U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM-10KSB
----------
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
--------------
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 16299
EMCEE BROADCAST PRODUCTS, INC.
(Name of small business issuer in its charter)
----------------------------------------------
DELAWARE 131926296
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
SUSQUEHANNA STREET EXTENSION,
WEST, PO BOX 68, WHITE HAVEN, PA 18661-0068
- ------------------------------- -----------------------------
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number: (717) 4439575
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: Name of each exchange on which
registered:
Common NASDAQ National Market
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<PAGE>
Securities registered under Section 12(g) of the Exchange Act:
None
----------------
(TITLE OF CLASS)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
twelve (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 ninety (90)
days.
Yes X No
---- ----
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation SB is met contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10KSB or any
amendment to this Form 10KSB. X
---
State issuer's revenues for its most recent fiscal year.
$14,292,562.
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant is $27,396,719, computed by
reference to the closing bid price of the stock at June 26, 1996.
This computation is based on the number of issued and outstanding
shares held by persons other than directors and officers of the
Registrant.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
CLASS OUTSTANDING AT JUNE 27,
1996
- ------------------------------------ --------------------------
Common stock, par value $.012/3 per sh. 4,152,757
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Items 9, 10, 11 and 12 in Part III of this report are
incorporated by reference from the Proxy Statement expected to be
filed within one hundred twenty (120) days of the close of the
Registrant's fiscal year ended March 31, 1996.
Transitional Small Business Disclosure Format (Check One)
Yes ; No X .
----- -----
<PAGE>
EMCEE BROADCAST PRODUCTS, INC.
FORM 10KSB
FISCAL YEAR ENDED MARCH 31, 1996
TABLE OF CONTENTS
PART I.
- --------
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. DESCRIPTION OF PROPERTY
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
PART II.
- --------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
ITEM 7. FINANCIAL STATEMENTS
ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
PART III.
- ---------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
ITEM 10. EXECUTIVE COMPENSATION
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
ITEM 13. EXHIBITS AND REPORTS ON FORM 8K
SIGNATURES
<PAGE>
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------
The Registrant (sometimes alternatively referred to in this
report as the "Company") is a corporation, organized and existing
under the laws of the State of Delaware, having been incorporated
in 1960.
The Registrant is engaged principally in the manufacture and
sale of Multichannel Multipoint Distribution Service ("MMDS")
microwave transmitters and related equipment for the wireless
cable industry and low power television ("LPTV") transmitters and
related equipment for the television broadcast industry. These
principal products are distributed primarily through the
Registrant's sales staff and independent representatives, with
most sales occurring in the commercial, educational and private
television system markets. The Registrant also provides all
services relative to the design, procurement and installation of
television broadcast stations, with the exception of licensing
submissions.
For more than the past three years, the Company's primary
sales and marketing focus has been on the wireless cable
industry. While the Company was also involved in the manufacture
and sale of products to the LPTV market during the same period of
time, LPTV product sales have been overwhelmingly subordinate to
the Company's MMDS products. The Company anticipates that its
MMDS sales will continue to dominate in both domestic and foreign
markets.
At March 31, 1996, the Registrant employed 92 people, of
whom 83 were full time employees.
The Registrant has a variety of raw material sources
available to conduct its present business. However, substantial
periods of lead time for delivery are sometimes experienced by
the Registrant, making it necessary to inventory varied
quantities of materials.
Significant portions of the Registrant's revenues come from
contracts with customers who generally do not place orders on a
regular basis. In addition, the timing of these contracts relate
to economic and regulatory developments over which the Registrant
has little or no control.
In fiscal year 1996, purchases by three MMDS customers
constituted, in the aggregate, $5,896,080, or approximately 41.3%
of the Company's net sales. Although these purchases were
significant in both amount and as a percentage of sales, the
Company's management believes that the loss of the contract the
Company has with only one of these customers would have a
<PAGE>
material adverse impact on the Company. That customer, which
contributed approximately 7.2% to the Company's net sales during
fiscal year 1996, represents approximately 80% of the Company's
current backlog.
The Registrant's principal suppliers are Andrew Corporation,
Fujitsu Compound Semiconductor, Inc., and Microwave Filter
Company, Inc.
Substantially all of the Registrant's domestic products must
receive Federal Communications Commission (FCC) approval prior to
being marketed and sold. During fiscal year 1996, the Registrant
developed a mobile, "frequency agile" (can be tuned to any
available channel immediately) VHS transmitter, known as the TTV
1000 EG Agile model. Since this transmitter was developed
specifically for use by the United States military, no FCC
approval was required. In addition, during fiscal year 1996, the
Company developed an "F" model LPTV transmitter. The 20watt
version was approved by the FCC during fiscal year 1996, and such
approval of the 100watt, 200watt and 1kilowatt versions is
pending at the present time.
The amount of money spent on the Registrant's research and
development activities in fiscal years 1995 and 1996 was,
respectively, $365,620 and $460,884. It is also relevant to note
that $33,000 of the sum that the Registrant expended on research
and development in fiscal year 1996 was devoted to its research
and development activities with the informal alliance of
noncompeting companies discussed in Item 6, Part II, of this
report.
Although demand for product, especially in the MMDS
industry, continues to be relatively strong, competitive
conditions in the Registrant's industry also continue to be
intense. Nevertheless, in the field of MMDS, the Registrant
occupies a strong position among its competitors.
In the Registrant's opinion, the primary methods of
competition in its industry are product pricing, the ready
availability of quality products to accommodate demand, offering
quality service of products after sale, and maintaining a
reputation for having a high degree of technical knowledge.
While FCC regulations, as promulgated or amended from time
to time, can have an effect on the demand for the Registrant's
domestic products, the Registrant does not presently know of any
existing governmental regulation and does not anticipate any
probable governmental regulation which would have a material
effect on its business. However, the Registrant does anticipate
FCC regulation of digital and compression technology, which is
described below, but it is unclear when this will occur and what
effect, if any, it will have on the Registrant's business.
<PAGE>
There has been no material effect on the Registrant as a
result of compliance with federal, state or local environmental
laws.
The Registrant's principal corporate logos, "EMCEE" and
"EMCEE Broadcast Products", are registered in the United States
Patent and Trademark Office and are used by the Registrant
pursuant to a license with its wholly owned subsidiary
corporation, EMCEE Cellular Inc., which owns the marks. In the
same manner, the Registrant also uses the trademark, "Site Lock",
which is a mark associated with a product sold by the Registrant
that enhances picture quality for MMDS systems in close proximity
to systems operating on the same frequency, and utilizes a patent
for a solid state Sband transmitter.
ITEM 2. DESCRIPTION OF PROPERTY
- --------------------------------
The Registrant conducts operations at its facility located
on 26 acres, which the Registrant owns in fee, in White Haven,
Pennsylvania.
The building was constructed specifically for the Registrant
in 1968 and consists of approximately 27,000 square feet, with
the majority of the area devoted to manufacturing. The front
portion of the building, consisting of two floors, houses
administrative, engineering and sales offices. The land, building
and improvements are well maintained and in good condition.
The Registrant's land, building and improvements are subject
to encumbrances held by the Registrant's primary lending
institution, First Valley Bank. These encumbrances secure the
Registrant's working line of credit and three term loans with the
lender. As of the date of this report, the aggregate principal
balance of these encumbrances is $935,372.
In accordance with a written agreement, the White Haven
Municipal Authority has the right and option to acquire, for no
additional consideration, up to but no more than one acre of the
Registrant's land. Although this sale and conveyance has not yet
been consummated, it presently appears that the parcel to be
conveyed will consist of a part of the Registrant's land located
near the northwestern boundary line thereof, together with a 20
foot wide easement of ingress and egress from Susquehanna Street
West, which is the public road leading into and running along the
western side of the Registrant's land. No entry on the financial
statements accompanying this report was made with respect to this
anticipated conveyance, as the value thereof was deemed not to be
material.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
There is no information relevant to the Registrant which
must be disclosed under this Item 3.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matter was submitted to a vote of security holders during
the fourth quarter of fiscal year 1996.
PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -----------------------------------------------------------------
The NASDAQ National Market is the principal market on which
the Registrant's common stock is traded.
MARKET INFORMATION
- ------------------
STOCK PRICE
- ------------------
The table below presents the high and low bid prices of the
Registrant's common equity for the two most recent fiscal years:
<TABLE>
<CAPTION>
FISCAL YEAR 1996
----------------
<S> <C> <C> <C> <C>
QTR ENDED: JUNE 30 SEPT 30 DEC 31 MAR 31
(BID) HIGH $7.75 $8.375 $8.25 $8.125
(BID) LOW $5.0 $5.375 $6.25 $5.875
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR 1995
----------------
<S> <C> <C> <C> <C>
QTR ENDED: JUNE 30 SEPT 30 DEC 31 MAR 31
(BID) HIGH $3.625 $8.0 $8.625 $8.0
(BID) LOW $1.0 $2.675 $6.25 $5.0
</TABLE>
<PAGE>
The above high/low bid information for June 30 and September
30, 1995 was obtained from the NASD OverTheCounter Market
quotations; such quotations reflect interdealer prices, without
retail markup, markdown or commission, and may not represent
actual transactions. The remainder of above high/low bid
information was obtained from the NASDAQ Stock Market, Inc.
HOLDERS
- --------
At March 31, 1996, the number of holders of the Registrant's
common stock was 1,724.
DIVIDENDS
- ---------
No dividends were declared during fiscal year 1995 or fiscal
year 1996. The Registrant's loan documents with its primary
lending institution contain certain financial covenants with
which the Registrant must comply in order to declare and pay
dividends on its common stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
- -----------------------------------------------------------------
RESULTS of OPERATIONS
- ---------------------
Net sales for fiscal year ended March 31, 1996 totaled
$14,293,000, a reduction of $2,072,000, or 13%, from fiscal year
ended March 31, 1995.
The Company's management believes that the decrease in sales
was primarily a result of MMDS domestic operators restricting
expansion until additional knowledge and testing of digital and
compression technology was completed. While, as indicated
below, foreign sales increased in fiscal year 1996, the Company's
management believes that there was delayed purchasing by foreign
customers, due to the increasing size and complexity of foreign
projects and the lengthening of contract negotiations for these
projects, which also contributed to the decrease in overall sales
in fiscal year 1996. However, this reduction in sales, which
appears to have begun in December, 1994, seems to have begun to
reverse itself, at least for the foreign markets, in October,
1995. As evidence of this reversal, fourth quarter net sales for
fiscal year 1996, which consisted of 67% foreign sales, totaled
$4,769,000, as compared to $2,698,000 for the fourth quarter of
fiscal year 1995, of which 19% came from foreign sales.
For fiscal year 1996, foreign sales totaled $8,132,000 (57%
of net sales), as compared to $6,829,000 (42% of net sales) for
the immediately preceding fiscal year. Domestic sales for fiscal
<PAGE>
year 1996 totaled $6,161,000, as compared to $9,536,000 for
fiscal year 1995. The largest sale to any one customer during
fiscal year 1996 totaled 19% of the Company's net sales. This
sale was with respect to a contract with a Pacific Rim country
which was concluded in the first quarter of fiscal year 1997.
Also included in the Company's sales for fiscal year 1996 were
approximately $1 million of shipments destined for Saudi Arabia
under a purchase order mentioned below. The Company's largest
domestic customer in fiscal year 1996 accounted for 16% of the
Company's net sales. The same customer accounted for 28% of the
Company's net sales for fiscal year 1995. However, the Company
believes that its future growth is not dependent on any one
customer, with the exception of the previously mentioned sales to
Saudi Arabia in which the Company is a subcontractor to the prime
contractor for the project. The Company's management believes
that the successful completion of that project will enhance its
opportunities with the other participating companies for future
orders throughout the world market.
With the Regional Bell Operating Companies (RBOC's)
investing in MMDS operators, additional funding for domestic
expansion is anticipated for the next three to four years. The
capital and technological investments in certain wireless cable
operators over the last two year by RBOC's, such as Bell
Atlantic, NYNEX and Pacific Telesis Group, should contribute to
further growth in the domestic wireless cable industry. The
Registrant has planned for this growth by increasing research and
development, as well as its marketing efforts, to maintain its
strong technological and product quality reputation in the
industry.
In the high technology environment in which the Company does
business, it is difficult, if not impossible, to fully anticipate
or accurately predict future sales. However, the Company expects
and is planning for sales growth in both the domestic and foreign
MMDS markets, with the majority of such growth to occur in the
foreign markets over the next ten years. For approximately the
next twelve months, the Company's foreign sales growth will be
sustained by a purchase order for Saudi Arabia with a remaining
value of approximately $8.8 million.
