executive will play a key role in
effectuating the sale or other disposition of its Bowmar Technologies division;
and
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;
NOW THEREFORE, Executive and Bowmar hereby agree that Executive will
render services to Bowmar on the following terms and conditions:
1. Employment. Upon the terms and subject to the conditions contained
herein, during the term of this Agreement, Executive hereby agrees to provide
full-time services to Bowmar as the Chief Financial Officer of Bowmar. 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
<PAGE> 2
performed or to be performed by him during the term of this Agreement, except
with the prior written consent of Bowmar's Board of Directors.
2. Duties. Executive shall perform the duties of Chief Financial
Officer 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 Executive's management.
3. Term of Agreement. This Agreement shall be effective beginning on
October 1, 1997 and shall continue until September 30, 1998, except as provided
herein. It shall thereafter renew automatically for a one (1) 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. Bowmar shall pay Executive a base salary
of One Hundred Forty Thousand Dollars ($140,000.00) per annum, payable in
semi-monthly 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 Bowmar's incentive
compensation plan, as it may be amended ("Incentive Compensation").
Additionally, Executive shall be paid a bonus upon the closing of the sale of
the Bowmar Technologies division in an amount equal to ten percent (10%) of the
excess, if any, of the sale price over book value of the division, if it is sold
during the term of this Agreement.
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.
2
<PAGE> 3
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 Chief Financial 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 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.
3
<PAGE> 4
(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 payment equal to Executive's total Base Salary and Incentive
Compensation paid for the calendar year immediately preceding the termination,
less all applicable taxes and other withholding ("Severance Payment").
(ii) Benefit Continuation. Bowmar will continue benefit
contributions (medical, dental, disability and life) on behalf of Executive for
twelve (12) months or until Executive becomes otherwise eligible for such
benefits, whichever occurs first. 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.
(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.
(iv) Attorneys' Fees. Bowmar will reimburse Executive for all
reasonable attorneys' fees incurred in connection with enforcing the terms of
this Agreement
4
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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.
(i) During Fiscal Year 1998. Executive may terminate this
Agreement upon six (6) weeks' prior written notice given to Bowmar at any time
prior to October 3, 1998. In the event of such termination, Executive shall be
paid the Severance Payment set forth in Section 7(b)(i), which shall not exceed
the sum of One Hundred Seventy Thousand Dollars ($170,000.00), as well as the
additional benefits set forth in Section 7(b), less all applicable taxes and
other withholding.
(ii) After Fiscal Year 1998. After October 3, 1998, Executive
may terminate this Agreement at any time upon thirty (30) days' prior written
notice, but will not be paid the Severance Payment or other benefits set forth
in Section 7(b)(i), except as otherwise provided in this Agreement.
(iii) No Further Benefits. In the event of termination by
Executive under either Section 7(c)(i) or (ii), 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,
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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).
(d) Termination of Executive Following a Change in Control. In the
event of a Change in Control, this Agreement shall be automatically renewed for
a period of twelve (12) 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 twelve (12) 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
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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 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 in a lump sum an amount equal to the
Severance Payment set forth in Section 7(b)(i), which shall not exceed the total
sum of One Hundred Seventy Thousand Dollars ($170,000.00), 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), provide outplacement assistance set forth in Section 7(b)(iii), and
will continue benefit contributions (medical, dental, disability and life) on
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behalf of Executive for twelve (12) months or until Executive becomes otherwise
eligible for such benefits, whichever occurs first. In the event that Bowmar is
unable to continue such contributions or secure replacement coverage, then it
shall pay the Executive the premium cost for such coverage. 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 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 to apply
for benefits under Bowmar's long-term disability plan, 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
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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) 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.
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<PAGE> 10
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.
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
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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.
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
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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.
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: Joseph G. Warren, Jr.
Bowmar Instrument Corporation
3601 E. University Drive
Phoenix, Arizona 85034-7217
(or such other address as may appear
in the records of Bowmar)
(b) If to Bowmar: Chief Executive Officer
Bowmar Instrument Corporation
3601 E. University Drive
Phoenix, Arizona 850134-7217
with a copy to: Joseph T. Clees, Esq.
Bryan Cave
2800 North Central Ave., 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
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day and year first written above.
BOWMAR INSTRUMENT CORPORATION
By: /S/ Thomas K. Lanin
-------------------------------------------
Title:President and Chief Executive Officer
--------------------------------------
JOSEPH G. WARREN, JR.
/S/ Joseph G. Warren, Jr.
------------------------------------------------
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Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of December 3,
1997, and is entered into by and between Thomas K. Lanin ("Executive") and
Bowmar Instrument Corporation, an Indiana corporation, including its divisions
Bowmar Technologies and White Microelectronics ("Bowmar").
