FORM 10-K
SECURITIES AND EXCHANGE COMMISSION Exhibit Index
Washington, D. C. 20549 on Page 50
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(Mark One)
[XX] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 29, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-8821
GENERAL MICROWAVE CORPORATION
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Exact name of registrant as specified in its charter)
NEW YORK 11-1956350
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5500 New Horizons Boulevard, Amityville, New York 11701
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 516 - 226-8900
-------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
- ------------------- -----------------------------------------
Common Stock, par value American Stock Exchange
$.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, i.e. by persons other than officers and directors of General
Microwave Corporation as reflected in the table incorporated by reference in
Item 12 of this Annual Report on Form 10-K as of April 1, 1996 was
$5,434,371.
As of April 1, 1996, there were 1,197,390 shares of the registrant's common
stock outstanding.
Documents Incorporated by Reference
Part III: Proxy Statement for Annual Meeting of Stockholders to be held June
25, 1996.
Page 1 of 150
<PAGE>
TABLE OF CONTENTS
NOTE: General Microwave Corporation and subsidiaries are sometimes
referred to in this Annual Report on Form 10-K as "the Company",
"General Microwave" or "Registrant".
Item Page
---- ----
PART I. 1. Business........................................ 3
2. Properties..................................... 8
3. Legal Proceedings.............................. 8
4. Submission of Matters to a Vote of Security
Holders........................................ 8
Executive Officers of the Registrant........... 9
PART II. 5. Market for Registrant's Common Equity and
Related Stockholder Matters.................... 11
6. Selected Financial Data........................ 12
7. Management's Discussion and Analysis of
Financial Condition and Results of Operation... 13
8. Financial Statements and Supplementary Data.... 16
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure......... 43
PART III. 10. Directors and Executive Officers of the
Registrant..................................... 44
11. Executive Compensation......................... 44
12. Security Ownership of Certain Beneficial Owners
and Management................................. 44
13. Certain Relationships and Related Transactions. 44
PART IV. l4. Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................ 45
Signatures....................................................
(1) These items are omitted because the Registrant will file a
definitive Proxy Statement pursuant to Regulation 14A involving the
election of directors with the Securities and Exchange Commission
not later than 120 days after the Registrant's fiscal year end.
Information relating to Executive Officers of the Registrant appears
at pages 9 and 10 of this Annual Report on Form 10-K.
2
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PART I
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ITEM 1. BUSINESS.
---------
Description of Business
-----------------------
General Microwave Corporation was incorporated in the State of New
York in 1960. Unless the context otherwise indicates, the terms "General
Microwave" and the "Company" as used herein refer to General Microwave
Corporation and subsidiaries.
The Company is engaged primarily in the design, development,
manufacture and marketing of microwave, electronic and fiber-optic systems,
equipment and components. The Company is organized into four operating
divisions in three locations with strong inter-divisional ties. The parent
company, General Microwave Corporation, operates the Company's largest
division, its microwave division located in Amityville, New York. A
substantial portion of the Company's microwave products is sold to
manufacturers and users of microwave systems and equipment for applications
in the defense electronics industry. The Company also sells these components
and equipment for use in the industrial sector as well as in commercial
telecommunications industries. Typical applications for the Company's
microwave products include electronic warfare and countermeasures, airborne
and shipboard navigation and communications, radar systems, missile guidance
systems, automatic test equipment, and satellite communications.
The Company's subsidiaries, General Microwave Israel Corporation and
General Microwave Israel (1987) Ltd. in Jerusalem, Israel, conduct research
and development and manufacturing operations largely devoted to the
production of microwave oscillators. The Company's subsidiary, General
Microcircuits Corporation in Billerica, Massachusetts, engages in the design,
manufacture and sale of hybrid microcircuits largely intended for military
applications. The Company's subsidiary, Math Associates, Inc. in Amityville,
New York, designs and manufactures fiber-optic systems and components for
audio, video and data transmissions in commercial and industrial
applications. Its products are used in security systems employing intercoms,
closed circuit remote video transmissions, highway traffic control and
controlled access installations. They are also employed in high speed
digital and analog data transmission networks.
The Company has traditionally developed new products for sale as
standard catalog items as well as products designed to customer
specifications under fixed price contracts. The Company's catalogs currently
list over 850 products.
The following table sets forth, for the periods indicated, unaudited
information with respect to the Company's net sales contributed by each class
of similar products which accounted for 15% or more of consolidated net sales
in any of the last three fiscal years.