Gross profit for fiscal year ended March 31, 1996 was
$5,191,000, a decrease of 25% from the $6,893,000 realized in the
immediately preceding fiscal year. This constitutes a reduction
of gross profit as a percent to net sales of 42% for fiscal year
ended March 31, 1995, to 36% for fiscal year ended March 31,
1996. While the reduction in volume contributed primarily to the
decrease in gross profit, the change in product mix was also a
significant factor. More specifically, sales of products which
are manufactured by others (O.E.M. products), for which the gross
profit is less than products manufactured by the Registrant,
increased from $2,530,000 (15.5% of net sales) for fiscal year
ended March 31, 1995, to $3,174,000 (22.2% of net sales) for
fiscal year ended March 31, 1996.
<PAGE>
Total operating expenses of $3,272,000 in fiscal year 1996
represented a 14% increase over fiscal year 1995. Additional
expenditures were made for research and development, from
$366,000 for fiscal year 1995 to $461,000 for fiscal year 1996,
in order to maintain the Company's leadership position in the
MMDS industry. Also included in this expense were costs incurred
by the Registrant as a result of its participation in an informal
alliance with five other noncompeting companies from the MMDS
industry.
That alliance, which was formed towards the end of the
first quarter of fiscal year 1995, has as its purpose the
development of wireless digital technology designed to compress
five or more television programs so that the consumer will be
able to receive from 150 to 300 channels, including "near video-on-
demand" and Pay Per View programs. The Company's management
believes that the testing which the alliance has been conducting
on such technology has been very successful thus far because it
has: (1) validated the engineering theory that digital
compression will allow video programs in the same spectrum with
enhanced picture quality; (2) enabled the Company to acquire
additional technical knowledge of this technology; (3) enabled
the Company to determine that its present transmitters, with
minor modifications, can be used for transmitting digital
television signals; and (4) enhanced operator interest in
utilizing this technology for its MMDS systems and thus providing
a potential avenue for sales growth in the domestic MMDS market.
The Company has provided demonstrations of this technology
at trade shows and industry conventions and plans to continue to
do so through fiscal year 1997. In the meantime, the Company,
through synthesizer enhancement, has developed a product, which
it calls "DigaCom", which will enable MMDS operators to convert
their current analog transmitters to digital technology when it
becomes available to the wireless cable industry.
Total selling expenses for fiscal year 1996 increased by
approximately $172,000, or 12%, over the immediately preceding
fiscal year. This was due primarily to additional personnel
costs, product promotion and travel expenses, the latter of which
resulted from the increase in sales in the international market.
The Company's management believes these expenditures must be
continued in order to properly develop the international market.
General and administrative expenses totaled $1,214,000 for
fiscal year ended March 31, 1996, as compared to $1,087,000 for
the previous year. Personnel costs, including total Company
related expenses, increased by approximately $50,000, and legal
expenses increased from $72,000 to $147,000. The increase in
legal expenses was due primarily to the corporate name change approved
by the stockholders at the Company's 1995 Annual Meeting of Stockholders
and litigation costs associated with litigation initiated by an
individual during fiscal year 1996, which was subsequently
<PAGE>
dismissed as being without merit. In addition, certain onetime
charges were incurred for consulting fees related to the
upgrading of the Company's electronic data processing systems and
in transferring the Company from the NASDAQ Small Cap Market to
the NASDAQ National Market.
Interest expense for fiscal year ended March 31, 1996
totaled $141,000, an increase of $25,000 over fiscal year ended
1995. Although principal payments of $172,000 were made during
fiscal year 1996, additional equipment was financed on a 5-year
Note in the amount of $115,000, in June, 1995. In addition, a
large foreign account receivable on a commercial letter of credit
was discounted at an interest cost of $23,000.
Aided by a cash and cash equivalent balances of $1,440,000
carried over from March 31, 1995 and a high average of deposits
on future orders, the Company was able to transfer its cash to
government securities and other investments to accumulate
interest income during fiscal year 1996 of $105,000, which was an
increase of $44,000 over fiscal year ended March 31, 1995.
In the "Other Income (expense)" category on the consolidated
statement of income of the financial statements accompanying this
report, "other", which consisted primarily of the rental of a
transmitter, netted $18,000 for fiscal year 1996, as compared to
$21,000 for fiscal year 1995.
Net income before provision for federal and state income
taxes totaled $1,901,000 for the twelve months ending on March
31, 1996, as compared to $3,981,000 for the immediately preceding
period. The Registrant was able to reduce federal and state
income taxes due on its net income for fiscal year 1995 by
utilizing net operating loss and tax credit carry forwards, and
for fiscal year 1996 by utilizing a foreign sales corporation
(FSC) and other tax credits. There is no state tax liability for
fiscal year ended March 31, 1996, since all profitable companies
in the consolidated reporting group are domiciled in
jurisdictions that do not impose income taxes.
Net income for fiscal year ended March 31, 1996 was
$1,595,000, a decrease of 49% from the amount of $3,152,000 for
fiscal year ended March 31, 1995. Earnings per share of common
and common equivalent shares outstanding equal $.36 for fiscal
year 1996 and $.71 ($.70, assuming full dilution) for fiscal year
1995.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
In fiscal year 1996, the Company's cash requirements were
satisfied principally from cash flow from operations, cash on
hand and customer deposits. These funds were sufficient to meet
the Company's working capital needs, capital expenditures and
required debt payments.
<PAGE>
Cash, cash equivalents and U.S. Treasury Bills totaled
$3,107,000 as of March 31, 1996, an increase of $1,086,000 from
March 31, 1995. Cash generated from income and deposits from
customers for future orders during fiscal year 1996, the latter
of which decreased by $38,000 from fiscal year 1995, has enabled
the Company to increase its investments in TBills by $988,000
during fiscal year 1996. In addition, cash and cash equivalents,
with the exception of approximately $150,000, earned interest
under a cash management agreement the Registrant has with its
primary lending institution.
Accounts receivable totaled $1,819,000 as of March 31, 1996,
as compared to $1,667,000 as of March 31, 1995. This increase is
attributable to the increase in sales volume in the fourth
quarter of fiscal year 1996. The Company's management believes
that its reserve for bad debts of $95,000, as of March 31, 1996,
is adequate.
Although inventories were reduced by 17%, from $4,048,000 at
March 31, 1995, to $3,376,000 at March 31, 1996, inventory turns
decreased from 2.49 to 2.45. The Company has been focusing on the
reduction of inventory as a percent to sales by utilizing
enhanced data processing hardware and software.
The "Note Receivable" shown on the balance sheet in the
financial statements accompanying this report in the amount of
$2,100,000 for both fiscal years ended 1995 and 1996 represents the
principal balance due and owing the Company on a Promissory Note for the
sale of a cellular license.That Note accrues interest on the unpaid
balance of principal at the rate of 7% per annum. As the Note will
mature on December 16,1996, it is shown as a current asset for fiscal
year ended March 31, 1996. The amount of the Note and the related interest
income has not been recognized by the Company because there is no
reasonable basis to evaluate the likelihood of collection.
However, as of the date of this report, the Registrant is not
aware of the occurrence of any material event or change in the
obligor of the Note that would affect the Registrant's ability to
collect the sums that will become due thereunder (See Note 1 of
the footnotes to the financial statements accompanying this
report).
Prepaid expenses, as shown on the financial statements
accompanying this report, include deferred federal income taxes
of $226,000, prepaid taxes of $140,000, prepaid insurance of
$29,000, and prepaid expenses of $79,000.
The accrued income tax amount of $1,041,000 as of March 31,
1995, was eliminated for March 31, 1996 as a result of tax
payments for fiscal year 1995. There is no accrued income tax
expense as of March 31, 1996, because the Registrant was required
to remit quarterly estimated tax payments for that year.
Accounts Payable increased from $632,000 at March 31, 1995 to
<PAGE>
$785,000 as of March 31, 1996 as a result of the increase in
sales for the fourth quarter of fiscal year 1996 and the
increased backlog of orders as of March 31, 1996, as compared to
the immediately preceding fiscal year end.
Capital expenditures for fiscal year 1996 were $231,000, of
which $161,000 was incurred for upgrading the Registrant's
electronic data processing systems. Capital assets of $91,000
that were fully depreciated were "scrapped" and written off, and
an additional $53,000 of equipment with a depreciated value of
$23,000 was transferred to inventory. Depreciation expense for
fiscal year 1996 totaled $199,000. Planned capital expenditures
for fiscal year 1997 are $248,000, with approximately 50% of that
amount being earmarked for factory and test equipment. Plans are
being formulated for future expansion of the production and
office portions of the Registrant's facility in White Haven,
Pennsylvania. The Company expects to finance these capital
expenditures through loans and income from operations.
"Other Assets" shown on the consolidated balance sheet of the
financial statements accompanying this report represent the
Registrant's equity investment in a wireless cable operator in
the amount of $212,000 for fiscal years 1995 and 1996, with the
remainder associated with organizational costs of certain
subsidiaries of the Registrant. The market value of the equity
investment of $212,000 was approximately $359,000 as of March 31,
1996. In the first quarter of fiscal year 1997, the Company sold
approximately 29% of this equity investment.
In November, 1995, the Company, by agreement with its primary
lending institution, increased its available line of credit from
$975,000 to $2 million, at a rate of interest per annum equal to
the lending institution's prime rate of interest minus one-half
of a percentage point. There has been no borrowing against the
line of credit since December, 1993; however, the line was
restricted as of March 31, 1996 by $25,000 in order to
collateralize a standby letter of credit issued by the Company in
the ordinary course of its business.
The balance of long-term debt of $1,195,000 as of March 31,
1995 was reduced during fiscal year 1996 through scheduled
repayments of principal of $172,000, which included a $50,000
accelerated principal payment on a debt the Registrant owes to
the White Haven Municipal Authority. As mentioned above, in June,
1995, the Company obtained a loan of $115,000 from its primary
lending institution in order to finance the purchase of certain
data processing equipment and software. That loan, as of March
31, 1996, had an outstanding principal balance of $96,000.
The Company believes that its existing working capital and
borrowing capacity, coupled with the cash flow generated from its
operations, including advance deposits on sales orders, will be
sufficient to fund its anticipated working capital and debt
payments required for fiscal year 1997.
<PAGE>
Inflation has not had a significant impact on cost or price
in the two fiscal years under review. However, it is important to
note that a significant portion of component parts that are
integrated into the Registrant's products are obtained from
sources outside of the United States, primarily the Far East.
The value of common stock and additional paid in capital
shown on the financial statements accompanying this report
increased by $47,000 in fiscal year 1996 as a result of the
exercise of employee stock options (See Note 9 to the financial
statements for a further discussion). The value of the Company's
Treasury Stock (a deduction from common stock) increased from
$21,000 as of March 31, 1995, to $52,000 as of March 31, 1996,
due to the Company's purchase of stock from former employees
under its KSOP Plan Agreement.
In May, 1996, the Registrant, through a subsidiary,
purchased 200,000 shares of the Company's stock from the Estate
of a former director through an agreement negotiated with the
beneficiary. In consideration of this agreement, the Company has
issued a Nonnegotiable, Nontransferable Stock Warrant to the
beneficiary that expires on May 22, 2001, for 200,000 shares of
the Company's stock at an exercise price of $9.46875 per share.
The sales order backlog, which the Registrant anticipates
will be filled in fiscal year 1997, was $10,912,000 as of March
31, 1996, as compared to $3,162,000 at March 31, 1995. The
current backlog includes approximately $8.8 million of a contract
being performed by the Company in which it is a subcontractor for
a 40 city wireless cable system in Saudi Arabia. As previously
mentioned, the Registrant believes that the successful completion
of this contract, together with the Registrant's prior and
continuing participation in the international marketplace, will
enhance its reputation and initiate the potential for additional
sales volume in the Middle East and in other parts of the world.
ITEM 7. FINANCIAL STATEMENTS
- -------------------------------
See pages 23 to 35 of this report for the financial
statements required by this Item.
ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURES
- ------------------------------------
There is no information relevant to the Registrant which
must be disclosed under this Item 8.
<PAGE>
PART III
--------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSON;
- ----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- --------------------------------------------------------------
The information required by this Item 9 is incorporated
herein from the Proxy Statement expected to be filed within one
hundred twenty (120) days of the close of the Registrant's fiscal
year.