WHEREAS, Bowmar desires to employ Executive as the President and Chief
Executive Officer and the Executive desires to be employed in that capacity; and
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;
NOW THEREFORE, Executive and Bowmar hereby agree that Executive will
render services to Bowmar on the following terms and conditions:
1. Employment. Upon the terms and subject to the conditions contained
herein, during the term of this Agreement, Executive hereby agrees to provide
full-time services to Bowmar as the President and Chief Executive Officer of
Bowmar. 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 Bowmar's Board of Directors.
2. Duties. Executive shall perform the duties of President and Chief
Executive Officer in accordance with the policies and practices of Bowmar, as
they may be amended from
<PAGE> 2
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, 1998, except as provided
herein. It shall thereafter renew automatically for a one (1) 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. Bowmar shall pay Executive a base salary
of Two Hundred Ten Thousand Dollars ($210,000) per annum, payable in
semi-monthly 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 Bowmar's incentive
compensation plan, as it may be amended ("Incentive Compensation").
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
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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 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 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
majority vote of Bowmar's Board of Directors 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 payment equal to Executive's total Base Salary and Incentive
Compensation paid for the
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calendar year immediately preceding the termination, less all applicable taxes
and other withholding ("Severance Payment").
(ii) Benefit Continuation. Bowmar will continue benefit
contributions (medical, dental, disability and life) on behalf of Executive for
twelve (12) months or until Executive becomes otherwise eligible for such
benefits, whichever occurs first. 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.
(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.
(iv) Attorneys' Fees. Bowmar will reimburse Executive for
all attorneys' fees incurred in connection with enforcing the terms of this
Agreement following termination of employment.
(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
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<PAGE> 5
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).
(d) Termination of Executive Following a Change in Control. In the
event of a Change in Control, this Agreement shall be automatically renewed for
a period of twelve (12) 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 twelve (12) 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 of 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
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<PAGE> 6
(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 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 in a lump sum an amount equal to one and
one-half (1-1/2 ) times the Severance Payment set forth in Section 7(b)(i),
which shall not exceed the total sum of Three Hundred Seventy-Five Thousand
Dollars ($375,000.00), 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
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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), provide
outplacement assistance set forth in Section 7(b)(iii), and will continue
benefit contributions (medical, dental, disability and life) on behalf of
Executive for twelve (12) months or until Executive becomes otherwise eligible
for such benefits, whichever occurs first. In the event that Bowmar is unable to
continue such contributions or secure replacement coverage, then it shall pay
the Executive the premium cost for such coverage. 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 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
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<PAGE> 8
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) 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.
8
<PAGE> 9
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.
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
9
<PAGE> 10
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.
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
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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.
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: Thomas K. Lanin
Bowmar Instrument Corporation
5080 North 40th Street, Ste. 475
Phoenix, Arizona 85018
(or such other address as may appear
in the records of Bowmar)
(b) If to Bowmar: Chairman, Board of Directors
Bowmar Instrument Corporation
5080 North 40th Street, Ste. 475
Phoenix, Arizona 85018
with a copy to: Joseph T. Clees, Esq.
Bryan Cave
2800 North Central Ave., 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
11
<PAGE> 12
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.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day and year first written above.
BOWMAR INSTRUMENT CORPORATION
By: /S/ Edward A. White
-------------------------
Title: Chairman
------------------
THOMAS K. LANIN
/S/ Thomas K. Lanin
----------------------------
12
<PAGE> 1
Exhibit 10.8
From the Office of:
STANDARD FORM
PURCHASE AND SALE AGREEMENT
<TABLE>
<S> <C>
This Agreement dated as of December 5 1997
1. PARTIES Bowmar/ALI, Inc., a Massachusetts corporation, having an address at
AND MAILING 5080 N. 40th St., Suite 475, Phoenix, Arizona, Attn: Joseph G. Warren, Jr.
ADDRESSES
hereinafter called the SELLER, agrees to SELL and
(fill in)
Werner F. Gossels, Trustee of Laine Realty Trust u/d/t dated December 31, 1963
having an address at 17 Bennett Road, Wayland, Massachusetts 01778
hereinafter called the BUYER or PURCHASER, agrees to BUY, upon the terms hereinafter set forth, the
following described premises:
2. DESCRIPTION That certain parcel of land, known as and numbered 531 Main Street in Acton, Massachusetts, as more
(fill in and include particularly described in Exhibit A.