3
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Year Ended February 28 or 29
----------------------------
1996 1995 1994
---- ---- ----
Microwave Components.............$11,833,453 $13,739,840 $13,442,241
Power Measuring Instruments......$ 2,148,258 $ 1,534,178 $ 1,910,554
Hybrid Microcircuits.............$ 2,958,868 $ 3,410,919 $ 2,717,397
Fiber-optics.....................$ 4,908,578 $ 3,240,629 $ 3,977,731
Other............................$ 487,031 $ 384,427 $ 624,013
Net Sales.........$22,336,188 $22,309,993 $22,671,936
Marketing
---------
The Company markets its products through an internal marketing
department and through independent domestic and independent foreign sales
organizations.
Research and Development
------------------------
The Company's research and development is conducted both through
internally funded activities and through customer funded research and
development under fixed price and cost plus fixed fee product development
contracts.
Internally funded research and development expenditures aggregated
$1,260,000, $1,160,000 and $1,112,000 in fiscal 1996, 1995 and 1994,
respectively. These expenditures are net of reimbursements received under
agreements with the government of Israel and another entity in the amounts of
$104,000, $245,000 and $60,000 in fiscal 1996, 1995 and 1994, respectively.
In addition to Company sponsored development activities, the
Company continues to expand and improve its product line and technology
through performance under certain fixed price and cost plus fixed fee
contracts requiring the development and manufacture of new products.
Development and manufacturing costs incurred in connection with customer
funded prototype development contracts are included in cost of sales. The
estimated amount spent by the Company during each of the last three fiscal
years on customer sponsored research and development activities aggregated
$860,000, $3,516,000 and $3,212,455 in fiscal 1996, 1995 and 1994,
respectively. The Company is currently engaged in the design and manufacture
of new prototypes in connection with various electronic countermeasures,
electronic warfare, radar, navigation and communications programs of the
United States Government. The Company also understands that many of such
engagements by major industrial corporations are for the design and
manufacture of products for foreign governments and agencies thereof.
4
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Raw Materials
-------------
Manufacturing operations consist of fabrication, assembly and
testing of components, systems and equipment built from fabricated parts as
well as printed circuits, electronic materials and components purchased from
outside sources. Manual and semi-automatic methods are employed in the
manufacturing process, depending principally upon production volumes.
Inspection and testing are critical to the achievement of product reliability
and performance standards demanded by the Company's customers. The Company
utilizes proprietary and other testing equipment in its operations and is
continuously developing new testing techniques to maintain its products'
performance standards.
Electronic components and raw materials used in the Company's
products are generally available from a large number of suppliers. Some
materials are standard items and others are manufactured to the Company's
specifications by subcontractors. The Company is not dependent upon any
single supplier for any component or material and has not experienced
significant interruptions in production due to a shortage of raw materials.
Patents and Trademarks
----------------------
The Company has 9 patents in the United States which cover various
products. The Company considers that its competitive position depends more
upon the technical expertise and creative ability of its engineering and
development personnel than upon its patents, patent applications and
trademarks.
Math Associates, Inc. is the holder of the registration of the
trademarks "FIBERLAB" and "FIBERVISION". These trademarks are registered
with the United States Patent and Trademark Office. Each registration is
effective for a period of twenty years after filing and is renewable for
similar terms thereafter. The trademark "FIBERLAB" was registered in 1983
and reregistered in 1990. The trademark "FIBERVISION" was registered in 1984
and reregistered in 1990. Although Math Associates considers that its
competitive position depends primarily upon its technical expertise, the
quality of its products and its ability to satisfy its customers' delivery
requirements, these trademarks provide a ready means for customers to
identify the Company's products.
Customers
---------
For its microwave and hybrid circuits product lines, the Company's
customers consist primarily of the United States Government and major
industrial corporations that incorporate the Company's products into a
variety of military, and to a lesser extent, commercial systems. For its
fiber-optic product line, the Company's customer base is largely non-military
and includes public utilities, manufacturers and installers of security
systems, process control equipment and data transmission networks. At
present, the Company estimates that it has approximately 4,000 customers.
5
<PAGE>
Although the end-use for the Company's products is not always
identifiable, Management estimates that sales for direct or indirect use by
the United States Government represented approximately 46%, 51% and 50% of
the Company's net sales in fiscal 1996, 1995 and 1994, respectively. The
timing and level of appropriations by the federal government can influence
the Company's operating results significantly. During the past several
years, slowdowns of and reductions in the amounts spent by the United States
Government for electronic defense programs increased the competition for and
generally reduced the profitability of available contracts. No material
portion of the Company's business is subject to renegotiation or limitation
of profits on contracts or subcontracts by the federal government. However,
the federal government, or agencies thereof, may terminate their contracts,
in whole or in part, at their convenience. In such event, the government
agency is obligated generally to pay the costs incurred by the Company under
the contract plus a fee based upon work completed. Substantial curtailment
or termination of the government programs which, directly or indirectly, fund
the Company's contracts could have a material adverse effect upon the
Company's operating results.