ITEM 10. EXECUTIVE COMPENSATION
- --------------------------------
The information required by this Item 10 is incorporated
herein from the Proxy Statement expected to be filed within one
hundred twenty (120) days of the close of the Registrant's fiscal
year.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- ------------------------------------------------------------------------
The information required by this Item 11 is incorporated
herein from the Proxy Statement expected to be filed within one
hundred twenty (120) days of the close of the Registrant's fiscal
year.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information required by this Item 12 is incorporated
herein from the Proxy Statement expected to be filed within one
hundred twenty (120) days of the close of the Registrant's fiscal
year.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8K
- -----------------------------------------
(a) The following constitutes an Exhibit Index of the applicable
Exhibits to this report:
DESCRIPTION OF EXHIBIT PAGE NUMBER
- ----------------------- -----------
Articles of Incorporation and Bylaws
Certificate of Incorporation 36
Bylaws (1)
Material Contracts
Purchase and Sale Agreement (1)
1988 Stock Option Plan (1)
Officers Incentive Compensation Plan 61
Agreement (Change in Control Agreements for
certain Executive Officers) 63
Nonnegotiable, Nontransferable Stock Warrant 79
Purchase Order Master Contract (2)
Subsidiaries (3)
Financial Data Schedule (4)
(1) Incorporated by reference from the Form 10KSB filed by the
Registrant with the U.S. Securities and Exchange Commission for
fiscal year ended 1993.
(2) This Exhibit, certain portions of which the Company believes
merit confidential treatment, has been omitted from this report and
will be filed separately with the Securities and Exchange
Commission, together with the Company's Application making objection
to the disclosure of such portions and requesting confidential
treatment thereof.
(3) Incorporated by reference from the Form 10KSB filed with the
U.S. Securities and Exchange Commission for fiscal year ended 1995.
(4) This Exhibit was filed electronically, but is not included in
the paper copy of this report.
(b) Form 8K filings: The Registrant filed one Form 8K during the
last quarter of the period covered by this report. That Form 8K was
filed with the U.S. Securities and Exchange Commission on February
13, 1996, and reported the Registrant's execution of a contract with
General Instrument Corporation to supply MMDS transmitters and
related equipment for 40 locations throughout the country of Saudi
Arabia.
<PAGE>
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMCEE BROADCAST PRODUCTS, INC.
/s/ JAMES L. DESTEFANO
---------------------------------
James L. DeStefano, President/CEO
Date: June 27, 1996
/s/ ALLAN J. HARDING
---------------------------------
Allan J. Harding, Vice President
Finance
Date: June 27, 1996
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
/s/ JAMES L. DESTEFANO Date: June 27, 1996
- ---------------------------
James L. DeStefano, Director
/s/ JOE B. HASSOUN Date: June 27, 1996
- ---------------------------
Joe B. Hassoun, Director
/s/ MICHAEL J. LEIB Date: June 27, 1996
- ---------------------------
Michael J. Leib, Director
/s/ RICHARD J. NARDONE Date: June 27, 1996
- ---------------------------
Richard J. Nardone, Director
/s/ EVAGELIA ROGIOKOS Date: June 27, 1996
- ----------------------------
Evagelia Rogiokos, Director
/s/ LEONARD S. TEVEN Date: June 27, 1996
- ---------------------------
Leonard S. Teven, Director
<PAGE>
EMCEE BROADCAST PRODUCTS, INC.
AND SUBSIDIARIES
YEARS ENDED
MARCH 31, 1996 AND 1995
<PAGE>
Independent Auditors' Report
Board of Directors
EMCEE Broadcast Products, Inc.
White Haven, Pennsylvania
We have audited the consolidated balance sheets of EMCEE Broadcast
Products, Inc. and subsidiaries as of March 31, 1996 and 1995 and
the related consolidated statements of income, shareholders' equity
and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of EMCEE Broadcast Products, Inc. and subsidiaries as of
March 31, 1996 and 1995, and the results of their operations and
their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Kingston, Pennsylvania
May 21, 1996
<PAGE>
<TABLE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND 1995
<CAPTION>
ASSETS
1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and equivalents $ 1,537,759 $ 1,440,080
U.S. Treasury Bills 1,569,026 580,528
Accounts receivable, net
of allowance for doubtful
accounts (1996, $95,000;
1995, $120,000) 1,818,988 1,667,495
Inventories 3,375,901 4,047,946
Prepaid expenses and
deferred income taxes 473,933 276,047
Note receivable 2,100,000
Less deferred portion (2,100,000)
----------- -----------
Total current assets 8,775,607 8,012,096
----------- -----------
Note receivable 2,100,000
Less deferred portion (2,100,000)
-----------
0
-----------
Property, plant and equipment:
Land and land improvements 246,841 246,841
Building 621,215 621,215
Machinery 2,060,799 1,972,808
----------- -----------
2,928,855 2,840,864
Less accumulated deprec-
iation 1,982,113 1,896,040
----------- -----------
946,742 944,824
----------- -----------
Other assets 214,900 215,200
Total assets $9,937,249 $9,172,120
========== ==========
<FN>
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Current liabilities:
Current portion of long term
debt $ 200,000 $ 150,500
Accounts payable 785,159 632,052
Accrued expenses 552,506 415,598
Deposits from customers 526,199 564,203
Accrued income taxes 1,041,000
----------- -----------
Total current liabilities 2,063,864 2,803,353
Long-term debt, net of current
portion 938,217 1,044,243
Shareholders' equity:
Common stock, $.01 2/3 par;
authorized 9,000,000 shares;
issued 4,359,381 shares,
1996; 4,300,155 shares,
1995 72,653 71,670
Additional paid in capital 3,517,778 3,472,200
Retained earnings 3,396,801 1,801,715
----------- -----------
6,987,232 5,345,585
Less shares held in treasury,
at cost (1996, 7,325; 1995,
3,211) 52,064 21,061
----------- -----------
6,935,168 5,324,524
Total liabilities and equity $9,937,249 $9,172,120
========== ==========
</TABLE>
<PAGE>
<TABLE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 1996 AND 1995
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Net sales $14,292,562 $16,365,326
Costs of products sold 9,101,277 9,472,302
----------- -----------
Gross profit 5,191,285 6,893,024
----------- -----------
Operating expenses:
Selling 1,597,549 1,425,980
General and administrative 1,213,996 1,087,181
Research and development 460,884 365,620
----------- -----------
3,272,429 2,878,781
----------- -----------
Income from operations 1,918,856 4,014,243
----------- -----------
Other income (expense), net:
Interest expense ( 140,723) ( 115,785)
Interest income 105,279 61,319
Other 17,674 21,338
----------- -----------
( 17,770) ( 33,128)
----------- -----------
Income before income taxes 1,901,086 3,981,115
Income taxes 306,000 829,000
----------- -----------
Net income $ 1,595,086 $ 3,152,115
=========== ===========
Earnings per common and
common equivalent share:
Primary $.36 $.71
=========== ===========
Assuming full dilution $.36 $.70
=========== ===========
Shares used in computing
earnings per common share
and common share equivalent:
Primary 4,403,500 4,468,100
=========== ===========
Assuming full dilution 4,405,500 4,479,300
=========== ===========
<FN>
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1996 AND 1995
<CAPTION>
Common stock Additional
---------------
Shares Amount paid in capital
-------- -------- ---------------
<S> <C> <C> <C>
Balance, March 31, 1994 4,246,826 $ 70,782 $3,451,836
Common stock issued under
stock option plan 53,329 888 20,364
Treasury stock purchased
Net income for the year
---------- ----------- -----------
Balance, March 31, 1995 4,300,155 71,670 3,472,200
Common stock issued under
stock option plan 59,226 983 45,578
Treasury stock purchased
Net income for the year
----------- ----------- -----------
Balance, March 31, 1996 4,359,381 $ 72,653 $3,517,778
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Retained
Earnings Treasury stock
(deficit) Shares Amount Total
----------- ------- ------- -----------
<S> <C> <C> <C> <C>
Balance, March 31, 1994 $(1,350,400) 466 $( 976) $2,171,242
Common stock issued
under stock option plan 21,252
Treasury stock purchased 2,755 (20,085) ( 20,085)
Net income for the year 3,152,115 3,152,115
---------- ------ ------- ----------
Balance, March 31, 1995 1,801,715 3,221 (21,061) 5,324,524
Common stock issued under
stock option plan 46,561
Treasury stock purchased 4,104 (31,003) ( 31,003)
Net income for the year 1,595,086 1,595,086
--------- --------- -------- ----------
Balance, March 31, 1996 $ 3,396,801 7,325 $(52,064) $6,935,168
=========== ========= ======== ==========
<FN>
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1996 AND 1995
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,595,086 $ 3,152,115
Adjustments:
Depreciation 198,632 171,911
Provision for doubtful accounts ( 25,000)
Disposal of fixed assets 30,647
(Increase) decrease in:
Accounts receivable ( 126,493) (1,193,443)
Inventory 672,045 (1,207,166)
Prepaid expenses ( 159,886) ( 15,044)
Deferred income tax asset, net ( 38,000) ( 188,000)
Other assets 300 ( 3,200)
Increase (decrease) in:
Accounts payable 153,107 ( 154,595)
Accrued expenses and income taxes ( 904,093) 1,090,499
Deposits from customers ( 38,004) ( 738,343)
----------- -----------
Net cash provided by operating
activities 1,358,341 914,734
----------- -----------
Cash flows from investing activities:
Acquisition of property, plant and
equipment ( 231,197) ( 342,685)
Purchase of U.S. Treasury Bills (2,388,498) ( 775,422)
Proceeds from maturities of U.S.
Treasury Bills 1,400,000 194,894
----------- -----------
Net cash used in investing
activities (1,219,695) ( 923,213)
----------- -----------
Cash flows from financing activities:
Acquisition of treasury stock ( 31,003) ( 20,085)
Proceeds from issuance of:
Long-term debt 115,000 150,000
Common stock 46,561 21,252
Repayment of:
Long-term debt ( 171,525) ( 136,537)
Notes payable, related parties ( 150,000)
----------- -----------
Net cash used in financing
activities ( 40,967) ( 135,370)
Net increase (decrease) in cash and
equivalents 97,679 ( 143,849)
Cash and equivalents,beginning 1,440,080 1,583,929
----------- -----------
Cash and equivalents, ending $ 1,537,759 $ 1,440,080
=========== ===========
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
<FN>
Supplemental disclosures of cash flow information:
Cash paid for interest expense amounted to $142,000 and $115,000
in 1996 and 1995, respectively. Cash paid for income taxes was
$1,473,000 and $11,000 in 1996 and 1995, respectively.
See notes to consolidated financial statements
</TABLE>
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1996 AND 1995
1. Summary of significant accounting policies:
Principles of consolidation:
The consolidated financial statements include the accounts of
EMCEE Broadcast Products, Inc. (previously Electronics, Missiles
& Communications, Inc.) and its wholly owned subsidiaries
(together, the Company). All significant intercompany accounts
and transactions have been eliminated.
Revenue recognition, sale of license:
During 1992, a rural cellular license was sold for $3,100,000.
The initial payment was $845,000, net of closing costs of
$155,000. The balance, which bears interest at 7% payable at
maturity, is due December 1996. Security for the note consists
of the personal guarantee of an individual. The deferred payment
and the related interest income was not recognized because of its
extended collection period and because there is no reasonable
basis to evaluate the likelihood of collection. It is at least
reasonably possible that a change in this estimate will occur in
the near term. Revenue will be recognized upon receipt. Based
upon the information available to the Company, the license holder
was operating a cellular system at March 31, 1996.
Cash and U.S. Treasury Bills:
The Company considers cash equivalents to be all highly liquid
investments purchased with an original maturity of three months
or less. U.S. Treasury Bills with an original maturity of more
than three months are considered to be investments. All U.S.
Treasury Bills are stated at cost which approximates market and
are considered as available for sale. All U.S. Treasury Bills at
March 31, 1996 not included as cash equivalents had contracted
maturities of either six or twelve months.
Inventories:
Inventories are stated at the lower of standard cost which
approximates current actual cost (on a firstin, firstout basis)
or market (net realizable value).
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
Property, plant and equipment and depreciation:
Property, plant and equipment are stated at cost. Depreciation
is provided on the straightline method over the estimated useful
lives of the assets.
Use of estimates:
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities and the reported revenues and expenses.
Advertising:
These expenses are recorded when incurred. They amounted to
$93,000 and $69,000 for 1996 and 1995, respectively.
Earnings per share:
Primary earnings per common and common equivalent share and
earnings per common and common equivalent share assuming full
dilution are computed using the weighted average number of shares
outstanding adjusted for the incremental shares attributed to
outstanding options to purchase common stock.