title reference)
3. BUILDINGS, Included in the sale as a part of said premises are the buildings, structures, and improvements now
STRUCTURES, thereon, and the fixtures belonging to the SELLER and used in connection therewith including, if any,
IMPROVEMENTS, all wall-to-wall carpeting, drapery rods, automatic garage door openers, venetian blinds, window
FIXTURES shades, screens, screen doors, storm windows and doors, awnings, shutters, furnaces, heaters, heating
equipment, stoves, ranges, oil and gas burners and fixtures appurtenant thereto, hot water heaters,
(fill in or delete) plumbing and bathroom fixtures, garbage disposers, electric and other lighting fixtures, mantels,
outside television antennas, fences, gates, trees, shrubs, plants, and, ONLY IF BUILT IN,
refrigerators, air conditioning equipment, ventilators, dishwashers, washing machines and dryers;
4. TITLE DEED Said premises are to be conveyed by a good and sufficient quitclaim deed running to the BUYER, or to
(fill in) the nominee designated by the BUYER by written notice to the SELLER at least seven (7) days before
the deed is to be delivered as herein provided, and said deed shall convey a good and clear record
* Include here by specific and marketable title thereto, free from encumbrances, except
reference any restric- (a) Provisions of existing building and zoning laws;
tions, easements, rights (b) Existing rights and obligations in party walls which are not the subject of written
and obligations in party agreement;
walls not included in (b), (c) Such taxes for the then current year as are not due and payable on the date of the delivery
leases, municipal and of such deed;
other liens, other encum- (d) Any liens for municipal betterments assessed after the date of this agreement;
brances, and make pro- (e) Easements, restrictions and reservations of record, if any, so long as the same do not
vision to protect prohibit or materially interfere with the current use of said premises;
SELLER against BUYER's *(f) (See Rider)
breach of SELLER's
covenants in leases,
where necessary
5. PLANS If said deed refers to a plan necessary to be recorded therewith the SELLER shall deliver such plan
with the deed in form adequate for recording or registration.
6. REGISTERED In addition to the foregoing, if the title to said premises is registered, said deed shall be in form
TITLE sufficient to entitle the BUYER to a Certificate of Title of said premises, and the SELLER shall
deliver with said deed all instruments, if any, necessary to enable the BUYER to obtain such
Certificate of Title.
7. PURCHASE PRICE The agreed purchase price for said premises is One Million Two Hundred Eighty Thousand
(fill in); space is ($1,280,000.00) dollars, of which
allowed to write $ 60,000.00 have been paid as a deposit this day and
out the amounts $
if desired $1,220,000.00 are to be paid at the time of delivery of the deed in cash, or by certified
cashier's, treasurer's or bank check(s).
$______________________________
$ 1,280,000.00 TOTAL
</TABLE>
COPYRIGHT(R) 1979, 1984, 1986, 1987, 1988, 1991
GREATER BOSTON REAL ESTATE BOARD
[REAL ESTATE BOARD LOGO]
All rights reserved. This form may not be copied or reproduced in whole or in
part in any manner whatsoever without the prior express written consent of the
Greater Boston Real Estate Board.
<PAGE> 2
<TABLE>
<S> <C>
8. TIME FOR Such deed is to be delivered at 10:00 o'clock A.M. on
PERFORMANCE; the 29th day of January 1998, at the Middlesex County
DELIVERY OF South Registry of Deeds, unless otherwise agreed upon
DEED (fill in) in writing. It is agreed that time is of the essence
of this agreement.
9. POSSESSION AND Full possession of said premises free of all tenants
CONDITION OF and occupants, except as herein provided, is to be
PREMISE. delivered at the time of the delivery of the deed
(attach a list of said premises to be then (a) in the same condition as
exceptions, if any) they now are, reasonable use and wear thereof
excepted, and (b) not in violation of said building
and zoning laws, and (c) in compliance with provisions
of any instrument referred to in clause 4 hereof. The
BUYER shall be entitled personally to inspect said
premises prior to the delivery of the deed in order to
determine whether the condition thereof complies
with the terms of this clause. (See Rider)
10. EXTENSION TO If the SELLER shall be unable to give title or to
PERFECT TITLE make conveyance, or to deliver possession of the
OR MAKE premises, all as herein stipulated, or if at the time
PREMISES of the delivery of the deed the premises do not
CONFORM conform with the provisions hereof, then any payments
(Change period of made under this agreement shall be forthwith refunded
time if desired). and all other obligations of the parties hereto shall
cease and this agreement shall be void without recourse
to the parties hereto, unless the SELLER elects to use
reasonable efforts to remove any defects in title, or
to deliver possession as provided herein, or to make
the said premises conform to the provisions hereof, as
the case may be, in which event the SELLER shall give
written notice thereof to the BUYER at or before the
time for performance hereunder, and thereupon the time
for performance hereof shall be extended for a period
of thirty (30) days.
11. FAILURE TO If at the expiration of the extended time the SELLER
PERFECT TITLE shall have failed so to remove any defects in title,
OR MAKE deliver possession, or make the premises conform, as
PREMISES the case may be, all as herein agreed, or if at any
CONFORM, etc. time during the period of this agreement or any
extension thereof, the holder of a mortgage on said
premises shall refuse to permit the insurance
proceeds, if any, to be used for such purposes, then
any payments made under this agreement shall be
forthwith refunded and all other obligations of the
parties hereto shall cease and this agreement shall
be void without recourse to the parties hereto. (See
Rider)
12. BUYER's The BUYER shall have the election, at either the
ELECTION TO original or any extended time for performance, to
ACCEPT TITLE accept such title as the SELLER can deliver to the
said premises and to pay therefor the purchase price
without deduction, in which case the SELLER shall
convey such title.