Foreign sales, primarily in Israel, Norway, France, United Kingdom,
Australia, Canada and India accounted for approximately 22%, 23% and 26% of
the Company's net sales in fiscal 1996, 1995 and 1994, respectively. Foreign
sales in fiscal 1996 include immaterial amounts of direct sales to 3 foreign
governments or agencies thereof.
Competition
-----------
The Company's ability to compete is dependent on several factors,
including product performance, quality and reliability, product development
capabilities, price, and the ability to meet delivery schedules and customer
specifications. The microwave component and equipment markets are highly
competitive and are characterized by rapid advances in technology resulting
in the introduction of new products with improved performance
characteristics, thereby subjecting the Company's products to the risk of
technological obsolescence.
The Company has numerous competitors, including some of its current
customers with captive microwave component design and manufacturing
operations. In addition, the Company competes with certain of its suppliers
of semiconductor devices. The Company also competes with a variety of
companies across its entire product line. Many of the Company's competitors
have greater financial and other resources than does the Company.
The slow down in defense spending by the United States Government
and sharpened government purchasing practices continues to increase
competitive pressures on suppliers in the microwave industry and keep
pressure on profit margins. In response, the Company continues to implement
cost reductions on its current products and expand its selling and marketing
efforts in the United States and abroad and continuously endeavors to expand
its activities in non-military aspects of the electronics industry. The
Company has traditionally emphasized the integrity, reliability and
performance of its products.
6
<PAGE>
Backlog
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The Company's backlog was approximately $11,781,000 at February 29,
1996 and $9,773,000 at February 28, 1995. Although the contemplated end-use
for products ordered is not always identifiable, Management estimates that
approximately 37% and 46% of the Company's backlog at February 29, 1996 and
February 28, 1995, respectively, is attributable to products ordered for
direct or indirect use by the United States Government.
The Company manufactures standard components and equipment for
inventory and specialized components, systems and equipment pursuant to
orders from customers. Orders are included in backlog upon the receipt by
the Company of verbal or written purchase orders with firm delivery dates.
Approximately 99% and 98%, respectively, of the backlog at February 29, 1996
and February 28, 1995 is scheduled for shipment within 12 months of such
dates. The amount of backlog expected to be shipped over such periods
represents only a portion of anticipated sales for such periods. Most of the
orders included in the Company's current backlog may be cancelled by
customers without cause or penalty, subject to payment for costs incurred and
normal profit thereon.
Segments and Other Financial Data
---------------------------------
Information concerning business segments and the estimated
geographical allocation of the Company's total sales is contained in Note 12
to the Consolidated Financial Statements in this Annual Report on Form 10-K.
The risks associated with the Company's sales in foreign countries are no
different from those experienced domestically. There is no significant
difference in the estimated profitability of such business.
See the information concerning working capital contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" in this Annual Report on
Form 10-K is incorporated herein by reference.
Other Information
-----------------
At February 29, 1996, the Company had approximately 285 full-time
employees. None of the Company's employees is subject to a collective
bargaining agreement.
The Company's business is not seasonal.
The Company does not anticipate that compliance with federal, state
and local provisions which have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, will have material effects on the earnings or
competitive position of the Company. The Company does not anticipate making
any material capital expenditures for environmental control facilities for
the remainder of its current fiscal year or its succeeding fiscal year.
7
<PAGE>
ITEM 2. PROPERTIES
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The Company manufactures microwave and fiber-optic components and
equipment in an approximately 60,000 square foot building it constructed on
approximately 9.5 acres of land in the New Horizons Business Center in
Amityville, New York. The building provides an integrated plant for the
Company's operations including executive offices and research and
manufacturing facilities.
Substantially all of the estimated cost of the acquisition,
construction and equipping of the Amityville building was financed through
variable rate industrial development revenue bonds issued by the Town of
Babylon Industrial Development Agency (New York). General Microwave is
leasing the facility from the issuer of the Bonds at a rental equal to the
amounts due from time to time under the Bonds. At the expiration of the
lease term on October 1, 1999, the Company may buy the facility for nominal
consideration. The indebtedness with respect to the Bonds is secured by a
mortgage of the premises. See Note 9 to Consolidated Financial Statements
in this Annual Report on Form 10-K for additional information concerning
the Bonds.