2. Industry, sales and accounts receivable concentration
information:
The Company's primary activity is in one segment which consists
of the assembly and sale of equipment for the domestic and
foreign television broadcasting industry. Major customers are
those that individually account for more than 10% of the
Company's consolidated revenues. For the years ended March 31,
1996 and 1995, two customers with total sales of $4,864,000 and
one with total sales of $4,567,000, respectively, qualified as
major customers. World wide export sales amounted to $8,132,000
and $6,829,000 for 1996 and 1995, respectively. At March 31,
1996, the Company had two customers who owed the Company $784,000
and $513,000 from the sale of television broadcasting equipment.
The Company performs ongoing credit evaluations of its customers
and typically requires deposits and a letter of credit on foreign
sales and deposits on domestic sales. Historically, the
Company's uncollectible accounts receivable have been immaterial.
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
3. Cash and equivalents:
At March 31, 1996, cash held at a financial institution is in
excess of the Federal Deposit Insurance coverage by $163,000. In
addition, $198,000 of U.S. Treasury Bills were recorded as cash
equivalents.
4. Inventories:
1996 1995
---------- ----------
Finished goods $ 554,000 $ 533,000
Work in process 681,000 1,111,000
Raw materials 1,614,000 1,589,000
Manufactured components 526,901 814,946
----------- ----------
$3,375,901 $4,047,946
=========== ==========
5. Line of credit:
The Company has a line of credit agreement with a bank
aggregating $2,000,000 collateralized by inventories, accounts
receivable and all property, plant and equipment. Inventories
and accounts receivable must be maintained at specific levels in
relation to the outstanding principal balance. At March 31, 1996
the Company had outstanding letters of credit totaling $25,000
which reduce the aggregate amount available under the line of
credit agreement. The line of credit agreement requires monthly
interest payments at .50%below the bank's prime rate of interest
which was 8.25% at March 31, 1996. There were no principal
borrowings during the years ended March 31, 1996 and 1995.
The loan agreement contains restrictive covenants which, among
other things, require the Company to maintain a maximum total
liabilities to net worth ratio, a minimum current ratio and a
debt coverage ratio. The Company is allowed to pay dividends on
its common stock if it is in compliance with the financial
covenants and ratios.
<PAGE>
6. Long-term debt:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Term loans, bank $ 823,369 $ 872,000
Due to municipal authority 83,155 143,800
Equipment loans 231,693 178,943
---------- ----------
1,138,217 1,194,743
Less current portion 200,000 150,500
---------- ----------
$ 938,217 $1,044,243
========== ==========
</TABLE>
Term loans, bank consist of two loans at March 31, 1996. One
loan in the current amount of $739,805 matures in 2008 and
requires monthly payments of $7,939, including interest.
Interest is calculated at .375% above the bank's base rate of
8.25% at March 31, 1996. The other loan, with a current balance
of $83,564, matures in 1998 and requires monthly principal and
interest payments of $4,600. The interest rate on this loan is
.25% above the bank's base rate. The bank has the option of
adjusting the monthly payments required under these loans to
provide for changes in the interest rates. The long-term debt is
cross collateralized with and has the same restrictive covenants
as the line of credit (see Note 5).
The amount due to the municipal authority is payable in monthly
installments of approximately $1,300 and additional principal
payments of ten percent of net income in excess of $100,000 up to
a maximum additional payment of $50,000 per annum. This
liability had been recorded at its present value using an
interest rate of 8%.
Principal payments on long-term debt, based on current interest
rates, are as follows:
1997 $ 200,000
1998 154,000
1999 125,000
2000 61,000
2001 46,000
Thereafter 552,217
----------
$1,138,217
==========
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
7. Fair value of financial instruments:
At March 31, 1996, the fair value of long-term debt that is
variable rate debt that reprices regularly and U.S. Treasury
Bills approximates the amounts recorded in the financial
statements. It is not practicable to estimate the fair value of
the note receivable because the Company is unable to estimate the
timing and form of the ultimate settlement of the amounts due to
it. The Company has fully provided for any potential loss
resulting from the nonpayment of the receivable.
8. Defined contribution pension plan:
A defined contribution pension plan covers all full time
employees who meet age and service requirements. Contributions to
the plan, determined at the discretion of the Board of Directors,
were $29,000 and $24,000 in 1996 and 1995, respectively.
9. Nonqualified stock option plans:
Nonqualified stock option plans provide for the grant of options
to purchase up to 350,000 shares. Upon the termination or
expiration of any stock options granted, the shares covered by
such terminated or expired stock options will be available for
further grant; 22,750 options were available for grant at March
31, 1996 and 1995. The Board of Directors, at the date of grant
of an option, determines the number of shares subject to the
grant and the terms of such option.
<TABLE>
<CAPTION>
Stock option activity is shown below:
1996 1995
--------- --------
<S> <C> <C>
Outstanding at beginning of year 145,920 144,499
Granted 182,750
Exercised (prices ranging from $.34 to
$3.4375 per share) ( 59,226) ( 53,329)
Canceled/forfeited (128,000)
--------- ---------
Outstanding at end of year (prices
ranging from $.34 to $3.4375 per share) 86,694 145,920
========= =========
Exercisable at end of year 65,611 92,754
</TABLE>
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
10. Income taxes:
The following table sets forth the current and deferred amounts
of the provision for income taxes for the year ended March 31,
1996 and 1995:
<TABLE>
<CAPTION
1996 1995
---------- ----------
<S> <C> <C>
Current $ 344,000 $ 1,017,000
Deferred ( 38,000) ( 188,000)
---------- ----------
$ 306,000 $ 829,000
========== ==========
</TABLE>
The provision for income taxes at the Company's effective rate
differed from the provision for income taxes at the statutory
rate of 34% for the years ended March 31, 1996 and 1995 as
follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Federal income tax at
the statutory rate $ 646,000 $ 1,354,000
Foreign sales corporation benefit ( 173,000)
State taxes, net of federal
effect 94,000
Federal income tax credit ( 49,000) ( 36,000)
Change in valuation allowance ( 597,000)
Other, net ( 118,000) 14,000
----------- ----------
Provision for income taxes $ 306,000 $ 829,000
=========== ==========
</TABLE>
<PAGE>
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1996 AND 1995
The tax effects of temporary differences that give rise to
deferred income taxes at March 31, 1996 and 1995 are presented in
the table below:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Deferred tax assets:
Inventory $ 124,000 $ 157,000
Other differences 102,000 84,000
---------- ----------
Total gross deferred tax assets 226,000 241,000
Deferred tax liabilities, depreciable
assets ( 53,000)
----------
Net deferred tax asset $ 226,000 $ 188,000
========== ==========
</TABLE>
11.Subsequent event:
Subsequent to March 31, 1996, the Company purchased 200,000
shares of its common stock using available cash. This purchase
represents approximately 5% of outstanding shares.
CERTIFICATE OF INCORPORATION
OF
ELECTRONICS, MISSILES & COMMUNICATIONS, INC.
---ooOoo---
FIRST. The name of the corporation is ELECTRONICS, MISSILES &
COMMUNICATIONS, INC.
SECOND. Its principal office in the State of Delaware is located
at No. 100 West Tenth Street, in the City of Wilmington, County
of New Castle. The name and address of its resident agent is The
Corporation Trust Company, No. 100 West Tenth Street, Wilmington
99, Delaware.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To manufacture, produce, assemble, fabricate, import, lease,
purchase or otherwise acquire; to invest in, use, hold, own,
license the use of, install, handle, maintain, service or repair,
to sell, pledge, mortgage, exchange, export, import, distribute,
lease, assign, and otherwise dispose of, and generally trade in
and deal in, to carry on research, development, engineering,
design, technical studies, consulting, invention, and revision
of, electronic systems, equipment and components, and electrical,
and electromechanical apparatus and equipment of all kinds and
descriptions, electronics, telecommunications, communications and
similar equipment of all descriptions, including but not limited
to high frequency, very high frequency, ultra high frequency,
microwave, infra-red, relays and repeaters, electronic test
equipment, equipment and systems for relaying broadcasting,
transmitting and receiving signals, equipment and systems for
computing measurements and control of signals, radio, sonar,
radar, television and related and similar devices and equipment,
cables, motors, dynamos, generating plants, meters, supplies,
parts, equipment, apparatus, machinery, improvements, appliances,
tools and goods, wares, merchandise, commodities, articles of
commerce and property of every kind and description, services of
every kind and description dealing with communications, reception
and transmission of sound and light waves, and all and any
products, machinery, equipment and supplies used or useful in
connection with the foregoing.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose
of, trade, deal in and deal with goods, wares and merchandise and
personal property of every class and description.
To acquire, and pay for in cash, stock or bonds of this
corporation or otherwise, the good will, rights, assets and
property, and to undertake or assume the whole or any part of the
obligations or liabilities of any person, firm, association or
corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of
the United States or any foreign country, patent rights, licenses
and privileges, inventions, improvements and processes,
<PAGE>
copyrights, trade-marks and trade names, relating to or useful in
connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer,
mortgage, pledge or otherwise dispose of or deal in and with any
of the shares of the capital stock, or any voting trust
certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and
other securities, obligations, choses in action and evidences of
indebtedness or interest issued or created by any corporations,
joint stock companies, syndicates, associations, firms, trusts or
persons, public or private, or by the government of the United
States of America,
or by any foreign government, or by any state, territory,
province, municipality or other political subdivision or by any
governmental agency, and as owner thereof to possess and exercise
all the rights, powers and privileges of ownership, including the
right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, county, state, body politic or government or colony
or dependency thereof.
To borrow or raise moneys for any of the purposes of the
corporation and, from time to time without limit as to amount, to
draw, make, accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other
negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the
interest thereon by mortgage upon or pledge, conveyance or
assignment in trust of the whole or any part of the property of
the corporation, whether at the time owned or thereafter
acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate
purposes.
To loan to any person, firm or corporation any of its surplus
funds, either with or without security.
To purchase, hold, sell and transfer the shares of its own
capital stock; provided it shall not use its funds or property
for the purchase of its own shares of capital stock when such use
would cause any impairment of its capital except as otherwise
permitted by law, and provided further that shares of its own
capital stock belonging to it shall not be voted upon directly or
indirectly.
To have one or more offices, to carry on all or any of its
operations and business and without restriction or limit as to
amount to purchase or otherwise acquire, hold, own, mortgage,
sell, convey or otherwise dispose of, real and personal property
of every class and description in any of the states, districts,
territories or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district,
territory, colony or country.
<PAGE>
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by
the laws of Delaware upon corporations formed under the General
Corporation Law of the State of Delaware, and to do any or all of
the things hereinbefore set forth to the same extent as natural
persons might or could do.
The objects and purposes specified in the foregoing clauses
shall, except where otherwise expressed, be in nowise limited or
restricted by reference to, or inference from, the terms of any
other clause in this certificate of incorporation, but the
objects and purposes specified in each of the foregoing clauses
of this article shall be regarded as independent objects and
purposes.
FOURTH. The total number of shares of stock which the corporation
shall have authority to issue is one million five hundred
thousand (1,500,000) and the par value of each of such shares is
Ten Cents (10 cents) amounting in the aggregate to One Hundred Fifty
Thousand Dollars ($150,000.00).
No stockholder of this corporation shall by reason of his holding
shares of any class have any pre-emptive or preferential right to
purchase or subscribe to any shares of any class of this
corporation, now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of any class, now
or hereafter to be authorized, whether or not the issuance of any
such shares, or such notes, debentures, bonds or other
securities, would adversely affect the dividend or voting rights
of such stockholder, other than such rights, if any, as the board
of directors, in its discretion from time to time may grant and
at such price as the board of directors in its discretion may
fix; and the board of directors may issue shares of any class of
this corporation, or any notes, debentures, bonds, or other
securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of
any class, either in whole or in part, to the existing
stockholders of any class.
FIFTH. The minimum amount of capital with which the corporation
will commence business is One Thousand Dollars ($1,000.00) .
SIXTH. The names and places of residence of the incorporators
are as follows:
NAMES RESIDENCES
R. F. Westover Wilmington, Delaware
L. A. Schoonmaker Wilmington, Delaware
S. E. Manuel Wilmington, Delaware
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.
NINTH. In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly
authorized:
<PAGE>
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation.
To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to
designate one or more committees, each committee to consist of
two or more of the directors of the corporation, which, to the
extent provided in the resolution or in the by-laws of the
corporation, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be stated in the
by-laws of the corporation or as may be determined from time to
time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of
a majority of the stock issued and outstanding having voting
power given at a stockholders' meeting duly called for that
purpose, or when authorized by the written consent of the holders
of a majority of the voting stock issued and outstanding, to
sell, lease or exchange all of the property and assets of the
corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock
in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and
for the best interests of the corporation.