13. ACCEPTANCE The acceptance of a deed by the BUYER or his nominee
OF DEED as the case may be, shall be deemed to be a full
performance and discharge of every agreement and
obligation herein contained or expressed, except such
as are, by the terms hereof, to be performed after
the delivery of said deed.
14. USE OF To enable the SELLER to make conveyance as herein
MONEY TO provided, the SELLER may, at the time of delivery of
CLEAR TITLE the deed, use the purchase money or any portion
thereof to clear the title of any or all encumbrances
or interests, provided that all instruments so
procured are recorded simultaneously with the
delivery of said deed, except that institutional
mortgages may be discharged subsequent to the
delivery of the deed in accordance with current
custom and practice.
15. INSURANCE Until the delivery of the deed, the SELLER shall
*Insert amount maintain insurance on said premises as follows:
(list additional Type of Insurance Amount of Coverage
types of insurance
and amounts as (a) Fire and Extended Coverage *$ To a minimum of $1,280,000
agreed) (b)
16. ADJUSTMENTS Mortgage interest, water and sewer use charges,
(list operating operating expenses (if any) according to the schedule
expenses, if any, attached hereto or set forth below, and taxes for the
or attach schedule) then current fiscal year, shall be apportioned and
fuel value shall be adjusted, as of the day of
performance of this agreement and the net amount
thereof shall be added to or deducted from, as the
case may be, the purchase price payable by the BUYER
at the time of delivery of the deed. Uncollected
rents for the current rental period shall be
apportioned if and when collected by either party.
*and insured damage by fire or other casualty to the
extent hereunder set forth
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
17. ADJUSTMENT If the amount of said taxes is not known at the time of the
OF UNASSESSED delivery of the deed, they shall be apportioned on the basis
AND ABATED TAXES of the taxes assessed for the preceding fiscal year, with a
reapportionment as soon as the new tax rate and valuation
can be ascertained; and, if the taxes which are to be
apportioned shall thereafter be reduced by abatement, the
amount of such abatement, less the reasonable cost of
obtaining the same, shall be apportioned between the
parties, provided that neither party shall be obligated to
institute or prosecute proceedings for an abatement unless
herein otherwise agreed. (See Rider)
18. BROKER's FEE A Broker's Fee for professional services of $51,200.00 is
(fill in fee with due from the SELLER to Oxbow Realty, Inc. the Broker herein,
dollar amount or but only if, as and when the transaction closes and the full
percentage; also purchase price is paid, and not otherwise. (See Rider.)
name of Brokerage
firm(s))
19. BROKER(S) The Broker named herein warrant(s) that the Broker is duly
WARRANTY licensed as such by the Commonwealth of Massachusetts.
(fill in name)
20. DEPOSIT All deposits made hereunder by the Buyer shall be held in
(fill in name) escrow by Oxbow Realty, Inc. as escrow agent subject to the
terms of this agreement and shall be duly accounted for at
the time for performance of this agreement. In the event of
any disagreement between the parties, the escrow agent may
retain all deposits made under this agreement pending
instructions mutually given by the SELLER and the BUYER.
(See Rider.)
21. BUYER's If the BUYER shall fail to fulfill the BUYER's agreements
DEFAULT; herein, all deposits made hereunder by the BUYER shall be
DAMAGES retained by the SELLER as liquidated damages, which shall be
the sole remedy of the SELLER, both at law and in equity.
23. BROKER AS The Broker(s) named herein join(s) in this agreement and
PARTY become(s) a party hereto, insofar as any provisions of this
agreement expressly apply to the Broker(s), and to any
amendments or modifications of such provisions to which the
Broker(s) agree(s) in writing.
24. LIABILITY OF If the SELLER or BUYER executes this agreement in a
TRUSTEE, representative or fiduciary capacity, only the principal or
SHAREHOLDER, the estate represented shall be bound, and neither the
BENEFICIARY, etc. SELLER or BUYER so executing, nor any shareholder or
beneficiary of any trust, shall be personally liable for any
obligation, express or implied, hereunder.
25. WARRANTIES AND The BUYER acknowledges that the BUYER has not been
REPRESENTATIONS influenced to enter into this transaction nor has he relied
(fill in); if none, upon any warranties or representations not set forth or
state "none"; if incorporated in this agreement or previously made in
any listed, indicate writing, except for the following additional warranties and
by whom each war- representations, if any, made by either the SELLER or the
ranty or represen- Broker(s): (See Rider)
tation was made
26. MORTGAGE In order to help finance the acquisition of said premises,
CONTINGENCY the BUYER shall apply for a conventional bank or other
CLAUSE institutional mortgage loan of $768,000.00 at *. If despite
(omit if not the BUYER's diligent efforts a commitment for such loan
provided for cannot be obtained, the BUYER may terminate this agreement
in Offer to by written notice to the SELLER and/or the Broker(s), as
Purchase) agent(s) for the SELLER, whereupon any payments made under
this agreement shall be forthwith refunded and all other
obligations of the parties hereto shall cease and this
agreement shall be void without recourse to the parties
hereto. In no event will the BUYER be deemed to have used
diligent efforts to obtain such commitment unless the BUYER
submits a complete mortgage loan application conforming to
the foregoing provisions on or before **__________, 19__.