The Company conducts its Israeli operations from an approximately
12,000 square foot plant in the Talpiot Industrial Zone of Jerusalem. See
Note 9 to Consolidated Financial Statements in this Annual Report on Form
10-K for additional information concerning the Talpiot facility. General
Microcircuits Corporation conducts its operations from an approximately
8,000 square foot leased facility in Billerica, Massachusetts.
ITEM 3. LEGAL PROCEEDINGS
-----------------
There are no material pending legal proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
property is the subject and no such proceeding was terminated during the
fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
There were no matters submitted to a vote of security holders
through the solicitation of proxies or otherwise during the fourth quarter of
the fiscal year covered by this Annual Report on Form 10-K.
8
<PAGE>
Executive Officers of the Registrant.
- ------------------------------------
The following is a list of the names, ages, principal occupations
and positions with the Company of its executive officers and the positions
held by such officers during the past five years. All executive officers of
the Company have terms of office which run until the next succeeding meeting
of the Board of Directors following the annual meeting of stockholders or
until their successors are elected and qualified unless they are removed
sooner by the Board.
Principal Occupation; Position
and Office (current and during
past five years with the
Name Age Company unless otherwise stated)
---- --- --------------------------------
Frederick Zissu (1) 82 Chairman Emeritus of the Board and
Chairman of the Executive Committee
of the Board
Sherman A. Rinkel (2) 70 Chairman of the Board
Mitchell Tuckman (3) 45 President-Chief Executive Officer
Russell Gulotta (4) 37 Senior Vice President-Manufacturing
Howard Cohen (5) 59 Vice President-Administration and
Assistant Secretary
Robert E. DeBrecht (6) 52 Vice President-Engineering
Arnold H. Levine (7) 57 Vice President-Finance, Treasurer,
Chief Financial Officer and Assistant
Secretary
Rozalie Schachter (8) 49 Vice President-Business Development
- ------------------
(1) Mr. Zissu was Chairman of the Board of the Company from its inception
in 1960 until his retirement due to his health in May, 1995. He was
Chairman of the Board and Chief Executive Officer of Vornado, Inc. (now
known as Vornado Realty Trust), a real estate and merchandising company
from 1971 until May, 1989. He is also of counsel to the law firm Zissu
Gumbinger, Stolzar & Wasserman.
(2) Mr. Rinkel was President of the Company from its inception until his
retirement on March 1, 1995. He became Chairman of the Board in May,
1995.
(3) Mr. Tuckman became President-Chief Executive Officer of the Company in
March, 1995. He was Executive Vice President and Chief Operating
Officer of the Company from August, 1994 until then. From June 1993
until August, 1994, Mr. Tuckman was Vice President-Microwave
Engineering of the Company. He was Chief Microwave Engineer of the
Company before that.
9
<PAGE>
(4) Mr. Gulotta became Senior Vice President-Manufacturing of the Company
in August, 1994. From June 1993 until then, Mr. Gulotta was Vice
President-Manufacturing of the Company. He was Director of
Manufacturing of the Company from January, 1992 until June, 1993 and
Operations Manager of the Company from June, 1989 until January, 1992.
(5) Mr. Cohen became Vice President-Administration in December, 1991. He
was Vice President-Manufacturing before that.
(6) Mr. DeBrecht became Vice President-Engineering in May, 1996. He was a
computer consultant in the securities, financial, insurance benefits
and office productivity areas from 1987 until then. Before that, he
was a product and engineering manager at Narda Microwave Co. and a
chief engineer at the Company.
(7) Mr. Levine became Vice President-Finance, Chief Financial Officer,
Treasurer and Assistant Secretary of the Company in March, 1995. From
1989 until then, he was Vice President, Finance and a director of
Cardion Inc., a subsidiary of Siemens Corporation.
(8) Dr. Schachter became Vice President-Business Development of the Company
in December, 1991. She was Director of Business Development of the
Company from June, 1990 until then.
General Microwave is not aware of any family relationship between any
of the executive officers or directors of the Company or any person nominated
or chosen by General Microwave to become a director or executive officer.
10
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
-------------------------------------------------
STOCKHOLDER MATTERS.
--------------------
The Company's Common Stock is traded on the American Stock Exchange.
The following table sets forth the high and low sales prices (AMEX) for the
Company's Common Stock for the fiscal quarters indicated.
Sales Price (AMEX)
------------------
High Low
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Fiscal 1996:
- ------------
First Quarter................... 9.13 6.88
Second Quarter.................. 9.25 7.63
Third Quarter................... 8.81 7.88
Fourth Quarter.................. 7.88 5.88
Fiscal 1995:
First Quarter................... 8.63 7.88
Second Quarter.................. 8.13 7.25
Third Quarter................... 7.50 7.00
Fourth Quarter.................. 8.38 7.00
General Microwave has not declared or paid any cash dividends during the
past two fiscal years. See Note 9 to Consolidated Financial Statements and
paragraph 5 under Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources in this Annual
Report on Form 10-K for information concerning the financial covenants
contained in the agreements relating to the Company's industrial development
revenue bond financing and their effect on the Company's ability to pay cash
dividends.