TENTH. Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the corporation
may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the
by-laws of the corporation. Elections of directors need not be by
ballot unless the by-laws of the corporation shall so provide.
ELEVENTH. The corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of
incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, do make this
certificate, hereby declaring and certifying that the facts
herein stated are true, and accordingly have hereunto set our
hands and seals this 20th day of May, A.D. 1960.
<PAGE>
R. F. Westover (SEAL)
L. A. Schoonmaker (SEAL)
S. E. Manuel (SEAL)
STATE OF DELAWARE
ss:
COUNTY OF NEW CASTLE
BE IT REMEMBERED that on this 20th day of May, A.D. 1960,
personally came before me, a Notary Public for the State of
Delaware, R. F. Westover, L. A. Schoonmaker and S. E. Manuel, all
of the parties to the foregoing certificate of incorporation,
known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signers
respectively and that the facts therein stated are truly set
forth.
GIVEN under my hand and seal of office the day and year
aforesaid.
Howard K. Webb
Notary Public
Howard K. Webb
Notary Public
Appointed June 27, 1958
State of Delaware
Term Two Years
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ELECTRONICS, MISSILES & COMMUNICATIONS, INC ., a corporation
organized end existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
Electronics, Missiles & Communications, Inc., the following
resolution was duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of the said corporation,
declaring said amendment to be advisable and placing the said
resolution on the annual meeting of the stockholders of the
corporation for consideration thereof. The resolution setting
forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the company be
amended by striking out and deleting all of the first paragraph
of Article Fourth' of said Certificate of Incorporation and
inserting in such Certificate of Incorporation a new first
paragraph of such Article Fourth' which reads as fol lows:
"'Fourth': The total number of shares which the company shall be
authorized to issue is Three (3) million and the par value of
each of such shares is Five ($.05) Cents amounting in the
aggregate to One Hundred Fifty Thousand ($150,000.00) Dollars."
SECOND: That thereafter, pursuant to the Board of Directors, the
annual meeting of the stockholders of the corporation was duly
called and held, upon notice in accordance with sections 242 and
222 of the General Corporation Law of the State of Delaware at
which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That this Certificate of Amendment of Certificate of
Incorporation shall be effective on September 1, 1971.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said Electronics, Missiles & Communications,
Inc. has caused its corporate seal to be hereunto affixed and
this certificate to be signed by Ross V. Swain its President, and
attested by Martin D. Cohn, its Secretary this 19th day of
August, 1971.
ELECTRONICS, MISSILES &
COMMUNICATIONS, INC.
ATTEST:
S/ MARTIN D. COHN BY: S/ ROSS V. SWAIN
Secretary President
PAGE
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss.
COUNTY OF LUZERNE :
BE IT REMEMBERED that on this l9th day of August, 1971,
personally came before me, Notary Public in and for the County
and State aforesaid, ROSS V. SWAIN, President of Electronics,
Missiles & Communications, Inc., a corporation of the State of
Delaware; he duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the
act and deed of said corporation and the facts stated therein are
true and that the seal affixed to said certificate and attested
by the secretary of the said corporation is the common or
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office of the day and year aforesaid.
S/ EDWARD A. KADLER
Notary Public
My commission expires July 20th, 1975.
PAGE
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ELECTRONICS, MISSILES & COMMUNICATIONS, INC., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware , DOES HEREBY CERTIFY:
FIRST: That at a meeting held June 5, 1972, the Board of
Directors of Electronics, Missiles & Communications, Inc., the
following resolution was duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of the said
corporation, declaring said amendment to be advisable and placing
the said resolution on the agenda of the annual meeting of the
stockholders for consideration thereof. The resolution setting
forth the proposed amendment is as follows:
RESOLVED, that the Articles of Incorporation of the company be
amended by striking out and deleting all of the first paragraph
of 'Article Fourth' of said Articles of Incorporation, as
amended, and by inserting in such Articles of Incorporation a new
first paragraph of such 'Article Fourth' which shall read as
follows:
"'Fourth': The total number of shares which the company shall be
authorized to issue is Nine (9) million shares of the Par Value
of One and Two-Thirds Cents ($.01667) per share.
SECOND: That thereafter, pursuant to the Board of Directors
resolution the annual meeting of the stockholders of the
corporation was duly called and held on August 21, 1979, upon
notice in accordance with Sections 242 and 222 of tho General
Corporation Law of the State of Delaware at which meeting the
necessary number of shares as required by statute were voted in
favor of such amendment.
THIRD: That this Certificate of Amendment of Certificate of
Incorporation shall be effective on September 1, 1972.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, the said Electronics, Missiles &
Communications, Inc. has caused its corporate seal to be hereunto
affixed and this certificate to be signed by Ross V. Swain its
President, and attested by Martin D. Cohn, its Secretary this
22nd day of August, 1972.
ELECTRONICS,.MISSILES &
COMMUNICATIONS, INC.
ATTEST:
S/ MARTIN D. COHN BY: S/ ROSS V. SWAIN
Secretary President
PAGE
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
ss.
COUNTY OF LUZERNE :
BE IT REMEMBERED that on this 22nd day of August, 1972,
personally came before me, a Notary Public in and for the County
and State aforesaid, ROSS V. SWAIN, President of Electronics,
Missiles & Communications, Inc., a corporation of the State of
Delaware; that he duly executed the said certificate before me
and acknowledged the said certificate to be his act and dead and
the act and deed of the said corporation and the facts stated
therein are true and that the seal affixed to said certificate
and attested by the secretary of the said corporation is the
common or corporate seal of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office on the day and year aforesaid.
S/ EDWARD A. KADLER
Notary Public
My Commission Expires: July 20th, 1975.
PAGE
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ELECTRONICS, MISSILES & COMMUNICATIONS, INC., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
Electronics, Missiles & Communications, Inc., the following
resolution was duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of the said Corporation,
declaring said amendment to be advisable and placing the said
resolution to a Special Meeting of Stockholders of the
Corporation for consideration thereof. The resolution setting
forth the proposed amendment is as follows:
RESOLVED THAT, 1) a special stockholder meeting he held on
February 25, 1982, at Richie's Steakhouse in White Haven, PA.,
and 2) the record date for the stockholder meeting shall be
December 31, 1981, and 3) the agenda for this meeting shall
include approval by the stockholders of (a) an ESOP plan, and (b)
an amendment to the charter of the corporation in accordance with
the following language, adding the following to the Articles of
Incorporation:
"ARTICLE TWELFTH: Except as set forth in (d) below, the
affirmative vote of the holders of not less than 80% of the
outstanding shares of the Corporation entitled to vote at an
election of directors shall be required to authorize any of the
following items of business:
(a) any merger or consolidation of the Corporation into or with
any other corporation;
(b) any sale, lease, exchange, or other disposition of all or
substantially all of the assets of the Corporation to any other
corporation, person or entity;
any purchase, lease or acquisition by the Corporation of any of
its subsidiaries of any assets or securities of the Corporation
or any of its subsidiaries; or
(d) any amendment of the Certificate of Incorporation which
changes the percentage of votes of shareholders required for the
transaction of any business or of any specified item of business,
including, without limitation, amendments to the Certificate of
Incorporation, unless such item of business has been authorized
by a majority of the entire Board of Directors of the
Corporation, in which latter event the approval of the holders of
not less than a majority of the shares of the Corporation present
and entitled to vote at a meeting of shareholder called for that
purpose shall be required to authorize any of the transactions
set forth in clauses (a), (b) or (d) hereof and no such approval
of shareholders shall be required to authorize any of the
transactions set forth in clause (c) hereof."
<PAGE>
SECOND: Thereafter, pursuant to the resolution of the Board of
Directors, a Special Meeting of Stockholders of the Corporation
was duly called and held, upon notice in accordance with Sections
242 and 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as
required by the statute and Certificate of Incorporation were
voted in favor of the amendment which added the aforementioned
Article Twelfth to the Articles of Incorporation.
THIRD: This Certificate of Amendment of Certificate of
Incorporation shall be effective on February 25, 1982.
FOURTH: The capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Electronics, Missiles & Communications,
Inc., has caused its corporate seal to be hereunto affixed and
this Certificate to be signed by Victor L. Grassini, Chief
Operating Officer and Vice President - Finance, and attested by
Martin D. Cohn, its Secretary this 25th day February, 1982.
ATTEST:ELECTRONICS, MISSILES &
COMMUNICATIONS, INC.
S/ MARTIN D. COHN BY: /s/ VICTOR L. GRASSINI
Martin D. Cohn, Secretary Victor L. Grassini, Chief
Operating Officer,
Vice President - Finance
ACKNOWLEDGMENT
The undersigned acknowledges the foregoing to be the Act of the
Corporation, and that the facts set forth are true and correct to
the best of their knowledge, information and belief.
/s/ Victor L. Grassini
Victor L. Grassini
I certify that on the 25th day of February, 1982, before me, the
subscriber, a Notary Public, personally appeared Victor L.
Grassini, and by virtue and in pursuance of authority conferred
upon him; acknowledged the foregoing to be the act of
Electronics, Missiles and Communications, Inc.
WITNESS my hand and notarial seal the day and year aforesaid. My
commission expires:
/s/ EDWARD A. KADLER
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ELECTRONICS, MISSILES & COMMUNICATION, INC., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members, filed with the minutes
of the board, adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of
Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of ELECTRONICS,
MISSILES & COMMUNICATION, INC. be amended by adding the TWELFTH
Article thereof so that, as amended, said Article shall be and
read as follows:
12. No director of this corporation shall be held personally
liable to the corporation or any of its stockholders for monetary
damages due to breach of fiduciary duty of care as director or
officer of the corporation in defending a civil or criminal
action, suit or proceeding by reason of the fact that he is a
director or officer of the corporation, shall be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding, upon receipt of an undertaking on behalf of
such director or officer to repay such amount if it shall
ultimately be determined in accordance with the Delaware General
Corporation Law that such director or officer is not entitled to
be indemnified by the corporation."
SECOND: That the stockholders by majority vote, consented to the
amendment in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
THIRD: That the aforesaid Amendment was duly adopted in
accordance with the applicable provisions of Section 249 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said ELECTRONICS, MISSILES & COMMUNICATIONS,
INC. has caused this certificate to be signed by James P. May,
its President, and attested by Martin D. Cohn, its Secretary,
this 23rd day of September, 1986.
ELECTRONICS, MISSILES &
COMMUNICATIONS, INC.
BY: S/ JAMES P. MAY
James P. May, President
ATTEST:
BY: S/ MARTIN D. COHN
Martin D. Cohn, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Electronics, Missiles & Communications, Inc., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: that at a meeting of the Board of Directors of
Electronics, Missiles & Communications, Inc., resolutions were
duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the
stockholders of said corporation for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
"RESOLVED THAT, a formal name change of the company to EMCEE
BROADCAST PRODUCTS, INC. be submitted to the shareholders for
approval on the 1995 Proxy Statement. Upon such approval by the
company's shareholders, the officers of the company are hereby
authorized to immediately and formally change the name of the
company from Electronics, Missiles & Communications, Inc. to
EMCEE Broadcast Products, Inc."
Said resolution will, therefore, cause the Certificate of
Incorporation of said corporation to be amended by changing the
FIRST Article thereof so that, as amended, said Article shall be
and read as follows:
"The name of the corporation is EMCEE BROADCAST PRODUCTS, INC."
SECOND: that, thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares
required by statute were voted in favor of the amendment.
THIRD: that said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate
to be signed by James L. DeStefano, its President/CEO, this 6th
day of September, 1995.
BY:/s/James L. DeStefano
TITLE: President/CEO
<PAGE>
CERTIFICATE OF CORRECTION FILED
TO CORRECT A CERTAIN ERROR IN THE CERTIFICATE
OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
OF EMCEE BROADCAST PRODUCTS, INC. FILED IN THE OFFICE
OF THE SECRETARY OF STATE OF DELAWARE ON OCTOBER 7, 1986
EMCEE Broadcast Products, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware, DOES HEREBY CERTIFY:
1.The name of the corporation is EMCEE Broadcast Products, Inc.
2.That a Certificate of Amendment of the Certificate of
Incorporation of the corporation was filed in the Office of the
Secretary of State of Delaware on October 7, 1986, and that said
Certificate requires correction as permitted by Section 103 of
the General Corporation Law of the State of Delaware.