*nine percent (9%) interest for five (5) years
amortized on a 25 or 30 year basis.
** two (2) weeks from the date the Buyer receives the
Work Completion Notice.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
27. CONSTRUCTION This instrument, executed in multiple counterparts, is
OF AGREEMENT to be construed as a Massachusetts contract, is to
take effect as a sealed instrument, sets forth the
entire contract between the parties, is binding upon
and enures to the benefit of the parties hereto and
their respective heirs, devisees, executors,
administrators, successors and assigns, and may be
cancelled, modified or amended only by a written
instrument executed by both the SELLER and the BUYER.
The captions and marginal notes are used only as a
matter of convenience and are not to be considered a
part of this agreement or to be used in determining
the intent of the parties to it.
28. LEAD PAINT LAW The parties acknowledge that, under Massachusetts law,
whenever a child or children under six years of age
resides in any residential premises in which any
paint, plaster or other accessible material contains
dangerous levels of lead, the owner of said premises
must remove or cover said paint, plaster or other
material so as to make it inaccessible to children
under six years of age.
30. ADDITIONAL The initialed riders, if any, attached hereto, are
PROVISIONS incorporated herein by reference.
</TABLE>
FOR RESIDENTIAL PROPERTY CONSTRUCTED PRIOR TO 1978, BUYER MUST ALSO HAVE SIGNED
LEAD PAINT "PROPERTY TRANSFER NOTIFICATION CERTIFICATION"
NOTICE: This is a legal document that creates binding obligations. If not
understood, consult an attorney.
/s/ Joseph G. Warren Jr. Vice President
- ---------------------------------- ---------------------------------------
SELLER (or spouse) SELLER Bowmar/ALI, Inc.
/s/ Werner F. Gossels, Trustee
- ---------------------------------- ---------------------------------------
BUYER BUYER Werner F. Gossels, Trustee of
Laine Realty Trust
- -------------------------------------------------------------------------------
Broker: Oxbow Realty, Inc.
- -------------------------------------------------------------------------------
EXTENSION OF TIME FOR PERFORMANCE
Date
-----
The time for the performance of the foregoing agreement is extended until
o'clock M. on the day of 19 ,
- -------------- ----- ----------- ------------- -----
time still being of the essence of this agreement as extended. In all other
respects, this agreement is hereby ratified and confirmed.
This extension, executed in multiple counterparts, is intended to take
effect as a sealed instrument.
- ---------------------------------- ---------------------------------------
SELLER (or spouse) SELLER
- ---------------------------------- ---------------------------------------
BUYER BUYER
- -------------------------------------------------------------------------------
Broker(s)
- -------------------------------------------------------------------------------
<PAGE> 5
RIDER
TO
PURCHASE AND SALE AGREEMENT
DATED AS OF DECEMBER 5, 1997
BETWEEN
BOWMAR/ALI, INC.
AND
WERNER F. GOSSELS, TRUSTEE OF LAINE REALTY TRUST
PARAGRAPH 4 (CONTINUED)
(f) Matters of record set forth or referred to in Exhibit B.
PARAGRAPH 9 (CONTINUED)
If the premises is damaged by fire or other casualty insured against and the
cost of restoring the premises to substantially its condition immediately prior
to such fire or other casualty is less than $500,000, the Seller may elect to
either (x) restore the premises to substantially its condition immediately prior
to such fire or other casualty, in which case if the Seller is unable to
complete such restoration work on or before the closing date set forth in
Paragraph 8 herein, the closing date shall be automatically extended to the
fifth Wednesday after the date the Buyer receives notification from the Seller
that the restoration is complete; or, (y) pay over or assign to the Buyer, on
delivery of the deed, all amounts recovered or recoverable on account of
insurance; except, however, if a holder of a mortgage on the premises does not
permit the insurance proceeds or a part thereof to be so paid over or assigned,
the Seller shall give to the Buyer a credit against the purchase price, on
delivery of the deed, equal to said amounts so recovered or recoverable and
retained by the holder of said mortgage. Upon the Seller's satisfaction of its
obligations under either the aforementioned clause (x) or (y), the Buyer shall
be obligated to proceed to close in accordance with the terms and conditions set
forth herein.