As of May 6, 1996, there were 189 record holders of the Common Stock of
the Company.
11
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<TABLE>SELECTED FINANCIAL DATA
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
Year Ended
----------
February 29, February 28, February 28, February 28, February 29,
------------ ------------ ------------ ------------ ------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operations Data:
Net sales $22,336,188 $22,309,993 $22,671,936 $22,515,934 $22,471,941
Net earnings (loss) before
extraordinary item (1,776,791) 174,676 1,042,690 158,131 1,186,380
Net earnings (loss) (A) (1,776,791) 174,676 1,042,690 258,131 1,191,380
Per share data:
Earnings (loss) before
extraordinary item (1.48) .14 .76 .11 .84
Net earnings (loss) (A) (1.48) .14 .76 .18 .84
Balance Sheet Data:
Total assets 21,581,608 23,441,828 25,182,150 24,407,886 24,762,907
Working capital 9,949,822 11,902,533 13,336,263 12,993,953 9,638,857
Long-term debt, less
current installments 2,325,589 2,631,250 3,206,250 3,781,250 4,256,250
Stockholders' equity 14,574,516 16,337,373 17,565,712 17,041,387 16,516,140
Weighted average
common shares outstanding 1,196,682 1,234,596 1,366,258 1,396,737 1,417,327
</TABLE>
General Microwave paid a special cash dividend of $0.25 per share on
February 9, 1994. No other dividends were declared or paid during the past
five fiscal years.
(A) Includes extraordinary tax benefit on net operating loss
carryforward of $100,000 (.07 per share), for fiscal year ended February
28, 1993.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATION.
---------------------
Results of Operations
- ---------------------
In fiscal 1996, the Company's net loss was $1,776,791 or $1.48 per
share, compared to net earnings of $174,676 or $.14 per share, for fiscal
1995. In fiscal 1994, net earnings were $1,042,690 or $.76 per share. The
current year sales of $22,336,188 is relatively consistent with the prior
year's level, although slightly lower than sales of two years ago. Sales of
fiber-optics products and power measuring instruments increased in fiscal
1996, whereas the Company experienced an offsetting decrease in sales of
microwave components, because of completion of a significant customer funded
development program spanning fiscal 1994 and 1995, and a decrease in sales of
hybrid microcircuits products. Fiscal 1996's operating losses resulted
principally from technical problems which delayed shipments, increased
production costs on several development programs for fiber-optic and
hybrid-microcircuits products, increased inventory valuation reserves, as
well as increased selling expenses. In fiscal 1996, the Company took a
valuation reserve related to the write off and disposal of obsolete inventory
of approximately $755,000 and incurred one-time severance expenses aggregating
$164,000. In fiscal 1995, reduced profitability resulted principally from
lower gross profit margins due to increased competition, increases to
inventory valuation reserves, cost overruns on a development program in the
microwave component market, reduced fiber-optic sales and technical problems
on new product development. In fiscal 1994, an increase of microwave
component sales and fiber-optics sales more than offset a decline of sales of
hybrid microcircuits and power measuring instruments.
As part of its efforts in fiscal 1996 to improve earnings, management
reviewed its personnel needs in order to increase productivity. During
fiscal 1996, the Company reduced its personnel levels in engineering and
manufacturing at the Amityville location which management estimates will
generate annualized savings in excess of $1,000,000.
Management's efforts to resolve technical problems, increase shipments and
reduce expenditures resulted in fourth quarter profitability. Management
will continue to focus on further resolution of technical problems and gross
profit margin improvement for fiscal 1997.
New orders booked during the current year were approximately $24.3
million compared to approximately $23.6 million last year. The backlog of
orders at February 29, 1996 was $11.8 million compared to $9.8 million at
February 28, 1995. In fiscal 1994, orders booked were $23.1 million and the
backlog was $8.5 million at the year end.
Cost of sales during fiscal 1996, as a percentage of sales, was 75.9%
compared with 68.9% the prior year and 62.7% the year before. In fiscal 1996,
the gross profit percentage decreased primarily due to technical problems and
cost overruns on certain development programs, increased inventory valuation
reserves for, and lower profit margins on new commercial products, as well as
non-recurring severance expenses. In fiscal 1995, the increase in cost of
sales was attributed to lower selling prices, primarily of microwave
components, that resulted from increased competition in the shrinking
military market, cost overruns on a development program, increased inventory
valuation reserves and lower profit margins on new commercial products.