3.The inaccuracy or defect of said Certificate to be corrected is
as follows: The FIRST Article of said Certificate inaccurately
indicates that it is amending the corporation's Certificate of
Incorporation by adding the TWELFTH Article thereof, and said
FIRST Article also inaccurately sets forth the specific language
of the Amendment which was duly approved by the corporation's
Board of Directors and Stockholders.
4.Article FIRST of the Certificate of Amendment of the
Certificate of Incorporation, which was filed in the Office of
the Secretary of State of Delaware on October 7, 1986, is
corrected to read as follows:
"FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members filed with the minutes
of the Board, adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of said corporation
and declaring said amendment to be advisable. The resolution
setting forth the proposed amendment is as follows:
"BE IT RESOLVED, that the Certificate of Incorporation of this
corporation be amended to provide that the personal liability of
a director of this corporation to the corporation or to its
stockholders for monetary damages for breach of fiduciary duty as
a director is eliminated, provided that such elimination shall
not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under the provisions of Section 174 of the Delaware
Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. Such elimination
shall eliminate the liability of the director for any act or
omission occurring at or after the date when the amendment has
been filed with and approved by the Secretary of the State of
Delaware."
Said resolution will, therefore, cause the Certificate of
Incorporation of said corporation to be amended by adding the
THIRTEENTH Article thereof to be and read as follows:
<PAGE>
"The personal liability of a director of this corporation to the
corporation or to its stockholders for monetary damages for
breach of fiduciary duty as a director is eliminated, provided
that such elimination shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under the
provisions of Section 174 of the Delaware Corporation Law, or
(iv) for any transaction from which the director derived an
improper personal benefit. Such elimination shall eliminate the
liability of the director for any act or omission occurring at or
after the date when this Article has been filed with and approved
by the Secretary of the State of Delaware."
IN WITNESS WHEREOF, said corporation has caused this Certificate
to be signed by James L. DeStefano, its President/CEO, this 11th
of January, 1996.
JAMES L. DESTEFANO
/s/ James L. DeStefano
President/CEO of EMCEE
Broadcast Products, Inc.
OFFICERS' INCENTIVE COMPENSATION PLAN
1.Purpose of Plan
To provide additional incentive to the participants to increase their
contribution to the achievement of company objectives by providing significant
and competitive incentive compensation that relates directly to the performance
of the company and the business results achieved, thereby promoting and
protecting the interests of the shareholders and enhancing the Company's ability
to attract, retain, and motivate and compensate key management employees. The
plan is authorized by the Board of Directors and, once established, can be
changed only by their approval.
2.Eligibility for Participation
Participation in the Plan for any year shall be the officers, excluding the
President
3.Establishment of Goal
The goal will be the income from operations established in the budget prepared
by the management, and approved by the Board of Directors for the ensuing
fiscal year. The amount for the base will be the Income from Operations as
promulgated by this budget including all incentives based on profitability.
4.Incentive Award Calculation
The award calculation will be equal to the Income from Operations for the fiscal
year as certified by the auditing firm and including any and all adjustments
necessary to receive such certification compared to the budget established in
section 3 above and will include all incentive awards including incentive awards
for officers and key employees. To establish the basis for calculating the
incentive award, Income from Operations will include incentive award amounts and
officers bonus amounts equal to the budgeted dollar amounts for the fiscal
period in which the award is calculated.
5.Individual Award Calculation
The award will be based as a percent of the base salary received by the
qualified individual for the period April 1 through March 31 in which the award
is calculated.
A)The salary class level as shown on the Salary Administration Bulletin (PS-12)
as of December 31 of the fiscal year (Officers are Level 11 ) and;
<PAGE>
B)Years of service at December 31 as follows:
6 months but less than 5 years= 0
5 years but less than 10 years = 1
10 years but less than 15 years = 2
15 years but less than 20 years = 3
20 years and up = 4
Example: Subject employee is a level 8 with 17 years service:
Level 8 = 8
17 Years = 3
TOTAL 11%
6.Proration of Incentive Award
The minimum amount will be awarded if actual Income from Operations, as stated
in section 4 is at least 80% of such stated goal. The award will be the ratio of
the achieved amount to the predetermined goal with a maximum of 150% achieved
and rounded to the nearest whole percent.
7.Examples
A)Income from Operations is budgeted for $3,000,000. The actual Income from
Operations totals $2,850,000 with incentives included as budgeted.
1.The incentive goal is $3,000,000.
2.The amount to be awarded an individual would be 95%
($2,850,000 + $3,000,000).
B) With the same budget, the company's actual Income from Operations is
$3,250,000 with incentives included as budgeted.
1.The amount to be awarded is $3,250,000 + $3,000,000 or
108%.
C) The individual shown in the example in section 5 would receive 10%(11% x .95)
of his base salary in example A above: 12% (11% x 1.08) in example B above.
APPROVED 6/2/95
JLD
AGREEMENT
THIS AGREEMENT, made this 28th day of December, 1995, by and
among EMCEE Broadcast Products, Inc. (the "COMPANY"), a Delaware
corporation, with a principal place of business located at
Susquehanna Street Extension, West (mailing address: P.O. Box
68), White Haven, Pennsylvania 18661, AND James L. DeStefano
("EXECUTIVE"), an adult individual, with a residence located at
and mailing address of 502 Crown Avenue, Scranton, Pennsylvania
18505.
BACKGROUND:
A. The Company considers it essential and in the best interest of
its stockholders to foster a stable employment environment for
certain of its officers. The Company also considers it to be in
the best interest of its stockholders to protect against the
disclosure of its confidential and proprietary information and to
restrict certain of its officers from competing against it for a
reasonable period of time in the geographic areas in which it
conducts business. The Company has identified Executive as such
an officer with whom it is appropriate to provide certain
assurances in certain cases involving a "Change in Control" (as
defined herein), and against whom it desires protection from the
disclosure of confidential and proprietary information and to
restrict from competing against it.
B. The Executive is currently employed with the Company.
Nevertheless, Executive finds it to be in his best interest to
enter into this Agreement because of the protections it affords
him in certain cases involving a Change in Control. Executive
further acknowledges that these Change in Control protections
represent a new and material benefit and constitute new and
additional consideration given to Executive by the Company in
exchange for the Executive's promises and agreements set forth in
this Agreement.
NOW, THEREFORE, based on the above-recited Background, which is
incorporated into and made a part of this Agreement, and in
consideration of the promises and agreements set forth herein,
the Company and Executive, intending to be legally bound by this
Agreement, promise, agree and represent as follows:
ARTICLE I - DEFINITIONS
1.1The following is a list which sets forth the meaning of
certain terms used in this Agreement which are not defined
elsewhere herein:
1.1.1"Change in Control" shall mean and be deemed to have
occurred if during the term of this Agreement: (i) the Company
shall become a subsidiary of another entity or shall become
subject to a binding agreement which shall provide for the
Company to become a subsidiary of another entity; (ii) the
Company shall be merged or consolidated with or into another
entity or shall become subject to a binding agreement which
shall provide for the Company to become merged or consolidated
<PAGE>
with or into another entity; (iii) all or substantially all of
the Company's assets are sold or assigned to another person or
entity; or (iv) any person or entity, or any persons or entities
(or any combination thereof) acting as a group, acquires more
than 50% of the then issued and outstanding capital stock of the
Company; AND in any such event the Company's Board of Directors,
as then constituted, shall no longer constitute a majority in
number and vote of the governing body of the Company at any time
thereafter.
1.1.2"Company" shall mean the Company, as defined in the opening
paragraph on page one hereof, and any successor or assignee of
the Company.
1.1.3"Company Information" shall mean any or all of the following
which has been prepared or created for or on behalf of the
Company or any of its subsidiaries by the Executive or others in
the past, presently or in the future, irrespective of however
held, stored, kept or produced: patented and unpatented
inventions; trade secrets; drawings and schematics; customer
lists, financial statements and other financially related
documents; corporate and legal documents; operations information,
data, plans, reports, studies and strategies; sales or marketing
information, data, plans, reports, studies and strategies; and
any and all other
such information which Executive knows or should know is
considered by the Company or any of its subsidiaries to be
confidential or proprietary in nature.
1.1.4Except as expressly provided in Section 2.1 hereof,
"Compensation" shall mean salary as fixed by the Company's Board
of Directors, cash bonuses and other payments, and the monetary
value of any perquisite or fringe benefit (excluding stock
options and restricted stock awards) not available to all other
full time Company employees on substantially the same terms and
conditions.
1.1.5Except as expressly provided in Section 2.1 hereof, "Fiscal
Year" shall mean the 12-month period ending on the last day of
the calendar month immediately preceding a "Position
Modification" or "Position Termination", as defined herein.
1.1.6"Position Modification" shall mean: (i) a decrease of three
(3%) percent or more in the Executive's Compensation; or (ii) a
change in place of employment of the Executive greater than a 50-mile radius of
White Haven, Pennsylvania.
1.1.7"Position Termination" shall mean the involuntary
termination of the Executive's employment with the Company,
except for such involuntary terminations occurring as a result
of: (i) a breach of the fiduciary duty which the Executive owes
to the Company or any of its subsidiaries; (ii) the Executive's
disability which prohibits him from performing the essential job
functions of his position with the Company or any subsidiary
thereof, with or without a reasonable accommodation; or (iii) the
Executive pleading guilty or nolo contendere to, or being
convicted of, a crime involving moral turpitude.
<PAGE>
1.1.8"Protected Area" means anywhere in the world.
1.1.9"Restricted Period" shall mean all times while Executive is
employed by the Company, or any subsidiary thereof, and for a
period of 12 months following the termination of this Agreement,
or if a Change in Control occurs and a Position Termination, or a
Position Modification as described in Section 2.1 hereof, occurs
within 24 months thereafter, then for a period of 24 months
following such Position Termination or Position Modification.
ARTICLE II - CHANGE IN CONTROL:COMPENSATION
2.1In the event a Position Termination occurs at any time within
a 24-month period following a Change in Control, or in the event
a Position Modification occurs at any time within a 24-month
period following a Change in Control and Executive declines to
continue to be employed by the Company, Executive shall be
entitled to receive, in reasonable periodic payments (but in no
event less than semi-monthly) over the course of the next
following 24 months, a sum equal to two times the Executive's
average aggregate Compensation for the two Fiscal Years
immediately preceding such Position Termination or Position
Modification. Notwithstanding the immediately preceding sentence,
in no event shall such sum exceed a sum equal to three times the
Executive's average aggregate compensation for the five fiscal
years immediately preceding such Position Termination or Position
Modification. For purposes of the immediately preceding sentence
only, "compensation" shall have the same meaning ascribed to it
in Section 280G(d) of the Internal Revenue Code, and "fiscal
year" shall mean April 1 through and including March 31, or such
other one year period which then constitutes the actual fiscal
year of the Company.
2.2In the event a Position Modification occurs at any time within
a 24-month period following a Change in Control and Executive
elects to continue his employment with the Company, Executive
shall be entitled to receive, in reasonable periodic payments
(but in no event less than semi-monthly) over the course of the
next following 24 months, the difference between the sum
calculated under Section 2.1 hereof and the Executive's
Compensation under the terms of his continuing employment with
the Company over the next following 24 months. If such a Position
Modification only involves, or also includes, a "change in place
of employment", as described in Section 1.1.6 (ii) hereof,
Executive shall be entitled to receive relocation assistance or
temporary commuting assistance from the Company to the extent the
parties shall agree under the terms and conditions of the
Executive's continuing employment with the Company.
2.3Any and all sums which the Executive may receive pursuant to
Section 2.1 or Section 2.2 hereof shall be subject to all
withholdings and deductions required by applicable law.
2.4Notwithstanding Sections 2.1 and 2.2 hereof, in the event
there shall be no successor, parent or assignee of the Company
following a Change in Control, or in the event the Company or any
such successor, parent or assignee shall at any time following a
<PAHE>
Change in Control have a net worth (based on book value) of less
than 1.5 million dollars (as determined in accordance with
Generally Accepted Accounting Principles consistently applied),
the periodic payments required to be made to Executive in
accordance with said Sections may, at the Executive's option, be
accelerated, thereby causing them to become immediately due and
payable.
2.5Except as provided in Section 2.7 hereof, in the event of a
Position Termination or a Position Modification described in this
Article II, Executive shall have no duty to mitigate his damages
by seeking other employment or otherwise.