If the premises is damaged by fire or other casualty insured against and the
cost of restoring the premises to substantially its condition immediately prior
to such fire or other casualty is $500,000 or more (a "Major Casualty"), the
Seller may, by providing written notice to the Buyer within three (3) weeks of
such Major Casualty, terminate this Agreement, in which case any payments
1
<PAGE> 6
made under this Agreement shall be forthwith refunded and all other obligations
of the parties hereto shall cease and this Agreement shall be void without
recourse to the parties hereto. If, after a Major Casualty, the Seller does not
provide timely notice to the Buyer of its decision to terminate, the Seller
shall either (a) restore the premises to substantially its condition immediately
prior to such fire or other casualty, in which case if the Seller is unable to
complete such restoration work on or before the closing date set forth in
Paragraph 8 herein, the closing date shall be automatically extended to the
FIFTH Wednesday after the date the Buyer receives notification from the Seller
that the restoration is complete; or, (b) if the Buyer provides its written
consent, pay over or assign to the Buyer, on delivery of the deed, all amounts
recovered or recoverable on account of insurance, except, however, if a holder
of a mortgage on the premises does not permit the insurance proceeds or a part
thereof to be so paid over or assigned, the Seller shall give to the Buyer a
credit against the purchase price, on delivery of the deed, equal to said
amounts so recovered or recoverable and retained by the holder of said mortgage.
Upon the Seller's satisfaction of its obligations under either the
aforementioned clause (a) or (b), the Buyer shall be obligated to proceed to
close in accordance with the terms and conditions set forth herein.
PARAGRAPH 11 (CONTINUED)
If the Seller does not remove any defects in the title of the premises at the
time of the delivery of the deed, and the Buyer does not elect to accept title
pursuant to the terms of Paragraph 12 hereunder, the Seller shall reimburse, to
a maximum of $5,000 in the aggregate, the Buyer's out-of-pocket legal and bank
fees incurred in connection with this Agreement or the transaction contemplated
hereby.
PARAGRAPH 17 (CONTINUED)
At the request of the Buyer, the Seller shall prepare and file in timely fashion
an application for an abatement of fiscal year 1998 real estate taxes on the
Premises, and thereafter, the Seller shall cooperate in the Buyer's efforts to
obtain such tax abatement.
PARAGRAPH 18 (CONTINUED)
The Buyer and the Seller each represent and warrant to the other that, in
connection with this Agreement and the transaction contemplated hereby, it has
dealt with Oxbow Realty, Inc. and with no other real estate broker and no other
real estate broker is entitled to a commission in connection with this
2
<PAGE> 7
Agreement or the transaction contemplated hereby. The provisions of this
Paragraph 18 shall survive delivery of the deed hereunder.
PARAGRAPH 20 (CONTINUED)
All amounts received by the Escrow Agent under this Agreement shall be deposited
by the Escrow Agent into an account with a banking institution chosen by the
Escrow Agent bearing interest at so-called money market rates declared by such
institution from time to time.
PARAGRAPH 25 (CONTINUED)
The Seller represents and warrants to the Buyer that to the best of the actual
knowledge of the Seller, except as to those conditions described in the
environmental assessments of the Premises performed by GZA GeoEnvironmental,
Inc., such assessments having been described in two reports, dated May 17, 1995
and July 20, 1995, true and accurate copies of which have been provided to the
Buyer, there is not, as of the date hereof, any hazardous materials or wastes
in, on or under the premises.
The closing is subject to and contingent upon the following:
(1) Seller repairing the septic system servicing the premises so
that it satisfies the Acton Board of Health and/or the current
Massachusetts state requirements allowing the Buyer to fully
utilize the premises.
(2) Seller satisfying the Buyer that there are no outstanding code
violations; the premises is free of contamination by hazardous
materials as defined by Massachusetts and Federal regulations
(including M.G.L. Chapter 21E); and, asbestos surrounding the
heating system is properly encapsulated.
(3) Seller removing all underground storage tanks and restore the
excavation(s) to a safe, clean condition. If fuel oil tanks
necessary for the heating of the building are removed, the
Seller shall provide an aboveground replacement tank (or
equivalent) so the heating system will operate effectively.
(4) Systems required for operating the building for its intended
use as a manufacturing facility are in reasonable operating
condition. This includes the plumbing, sprinkler, heating, air
conditioning, elevator, alarm, and electrical systems.
3
<PAGE> 8
If at any time the Seller determines that completion of work described in
Section (2) of this Paragraph 25 is likely to require expenditures totaling
$25,000 or more in the aggregate, or completion of the work described in Section
(4) of this Paragraph 25 is likely to require expenditures totaling $50,000 or
more in the aggregate, then the Seller may elect to terminate this Agreement, in
which case any payments made under this Agreement shall be forthwith refunded
and all other obligations of the parties hereto shall cease and this Agreement
shall be void without recourse to the parties hereto, except the Seller shall
reimburse, to a maximum of $5,000 in the aggregate, the Buyer's out-of-pocket
legal and bank fees incurred in connection with this Agreement or the
transaction contemplated hereby, which reimbursement, in addition to the refund
of payments made under this Agreement, shall be the Buyer's only remedies, both
at law and in equity.