In fiscal 1994, the decrease in cost of sales was attributed to cost savings
resulting from management's effort to lower overhead through personnel
reductions and other economies.
13
<PAGE>
In fiscal 1996, selling and general and administrative expenses
increased, when compared to the prior year, due primarily to increased
selling efforts in Microwave Amityville and Math fiber-optics. Research and
development expenses increased from the prior year because of increases at
General Microwave Israel, notwithstanding decreases in the U.S. divisions.
In fiscal 1995, selling expenses declined, when compared to the prior year,
offset by an increase in general and administrative expenses. Research and
development expenses remained essentially the same in 1995 compared to the
prior year.
Although borrowing and interest thereon increased in fiscal 1996,
interest expense decreased compared to fiscal 1995, because of an increased
interest expense in 1995 which resulted from interest on taxes after a tax
audit. Dividend and interest income were lower in fiscal 1996 compared to
the two prior years, as a result of a reduction in average investment
balances and lower interest rates.
In fiscal 1996, the Company recorded tax benefits of $554,000 as
compared to tax benefits of $421,000 for fiscal 1995 and a tax provision at
the effective rate of 30% for fiscal 1994. The fiscal 1996 tax benefit
results primarily from a tax loss carryback claim to recover Federal taxes
paid for a three-year period and the reduction of net deferred tax
liabilities. The fiscal 1995 tax benefit resulted primarily from the Israeli
government's approval to utilize a corporate tax rate of 10% in Israel,
instead of the statutory 38%, as well as the reversal of excess liabilities
no longer determined to be required given the completion of tax audits of
several years in fiscal 1995. The fiscal 1994 tax provision is less than the
statutory Federal and state combined income tax rate primarily due to
non-taxable investment income and the utilization of net operating loss
carryforwards of a subsidiary.
During the three-year period covered by this discussion, inflation did
not have any significant effect on the Company's business.
Liquidity and Capital Resources
- -------------------------------
At February 29, 1996, the Company had working capital of $9.9 million
compared to $11.9 million and $13.3 million at the end of fiscal 1995 and
1994, respectively.
Cash flows provided by operations amounted to approximately $267,000
during fiscal 1996. In addition, funds were received from long-term debt
proceeds at General Microwave Israel of $404,000 and the sale of short-term
investments of $758,000. During fiscal 1996, the Company utilized funds
primarily for payment of $575,000 of long-term debt, to acquire $577,000 of
capital assets, and to acquire an additional interest in General Microcircuits
for $279,000.
Cash flows used in operations amounted to approximately $197,000 during
fiscal 1995. During that year, the Company purchased approximately $1,430,000
of treasury stock and $84,600 was utilized to purchase General Microcircuits'
common stock. Funds were also utilized for the payment of $575,000 of
long-term debt. These were funded primarily by the use of cash and marketable
investments.
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During fiscal 1996, inventories decreased $850,000 due primarily to
valuation reserves related to the disposal of obsolete inventory. During
fiscal 1995, increases in inventories were offset by increased valuation
reserves for obsolete and excess inventory levels. During fiscal 1996,
accounts receivable decreased compared to the prior year due to improved
collections. Accounts receivable increased in fiscal 1995 compared to the
year prior, primarily due to a large amount of sales at year end.
During fiscal 1996, the Company acquired capital assets of $577,000
compared with $485,000 and $356,000 during fiscal 1995 and 1994, respectively.
During fiscal 1997, the Company anticipates expenditures of approximately
$600,000 for capital equipment. A major portion of the Company's property,
plant and equipment is encumbered by an Industrial Revenue Bond agreement, as
discussed in Note 9 to the Consolidated Financial Statements. At February
29, 1996, the Company is in compliance with the debt covenants included in
the bond related agreements as amended. A tangible net worth covenant
contained in one of the bond agreements limits the ability of the Company to
pay cash dividends. As a result of that covenant, there is approximately
$424,000 of unrestricted funds available for the payment of cash dividends as
of February 29, 1996.
In fiscal 1996 and 1995, the Company's only short-term borrowings
(approximately $324,000 at year end, compared to prior year, $245,000) were
at its foreign subsidiary at a weighted average interest rate of 8.38% and
9.00%, respectively. Because of positive cash flows during fiscal 1994, the
Company had no need for short-term borrowings. The Company believes that its
cash-on-hand plus anticipated sources of funds will be sufficient to fund its
working capital, capital expenditures and debt service requirements for
fiscal 1997.