2.6The amounts to which the Executive may become entitled
hereunder are in addition to, and not in lieu of, any other
amounts to which Executive is or may hereafter become entitled by
contract, which is not in violation of any provision of this
Agreement, or by applicable law, with the exception of those laws
described in Section 2.7 hereof; so that the amounts to be paid
to Executive hereunder shall not be reduced or offset by any such
other amounts, including, but not limited to, future earnings.
2.7Executive shall not receive the benefit of the provisions of
Section 2.5 hereof, and the same shall be stricken from this
Agreement as if never contained herein, if the Executive ever
brings an action or proceeding against the Company, or any of its
directors, officers, employees, agents or subsidiaries, based in
whole or in part on Title VII of the Civil Rights Act of 1964 (as
amended by the Civil Rights Act of 1991), the Pennsylvania Human
Relations Act or any other similar state law, the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of
1993, the Employee Retirement Income Security Act of 1974, the
Age Discrimination in Employment Act or any other federal, state
or local statutory, regulatory or common law prohibition or
restriction on an employer's right to terminate its employees'
employment or which otherwise regulates or deals with the
employer/employee relationship. In addition, any sum to which
Executive may become entitled by virtue of any such action or
proceeding shall be reduced by an amount equal to all sums paid
or to be paid to Executive pursuant to the provisions of Section
2.1 or Section 2.2 hereof.
2.8The Company's obligations under this Article II shall survive
the termination of this Agreement if, and only if, such
termination occurs as a result of a Position Termination or a
Position Modification described in this Article II.
ARTICLE III - CONFIDENTIALITY AND RESTRICTIVE COVENANT;
EXCLUSIVE JURISDICTION
3.1Executive hereby acknowledges and represents that by virtue of
his position with the Company he has participated (and/or will
hereafter participate) in the formulation of and/or has been (
and/or will hereafter be) given access to certain Company
Information. In consideration of the Company's promises and
<PAGE>
agreements contained in this Agreement, Executive promises and
agrees that he shall not use any Company Information, except in
the ordinary course of performing his duties for the Company or
any of its subsidiaries, and that he shall at all times
safeguard, hold in trust and forever refrain from disclosing any
Company Information to any person or entity, except to other
employees or agents of the Company who are authorized to receive
such Company Information.
3.2For the reasons and consideration set forth and described in
Section 3.1 hereof, and because the Company does business
regularly all over the world, during the Restricted Period the
Executive shall not directly or indirectly: (i) own, manage,
operate, join, control, be employed by, participate in, assist,
become engaged by, or lend money to any proprietorship, firm,
association, partnership, corporation, limited liability company,
trust or other business or form of business entity engaged
directly or indirectly in the sale, marketing, distribution or
manufacturing of multichannel multipoint distribution service
("MMDS") or low power television ("LPTV") transmitters or
translators in the Protected Area; (ii) divert, take away,
redirect or interfere with any ongoing or prospective business
relationship the Company or any of its subsidiaries may now or
hereafter have with any person or entity; or (iii) solicit,
induce, recruit or attempt to influence any person who is now or
hereafter an employee or engaged as an independent contractor of
the Company or any of its subsidiaries to become an employee or
to become engaged as an independent contractor of any other
person or entity which is involved in the sale, marketing,
distribution or manufacture of MMDS or LPTV transmitters or
translators in the Protected Area.
3.3Executive acknowledges and agrees that a breach of any one or
more of his promises or agreements set forth in this Article III
will result in irreparable and continuing damage to the Company
for which there may be no adequate remedy at law. Therefore, in
the event of any such breach or threatened breach of all or any
part of this Article III, the Company shall be entitled to
specific performance and injunctive relief, in addition to any
and all other rights and remedies available to the Company at law
or in equity. The Company shall also have the right to require
the Executive to account for and pay over to the Company all
monies and other property derived or received, or to be derived
or received, by the Executive as a result of any such breach, as
well as any and all sums received under any of the provisions of
Article II hereof.
3.4Executive acknowledges and agrees that the provisions of this
Article III are fair, reasonable and necessary in order to
protect the Company's and its subsidiaries' legitimate business
interests. However, in the event a Court or other tribunal of
competent jurisdiction shall determine that any provision set
forth in this Article III is illegal or unenforceable for any
reason, it is the irrevocable and express intention of the
<PAGE>
Company and the Executive to have such Court or other tribunal
reform such provision by reducing it in time and/or geographic
scope, or as otherwise necessary to, and only to the extent
necessary to, make the same enforceable under applicable law.
3.5The Company and Executive agree that any dispute, controversy
or claim arising out of or in connection with any of the
provisions of this Article III shall be decided exclusively by
the Court of Common Pleas of Luzerne County, Pennsylvania.
For such purpose, both the Company and Executive hereby submit to
the personal jurisdiction of said Court and agree that service of
process on either of them may be completed, and shall be
effective and binding upon the party served if effected pursuant
to the provisions of Section 4.4 hereof, provided that such
method shall not preclude either party from effecting service of
process in any other manner permitted by applicable law. Each
party hereto hereby waives any objection to the personal
jurisdiction of the Court of Common Pleas of Luzerne County,
Pennsylvania, over him and agrees that he shall be barred from
asserting any such objection as long as process is served in
accordance with this Section 3.5. Each party further hereby
agrees to and does hereby waive any right to assert or move for
removal or transfer of venue to any Court other than the Court of
Common Pleas of Luzerne County, Pennsylvania, based on diversity
of citizenship, federal question jurisdiction, the doctrine of
forum nonconveniens or otherwise. The provisions of this Section
3.5 are material to the Company's execution of this Agreement.
3.6The provisions of this Article III shall survive the
termination of this Agreement, irrespective of the reason or
reasons for the ending of Executive's employment with the Company
or when such employment ends.
ARTICLE IV - EXPIRATION, TERMINATION,
ARBITRATION AND MISCELLANEOUS
4.1This Agreement shall commence on the date hereof and shall
automatically expire in five (5) years from such date. This
Agreement may be extended or renewed only by a written instrument
signed by the Executive and the chief executive officer of the
Company. If this Agreement has not already expired, it shall
immediately terminate contemporaneously with the date on which
Executive's employment with the Company ends for any reason,
including, but not limited to, retirement, voluntary resignation
(including a Position Modification described in Section 2.1
hereof), involuntary termination (whether or not a Position
Termination) or death, or the date on which a Position
Modification described in Section 2.2 hereof occurs, whichever
shall occur first.
4.2This Agreement shall inure to the benefit of and be binding on
the heirs, personal
representatives, successors and assigns of the Company and
Executive.
<PAGE>
4.3The captions used in this Agreement are inserted and provided
for convenience of reference only and shall not be used to
construe, interpret, limit or expand any provision of this
Agreement.
4.4Any and all notices or other correspondences of any kind
required or permitted to be given hereunder or associated
herewith shall be in writing and be delivered either personally
(with a written acceptance of such delivery by the addressee
party or his agent), or by first-class U.S. certified mail or
private express mail courier (such as FedEx or UPS), postage
prepaid, to the addressee party at his address first set forth
above, or to such other address as the addressee party shall have
last designated by such notice.
4.5If any provision of this Agreement is deemed to be invalid or
unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof; so that in such an event this
Agreement shall continue to be binding on the parties hereto, and
subject to Section 3.4 hereof, with such invalid or unenforceable
provision or provisions being deleted herefrom as if never
contained herein.
4.6This Agreement may be executed in as many counterparts as may
be deemed necessary or convenient by the parties hereto, and by
the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all
such counterparts shall constitute one and the same instrument.
4.7No third party beneficiary rights are intended or created
hereby.
4.8References herein to the masculine shall include the feminine
and the neuter, and vice versa.
4.9Except for disputes arising out of any or all of the
provisions of Article III hereof, all disputes arising out of
this Agreement shall be settled by arbitration in Hazleton,
Pennsylvania, by one arbitrator, in accordance with the then
prevailing rules of the American Arbitration Association, for
which the decision of the arbitrator shall be final and binding
on the Company and the Executive, and for which a judgment upon
any award rendered therein may be entered in any court of
competent jurisdiction. In any such arbitration, the parties
hereto shall bear their own respective expenses, costs and fees
associated therewith, including, but not limited to, travel
expenses, attorney's fees and related disbursements, but the
actual costs of the arbitration shall be shared equally by such
parties, irrespective of the outcome of the case.
4.10This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania,
without regard to conflicts of law rules or principles.
4.11This Agreement constitutes the entire, complete and final
agreement of the parties hereto related to the subject matter
hereof, supersedes any prior discussions, understandings or
agreements of any kind between said parties, whether written or
oral, and may be changed, altered, amended, modified,
<PAGE>
supplemented or superseded subsequent to the date hereof only by
a written instrument signed by both such parties.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
4.12IMPORTANT NOTICE:NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
CHANGE, ALTER OR MODIFY THE "AT-WILL" NATURE OF THE EXECUTIVE'S
EMPLOYMENT STATUS WITH THE COMPANY. THIS AGREEMENT IS NOT
INTENDED TO BE AND SHALL NOT BE CONSTRUED AS AN EMPLOYMENT
CONTRACT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING
THIS AGREEMENT, EXECUTIVE'S EMPLOYMENT WITH THE COMPANY OR ANY
SUBSIDIARY THEREOF MAY BE TERMINATED AT ANY TIME AND FOR ANY
REASON, OR FOR NO REASON AT ALL.
IN WITNESS WHEREOF, this Agreement has been executed by the
Company and Executive on the date first set forth above.
EMCEE BROADCAST PRODUCTS, INC.
BY:/s/ Martin D. Cohn TITLE:
Secretary
CAUTION:This Agreement is intended to be a legally binding
contract. While it confers benefits on you under certain
circumstances, it also imposes certain duties, obligations and
burdens on you. Therefore, before signing this Agreement, you are
urged to have it reviewed by and to consider it with independent
legal counsel.
WITNESS:JAMES L. DESTEFANO
/s/ Kay Krull /a/ James L. DeStefano
(Signature)
The immediately preceding Agreement was also executed by the
Company and certain other of its officers, namely Allan J.
Harding, Vice President-Finance, Perry Spooner, Vice President-International
Sales, and John Saul, Vice President-Director of
Systems Engineering, on respectively, November 30, 1995, December
5, 1995, and December 4, 1995.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS
WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND CONTENT TO COUNSEL FOR THE CORPORATION
THAT THE TRANSACTION SHALL NOT RESULT IN A VIOLATION OF STATE OR
FEDERAL SECURITIES LAWS, AND IN ALL EVENTS THE EXPRESS WRITTEN
CONSENT OF THE CORPORATION AS SET FORTH IN MORE DETAIL IN SECTION
13 HEREOF.
NON-NEGOTIABLE, NON-TRANSFERABLE
STOCK WARRANT
FOR VALUE RECEIVED, EMCEE Broadcast Products, Inc. (the
"CORPORATION"), a Delaware corporation, hereby grants to the
American Committee for the Weizmann Institute of Science, Inc.
("WEIZMANN"), a New York nonprofit corporation, the right to
purchase two hundred thousand (200,000) shares of the common
stock of the Corporation, under and subject to the following
terms, conditions, restrictions and limitations:
1.ISSUE. Within ten (10) business days following tender to the
Corporation, as accomplished in strict accordance with the
provisions of Section 5 hereof, the Corporation shall issue to
Weizmann the number of shares of common stock of the Corporation
specified in the "Exercise Form" (defined hereinafter) to which
Weizmann is then entitled to purchase pursuant to the provisions
hereof.
2.EXERCISE PRICE. The exercise price of this Warrant, the price
at which the shares of stock purchasable on exercise of this
Warrant may be purchased, is $9.46875 per share (the "EXERCISE
PRICE").
3.EXERCISE PERIOD. This Warrant may only be exercised on or after
May 22, 1996, and on or before May 21, 2001 (the "EXERCISE
PERIOD"). If not fully exercised during the Exercise Period, this
Warrant, together with all of the rights granted to Weizmann
hereby, shall automatically expire, lapse and become null and
void and of no further force or effect.
4.PARTIAL EXERCISES. The shares of common stock subject to this
Warrant may be purchased pursuant to the provisions hereof all at
one time or in varying increments from time to time during the
Exercise Period.