When the work described in this Paragraph 25 is completed, the Seller shall
provide the Buyer with a written notice stating that such work has been
completed, accompanied by any reports (including environmental reports) and
government certificates to be delivered in connection with such work (the "Work
Completion Notice"). If the Work Completion Notice is not received by the Buyer
on or before January 2, 1998, the closing date shall be automatically extended
to the fifth Wednesday after the date the Buyer receives the Work Completion
Notice from the Seller.
The Seller agrees to provide access to the Buyer and its prospective lenders,
architects and contractors at reasonable times and subject to reasonable prior
notice (oral or written notice to the Seller or the Seller's agent 24 hours
prior to such inspections being sufficient) to permit inspections of the
completed work described in this Paragraph 25.
The parties hereto agree that the entire agreement of the parties is fully set
forth herein.
PARAGRAPH 30 (ADDITIONAL PROVISIONS)
(A) Due Diligence and Inspection.
The Buyer and its agents have, from the date hereof, thirty (30) days
to conduct such due diligence as is desired by the Buyer with respect
to the condition of the building systems under Section (4) of Paragraph
25 (the "Building Systems Due Diligence Period"). During the Building
Systems Due Diligence Period, the Buyer shall identify those repairs,
if any, it demands the Seller to perform pursuant to Section (4) of
Paragraph 25.
4
<PAGE> 9
The Buyer and its prospective lenders and agents have, from the date
the Buyer receives the Work Completion Notice, thirty (30) days to
conduct, such due diligence as is desired by the Buyer, in its sole
discretion, with respect to the premises (the "General Due Diligence
Period"). At any time during the General Due Diligence Period, the
Buyer may, by providing notice to the Seller, terminate this Agreement
for any reason whatsoever, in which event any payments made under this
Agreement shall be forthwith refunded and all other obligations of the
parties hereto shall cease and this Agreement shall be void without
recourse to the parties hereto. If the Buyer does not terminate this
Agreement by the expiration of the General Due Diligence Period, the
Buyer will be deemed to have acknowledged that it is satisfied in all
respects with the results of such due diligence and inspections as
aforesaid.
The Seller agrees to provide access to the Buyer and its prospective
lenders, architects and contractors at reasonable times and subject to
reasonable prior notice (oral or written notice to the Seller or the
Seller's agent 24 hours prior to such inspections being sufficient) to
permit inspections in connection with the inspections as aforesaid.
The Buyer shall not undertake any test borings or other physical
alteration of the premises without the Seller's prior written consent,
such consent being conditioned upon the Buyer (i) identifying in such
notice the parties by whom any such inspections are to be conducted and
(ii) agreeing on behalf of himself as Trustee and the beneficiary(ies)
to be identified by separate certificate, to defend, indemnify and hold
the Seller harmless from and against any and all losses, claims,
liabilities and damages, and to repair and restore any damage, arising
out of or resulting from any such inspections.
(B) No Assignment: No Recording. The Buyer agrees that the Buyer shall not
assign or otherwise transfer any of the Buyer's rights or interests
under this Agreement (excepting only transfers between or among the
spouse and children of the Seller, whether in a fiduciary capacity or
otherwise, and transfers between or among entities controlled by such
family members), or record this Agreement without the prior written
consent of the Seller, which consent shall not be unreasonably
withheld.
(C) Interest on Security Deposit. Any interest accruing on the security
deposit described in Paragraph 7 hereunder shall be credited to the
Buyer. Deposits and interest amounts are to be paid to the party(s)
5
<PAGE> 10
entitled to receive them under and pursuant to the terms and provisions
of this Agreement.
(D) Notices. All notices permitted or required hereunder shall be in
writing addressed to the other party at the address set forth on the
first page of this Agreement with a copy in the case of the Seller or
the Escrow Agent to Stephen P. Lindsay, Esq., Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624, and shall be
deemed to have been given when tendered to the United States Mail
Service for certified delivery with signed receipt by the addressee,
except that where under this Agreement any time period is specified to
commence from notice, such time period shall not be deemed to commence
until, according to the applicable records of the U.S. Mail Service,
delivery of such notice was first attempted.
6
<PAGE> 11
EXHIBIT A
The land with the buildings and improvements thereon on Main Street and
Technology Drive, in Acton, Middlesex County, Massachusetts, containing
approximately 586,084 square feet, and shown as Lot 5 on a plan entitled,
*Definitive Plan of Acton Technology Park, in Acton, Mass., *Scale 1 inch = 80
feet, August 3, 1989, revised November 22, 1983, Acton Survey & Engineering
Inc., 277 Central St., Acton, Mass., recorded in the Middlesex South District
Registry of Deeds at Book 15931, Page 567, reference to which plan may be had
for a more particular description of said Lot 5.