As a measure of the Company's ability to meet its short-term obligations,
the Company has the following:
February 29, February 28,
1996 1995
Working Capital
(in thousands) $9,950 $11,903
Current Ratio 3.4 to 1 4.1 to 1
Impact of New Accounting Standards
- ----------------------------------
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121), effective for fiscal years beginning after December 15, 1995,
requires among other things, that long-lived and certain identified
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Impairment losses should be based upon
the fair value of the asset, and reported in the period in which the
recognition criteria are first applied and met. The Management of the
Company does not believe that the implementation of SFAS 121 will have a
significant impact on its financial position or results of operations.
In October 1995, the Financial Accounting Standards Board issued
Statement No. 123 "Accounting for Stock-Based Compensation," for fiscal years
beginning after December 15, 1995. The Registrant has elected not to
implement the fair value based accounting method for employee stock options,
but has elected to disclose, commencing in fiscal year 1997, the proforma net
income and earnings per share as if such method had been used to account for
stock-based compensation cost as described in the statement.
15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
Independent Auditors' Report
----------------------------
To the Stockholders and Board of Directors
General Microwave Corporation:
We have audited the consolidated financial statements of General
Microwave Corporation and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements, we
have also audited the financial statement schedule as listed in the
accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits. We did not
audit the consolidated financial statements of General Microwave Israel
Corporation, an indirect wholly-owned subsidiary, as of and for the year
ended February 29, 1996, which statements reflect total assets constituting
17% and total revenues constituting 11%, after elimination of intercompany
balances and sales, of the related 1996 consolidated totals. Those
statements insofar as it relates to the amounts included for General
Microwave Israel Corporation, is based solely on the report of the other
auditor.
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, based on our audits and the 1996 report of the other
auditor, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General
Microwave Corporation and subsidiaries as of February 29, 1996 and
February 28, 1995 and the results of their operations and cash flows for
each of the years in the three-year period ended February 29, 1996, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set
forth therein.
KPMG PEAT MARWICK LLP
Jericho, New York
May 10, 1996
16
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS OF
GENERAL MICROWAVE (ISRAEL) CORPORATION AND SUBSIDIARY
-----------------------------------------------------
We have audited the accompanying balance sheet of General Microwave (Israel)
Corporation and subsidiary ("the Company") as of February 29, 1996 and the
related statements of operations, changes in shareholders' equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's Board of Directors and management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards, including those prescribed under the Israeli Auditors' Regulations
(Mode of Performance) - 1973. Such auditing standards are substantially
identical, in all material respects, to generally accepted auditing standards
in the United States. 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 the Board of Directors and management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
The aforementioned financial statements have been prepared in U.S. dollars
as described in Note 2A.
As stated in Note 1B, the consolidated financial statements were prepared at
the request of the parent company and for its use only. The financial
statements do not include activities of the Company, if any, that are not
directly reflected in its books and records maintained in Israel.
In our opinion, except for the matter discussed in the preceding paragraph,
the financial statements present fairly, in all material respects, the
financial position of the Company and subsidiary as of February 29, 1996, and
the consolidated results of operations, changes in shareholders' equity and
cash flows for the year then ended in accordance with generally accepted
accounting principles in Israel.
Pursuant to Section 211 of the Companies Ordinance (New Version) - 1983, we
state that we have obtained all the information and explanations we have
required and that our opinion on the above financial statements is given
according to the best of our information and the explanations received by us
and as shown by the books of the Company.
Igal Brightman & Co.
Certified Public Accountants
Jerusalem, Israel
May 20, 1996.