5.TENDER. The exercise of this Warrant must be accomplished by
actual delivery of the Exercise Price by certified check or
official bank draft in lawful money of the United States of
America, and by actual delivery of a properly executed exercise
form (the "Exercise Form"), which shall be in form and content as
set forth on Exhibit "A" attached hereto and made a part hereof,
and by surrender of this Warrant. If such exercise is, pursuant
to the provisions of Section 4 hereof, only a partial exercise
<PAGE>
and there remains available shares to be purchased pursuant to
the provisions hereof, the Corporation shall deliver a new
warrant to Weizmann of like tenor and date representing the
number of such available remaining shares. The Exercise Price and
Exercise Form must be delivered, via first class U.S. certified
mail (return receipt requested) or private commercial express
mail courier (such as FedEx or U.P.S.), postage prepaid, to the
attention of the Vice-President--Finance of the Corporation at
Susquehanna Street Extension, West, P.O. Box 68, White Haven,
Pennsylvania 18661-0068, or to such other address and/or such
other officer or employee as shall have been last designated by
the Corporation in writing. The date of delivery of the Exercise
Price and Exercise Form shall be deemed to be the date
they are received by the Corporation.
6.SHARES : REGISTRATION & RESERVE. On or within one hundred fifty
(150) days from the date of their issue, the shares of common
stock subject to this Warrant shall be registered pursuant to
applicable federal and state laws and regulations. The
Corporation shall at all times during the Exercise Period reserve
and hold available sufficient shares of its common stock to
satisfy its obligations hereunder. The Corporation further
covenants and agrees that all shares of common stock that may be
issued upon the exercise of this Warrant shall, upon issuance, be
duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the purchase
and issuance thereof.
7.STOCK CHANGES. On the date hereof, the Corporation has only one
class of stock, which is common stock, is authorized to issue
nine million (9,000,000) shares of common stock and has issued
and outstanding four million three hundred sixty-one thousand
seven hundred fourteen (4,361,714) shares of its common stock. If
at any time subsequent to the issuance and acceptance hereof and
during the Exercise Period, the Corporation shall change the
number or class of shares of its common stock by stock dividend,
stock split, subdivision, reverse split, merger, consolidation or
reclassification of shares, then, in any such event, subject to
the Corporation's call option set forth in Section 8 hereof, the
aggregate number of shares with respect to which this Warrant may
then be exercised and the Exercise Price thereof shall be
proportionately adjusted by the Board of Directors of the
Corporation on the basis of a determination by the Corporation's
independent auditors, which determination shall be binding on the
Corporation and Weizmann, in order to prevent dilution or
enlargement of the rights of Weizmann granted hereby. However,
other than as a result of the occurrence of any one or more of
the events expressly described above in this Section 7, in no
event shall any change in the number or class of shares of the
common stock of the Corporation, either separately or in the
aggregate, cause the number of shares available under this
Warrant to exceed two hundred fifty thousand (250,000) shares.
<PAGE>
8.CONSOLIDATION OR SALE. Notwithstanding any other provision
contained herein, if the Corporation consolidates with or merges
into another corporation or other entity so that it is not the
surviving corporation, or if the Corporation receives an offer to
purchase or lease all or substantially all of its assets or an
offer to purchase thirty (30%) percent or more of its issued and
outstanding common stock, or if all or substantially all of the
assets of the Corporation are sold or leased or thirty (30%)
percent or more of its issued and outstanding common stock is
purchased by any person or group of persons acting in concert,
then, in any such event, this Warrant, at the option of the
Corporation, may be called by the Corporation, provided that the
Corporation gives Weizmann at least thirty (30) days advance
written notice thereof. The right to exercise this Warrant shall
terminate when it is called at the end of said thirty (30) day
notice period. The call price shall be $.70139 per share,
proportionately adjusted as a result of the occurrence of any and
all stock changes described in Section 7 hereof, and in the
manner described therein. Such call price shall be payable to
Weizmann upon its surrender of this Warrant for cancellation at
the offices of the Corporation set forth in Section 5 hereof,
together with a properly executed transfer or assignment form, in
form and content satisfactory to the Corporation in all respects.
9.DISSOLUTION. In the event that a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (other
than in connection with a merger, consolidation, sale or lease
described in Sections 7 and 8 hereof) is at anytime proposed
during the Exercise Period, the Corporation shall give written
notice to Weizmann at least thirty (30) days prior to the record
date of the proposed transaction. The notice must contain: (a)
the date on which the transaction is to take place; (b) the
record date (which must be at least thirty (30) days after the
giving of such notice) as of which holders of the common stock of
the Corporation entitled to receive distributions as a result of
the transaction shall be determined; a brief description of the
transaction; and (d) a brief description of the distributions, if
any, to be made to holders of the common stock of the Corporation
as a result of such transaction. On the date of the transaction,
if it actually occurs, this Warrant and all rights existing under
this Warrant shall terminate.
10.FRACTIONAL SHARES. Only whole shares of stock of the
Corporation may be purchased pursuant to this Warrant. However,
in the event any provision hereof would result in a fractional
share being available hereunder, such fractional share shall be
increased to the next highest whole number if it exceeds one-half
(1/2), but shall be decreased to the next lowest whole number if
it is one-half (1/2) or less.
11.REPRESENTATIONS AND WARRANTIES OF WEIZMANN. Weizmann hereby
represents and warrants to the Corporation as follows:
(a) This Warrant is being accepted by it for investment only, for
its own account and not with a view to the sale or distribution
thereof, and it is not participating, directly or indirectly, in
an underwriting of any such undertaking;
<PAGE>
(b) It will not take, or cause to be taken, any action that would
cause it to be deemed an underwriter, as defined in Section 2
(11) of the Securities Act of 1933, as amended (the "ACT"), with
respect to this Warrant;
It has received and reviewed with its separate legal counsel,
certified public accountants and financial advisors a true copy
of the Corporation's most recent Form 10 KSB, proxy materials
with respect to the Corporation's 1995 Annual Meeting of
Stockholders, and Form 10 QSB filed with the Securities and
Exchange Commission;
(d) It is an "Accredited Investor", as that term is presently
defined and used in Regulation D under the Act;
(e) By reason of its knowledge and experience in financial and
business matters in general, and business investments in
particular, it is capable of evaluating the merits and risks of
an investment such as is contemplated hereby;
(f) It is capable of bearing the economic risks of an investment
such as is contemplated hereby; and
(g) Its present financial condition is such that it has no
present or contemplated future need to dispose of any portion of
its investment made or to be made hereby to satisfy any existing
or contemplated undertaking, need or indebtedness.
Weizmann recognizes, understands and agrees that the Corporation
has delivered this Warrant to Weizmann in reliance on the
representations and warranties of Weizmann contained herein.
12.NO STOCKHOLDER RIGHTS. Notwithstanding any possible contrary
interpretation of any provision set forth herein, this Warrant
does not entitle Weizmann to any of the rights of a stockholder
of the Corporation.
13.NEGOTIABILITY; ASSIGNMENT. THIS WARRANT IS NON-NEGOTIABLE. IN
ADDITION, WEIZMANN SHALL HAVE NO RIGHT TO SELL, OFFER FOR SALE,
ASSIGN, TRANSFER OR ENCUMBER ALL OR ANY PART OF THIS WARRANT
WITHOUT THE EXPRESS WRITTEN CONSENT OF THE CORPORATION, WHICH
CONSENT MAY BE WITHHELD FOR ANY REASON OR FOR NO REASON AT ALL.
ANY SUCH SALE, ASSIGNMENT, TRANSFER OR ENCUMBRANCE WITHOUT SUCH
CONSENT SHALL CAUSE THIS WARRANT AND ALL OF THE PROVISIONS HEREOF
TO AUTOMATICALLY BECOME NULL AND VOID AND OF NO FURTHER FORCE OR
EFFECT.
14.LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation may
issue a new Warrant of like denomination, tenor and date. Any
such issuance of a new warrant shall be on such terms and
conditions with respect to indemnity and otherwise as the
Corporation may in its sole discretion impose, which shall, in
the case of mutilation, include the surrender of this Warrant.
15.NOTICES. Any and all notices, correspondences or other
communications to the Corporation shall be sent in the manner, to
the address and to the attention of the person set forth and
described in Section 5 hereof. Any and all such notices,
correspondences or other communications to Weizmann shall be sent
in the same manner as follows:
<PAGE>
American Committee for the
Weizmann Institute of Science, Inc.
51 Madison Avenue
New York, NY 10010
Any and all such notices to the Corporation or to Weizmann shall
also be sent to its legal counsel as follows:
If to the Corporation:
Robert S. Sensky, Esquire or
Martin D. Cohn, Esquire
LAPUTKA, BAYLESS, ECKER
& COHN, P.C.
2 East Broad Street
6th Floor
Hazleton, PA 18201
Fax No. (717) 459-0729
If to Weizmann:
Lawrence F. Blumberg, Esquire
GERALD & LAWRENCE BLUMBERG
LAW OFFICES
521 Fifth Avenue
New York, New York 10175
Fax No. (212) 697-9570
,or to such other legal counsel as has been last designated by
such party, by such notice; provided, however, that the failure
to provide a party's legal counsel with any such notice shall not
cause such notice to be defective.
16.LAW GOVERNING; JURISDICTION; SERVICE. This Warrant and the
provisions hereof shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. The
Corporation and Weizmann further agree that any and all disputes
arising out of or with respect to this Warrant shall be brought
before and decided exclusively by the United States District
Court for the Middle District of Pennsylvania; and in furtherance
thereof, each party hereto hereby irrevocably waives any right to
object to the jurisdiction of said Court over it or its property
and all other available objections, including, but not limited
to, forum non conveniens. The parties further agree that service
of process or service of any other document or paper in any such
suit may be served, and service shall be deemed complete and
effective upon such party, if the serving party effects such
service on the other party at its address set forth in Section 16
hereof by first-class U.S. certified mail (return receipt
requested) or private commercial express mail courier (such as
FedEx or U.P.S.), provided that the provisions hereof shall not
preclude a party from effecting service in any other manner
permitted by applicable law.
<PAGE>
17.CAPTIONS. The captions herein are inserted and provided for
convenience of reference only and are not part of this Warrant
and shall not affect the interpretation hereof.
18.INTEGRATION. This Warrant constitutes the entire, complete and
final agreement of the parties hereto with respect to the subject
matter hereof, supersedes any prior agreement, discussion or
understanding between said parties, whether written or oral, and
may be amended or supplemented subsequent to the date hereof only
by a written instrument executed by both such parties.
IN WITNESS WHEREOF, this Warrant has been executed and delivered
by the Corporation, intending to be legally bound hereby, this
26th day of May, 1996.
ATTEST: EMCEE BROADCAST PRODUCTS, INC.
/s/ Martin D. Cohn BY: /s/ James L. DeStefano
Corporate Secretary TITLE: President
(SEAL)
Intending to be legally bound hereby, this Warrant and the
provisions hereof are agreed to and accepted this 23rd day of
May, 1996.
ATTEST:AMERICAN COMMITTEE FOR THE WEIZMANN INSTITUTE OF SCIENCE,
INC.
BY: /s/ Bernard N. Samers
Corporate Secretary TITLE:Executive Vice President
(SEAL)
<PAGE>
TO:EMCEE Broadcast Products, Inc.
Susquehanna Street Extension, West
P.O. Box 68
White Haven, Pennsylvania 18661-0068
Pursuant to the provisions of a certain Non-Negotiable, Non-Transferable Stock
Warrant, dated , 1996, the undersigned
hereby: (1) irrevocably subscribes for and offers to purchase
( ) shares of common stock of EMCEE Broadcast Products, Inc.;
(2) encloses payment of ($ ) for these shares; and (3)
requests that a certificate or certificates for these shares be
issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date: AMERICAN COMMITTEE FOR THE WEIZMANN INSTITUTE OF SCIENCE,
INC.
BY:
TITLE:
Signature guaranteed by:
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000032312
<NAME> EMCEE BROADCAST PRODUCTS, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,537,759
<SECURITIES> 1,569,026
<RECEIVABLES> 1,818,988
<ALLOWANCES> 95,000
<INVENTORY> 3,375,901
<CURRENT-ASSETS> 8,775,607
<PP&E> 2,928,855
<DEPRECIATION> 1,982,113
<TOTAL-ASSETS> 9,937,249
<CURRENT-LIABILITIES> 2,063,864
<BONDS> 0
<COMMON> 72,653
0
0
<OTHER-SE> 6,862,515
<TOTAL-LIABILITY-AND-EQUITY> 9,937,249
<SALES> 14,292,562
<TOTAL-REVENUES> 14,292,562
<CGS> 9,101,277
<TOTAL-COSTS> 12,373,706
<OTHER-EXPENSES> (17,674)
<LOSS-PROVISION> 4,804
<INTEREST-EXPENSE> 140,723
<INCOME-PRETAX> 1,901,086
<INCOME-TAX> 306,000
<INCOME-CONTINUING> 1,595,086
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,595,086
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
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