<PAGE> 12
EXHIBIT B
1. Real estate taxes and municipal charges which constitute liens, but
which are not yet due and payable;
2. Easements as shown on a plan recorded as Plan No. 1544 of 1984.
3. Easements to Boston Edison Company and New England Telephone and
Telegraph Company dated March 7, 1985 recorded in Book 16065, Page 99
and Book 16065, Page 414.
4. Easement and Agreement dated December 19, 1984 and recorded in Book
15931, Page 575.
5. Taking by the Commonwealth of Massachusetts, Town of Acton, dated July
25, 1927 and recorded in Book 5125, Page 121.
6. Easement to the Town of Acton to construct, install, maintain and use a
pole for traffic signals dated March 31, 1995 and recorded in Book
25296, Page 89.
7. Matters as shown on a plan entitled, "Site/Detail Plan"
Scale: 1"=40' Date October 13, 1995 Main Street/Technology Drive Acton,
MA Prepared for Bryan Cave Prepared by: Howe Surveying Associates, Inc.
Civile Engineers & Land Surveyors 73 Princeton St. NO Chelmsford, MA as
follows:
a. berms encroaching on to Main Street and Technology Drive
b. traffic signal encroaching property line
c. shrubs encroaching property line along Technology Drive
8. Order of Conditions dated April 16, 1986 and recorded in Book 17031,
Page 105.
9. special Permit by the Board of Selectman dated February 25, 1986 and
recorded in Book 16864. Page 441.
10. Waiver as to Lot 5 only recorded in Book 16844, Page 369, as affected by
Revised Waiver dated June 6, 1986 and recorded in Book 17085, Page 310.
11. Covenants from the Town of Acton Planning Board dated October 17, 1983
and recorded in Book 16004, Page 416.
<PAGE> 1
EXHIBIT 11
BOWMAR INSTRUMENT CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FIRST QUARTER
FISCAL FISCAL
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
NET INCOME:
Earnings from Continuing Operations, Net of Tax $ 210,000 $ 383,000
Less: Dividends on Preferred Stock 90,000 90,000
---------- ----------
Earnings Applicable to Continuing Operations, Net of Tax 120,000 $ 293,000
Earnings Applicable to Discontinued Operations, Net of Tax 0 46,000
---------- ----------
Earnings Applicable to Common Shares $ 120,000 $ 339,000
========== ==========
SHARES:
Weighted Average Number of Common
Shares Outstanding 6,674,492 6,563,311
========== ==========
Earnings per Common Share-Continuing Operations $ 0.02 $ 0.04
Earnings per Common Share-Discontinued Operations 0.00 0.01
---------- ----------
Basic Earnings per Common Share $ 0.02 $ 0.05
- ---------------------------------------------------------------------------------------------
DILUTED EARNINGS PER COMMON SHARE:
NET INCOME:
Earnings from Continuing Operations, Net of Tax $ 210,000 $ 383,000
Earnings from Discontinued Operations, Net of Tax 0 46,000
---------- ----------
Net Income $ 210,000 $ 429,000
========== ==========
SHARES:
Weighted Average Number of Common
Shares Outstanding 6,674,492 6,563,311
Number of Common Stock Equivalents
Assuming Exercise of Options Reduced
by the Number of Shares Which Could
Have Been Purchased With the Proceeds
From the Exercise of Such Options 162,697 3,660
Number of Shares of Common Stock
Issued Upon Conversion of Preferred Stock 1,598,346 1,598,907
---------- ----------
Weighted Average Number of Shares
and Common Stock Equivalents
Assuming Conversion of Preferred Stock 8,435,535 8,165,878
========== ==========
Diluted Earnings per Share-Continuing Operations 0.02 0.04
Diluted Earnings per Share-Discontinued Operations 0.00 0.01
---------- ----------
DILUTED EARNINGS PER COMMON SHARE $ 0.02 $ 0.05
========== ==========
</TABLE>
Note: For the first quarter of 1998 and 1997, fully diluted earnings per share
is considered to be the same as basic earnings per share since the effect of the
potentially dilutive preferred stock is currently antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> SEP-27-1997
<PERIOD-END> JAN-03-1998
<CASH> 15
<SECURITIES> 0
<RECEIVABLES> 5,023
<ALLOWANCES> 0
<INVENTORY> 8,239
<CURRENT-ASSETS> 16,427
<PP&E> 8,606
<DEPRECIATION> (5,952)
<TOTAL-ASSETS> 20,629
<CURRENT-LIABILITIES> 4,436
<BONDS> 6,461
0
120
<COMMON> 668
<OTHER-SE> 8,605
<TOTAL-LIABILITY-AND-EQUITY> 20,629
<SALES> 5,999
<TOTAL-REVENUES> 5,999
<CGS> 3,512
<TOTAL-COSTS> 3,512
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 141
<INCOME-PRETAX> 367
<INCOME-TAX> 157
<INCOME-CONTINUING> 210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