17
<PAGE>
<TABLE>BALANCE SHEET ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
February 29, 1996 and February 28, 1995
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,139,731 1,053,861
Investments - 757,909
Accounts receivable, net of allowance for doubtful accounts
of approximately $50,700 in 1996 and $90,000 in 1995 5,150,561 5,393,418
Inventories 6,744,203 7,594,526
Prepaid expenses and other current assets 278,785 411,884
Income tax receivable 155,733 -
Deferred income taxes, net 560,073 485,965
----------- -----------
Total current assets $ 14,029,086 15,697,563
Property, plant and equipment, net 6,356,052 6,586,563
Debt issuance costs, net 75,626 96,494
Other intangible assets, net 178,015 217,291
Costs in excess of fair value of net assets acquired, net 872,731 721,149
Other assets 70,098 122,768
----------- -----------
$ 21,581,608 23,441,828
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt 709,670 575,000
Short-term borrowing 323,463 244,712
Accounts payable 1,201,775 847,816
Accrued payroll and other employee benefits 767,126 892,752
Accrued expenses and other current liabilities 803,038 628,097
Accrued commissions 274,192 267,736
Income taxes payable - 338,917
----------- -----------
Total current liabilities 4,079,264 3,795,030
----------- -----------
Long-term debt, less current installments 2,325,589 2,631,250
Deferred income taxes 584,068 612,656
Minority interest 18,171 65,519
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized and unissued - -
Common stock, $.01 par value; 5,000,000 shares authorized;
issued 1,664,492 in 1996 and 1,661,292 in 1995 16,645 16,613
Additional paid-in capital 9,549,402 9,531,034
Retained earnings 8,197,118 9,973,909
----------- -----------
17,763,165 19,521,556
Less:
Treasury stock, at cost 3,188,649 3,184,183
----------- -----------
14,574,516 16,337,373
----------- -----------
$ 21,581,608 23,441,828
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE>
<TABLE>STATEMENT OF OPERATIONS
<CAPTION>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended February 29, 1996 and February 28, 1995 and 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales $ 22,336,188 22,309,993 22,671,936
----------- ----------- -----------
Costs and expenses:
Cost of sales 16,946,866 15,363,367 14,207,780
Selling 3,074,020 2,704,794 2,930,754
General and administrative 3,202,701 3,102,635 2,907,242
Research and development 1,260,059 1,160,234 1,112,198
----------- ----------- -----------
24,483,646 22,331,030 21,157,974
Operating earnings (loss) (2,147,458) (21,037) 1,513,962
----------- ----------- -----------
Other expenses (income):
Interest expense 148,682 171,902 126,461
Dividend and interest income (57,060) (80,871) (166,043)
Minority interest in earnings (loss) of
consolidated subsidiary (6,399) 65,519 -
Other, net 98,110 68,737 65,854
----------- ----------- -----------
183,333 225,287 26,272
----------- ----------- -----------
Earnings (loss) before income taxes (benefit) (2,330,791) (246,324) 1,487,690
Income taxes (benefit) (554,000) (421,000) 445,000
----------- ----------- -----------
Net earnings (loss) $ (1,776,791) 174,676 1,042,690
=========== =========== ===========
Net earnings (loss) per share $ (1.48) .14 .76
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
<TABLE>STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended February 29, 1996 and February 28, 1995 and 1994
Additional Total
Common stock paid-in Retained Treasury stock stockholders'
Shares Amount capital earnings Shares Amount equity
------ ------ ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, February 28, 1993 1,613,088 $ 16,131 $ 9,220,610 $ 9,093,712 229,109 $ (1,289,066) $ 17,041,387
Net earnings - - - 1,042,690 - - 1,042,690
Exercise of stock options, net of
shares tendered 43,404 434 283,372 - 11,750 (117,500) 166,306
Purchase of treasury stock - - - - 46,803 (347,502) (347,502)
Cash dividends paid ($.25 per share) - - - (337,169) - - (337,169)
--------- ------ --------- --------- ------- ---------- ----------
Balances, February 28, 1994 1,656,492 16,565 9,503,982 9,799,233 287,662 (1,754,068) 17,565,712
Net earnings - - - 174,676 - - 174,676
Exercise of stock options 4,800 48 27,052 - - - 27,100
Purchase of treasury stock - - - - 178,802 (1,430,115) (1,430,115)
--------- ------ --------- --------- ------- ---------- ----------
Balances, February 28, 1995 1,661,292 16,613 9,531,034 9,973,909 466,464 (3,184,183) 16,337,373
Net loss - - - (1,776,791) - - (1,776,791)
Exercise of stock options, net of
shares tendered 3,200 32 18,368 - 638 (4,466) 13,934
--------- ------ --------- --------- ------- ---------- ----------
Balances, February 29, 1996 1,664,492 $ 16,645 $ 9,549,402 $ 8,197,118 467,102 $ (3,188,649) $ 14,574,516
========= ====== ========= ========= ======= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE>
<TABLE>STATEMENT OF CASH FLOWS
<CAPTION>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended February 29, 1996 and February 28, 1995 and 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (1,776,791) 174,676 1,042,690
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 963,538 970,708 1,008,661
Bad debt expense (recovery) (39,300) (81,000) 12,000
Gain on disposal of equipment (4,867) (22,208) (370)
Loss on sale of securities - 19,214 -
Minority interest in earnings (loss) of consolidated
subsidiary (6,399) 65,519 -
Changes in assets and liabilities:
Accounts receivable 282,157 (421,807) 14,998
Inventories 850,323 58,231 (471,636)
Income taxes payable and receivable (494,650) (81,731) 220,540
Prepaid expenses and other current assets 133,099 (270,586) 8,296
Accounts payable and accrued liabilities 409,730 81,218 462,961
Deferred income taxes (102,696) (732,666) (112,374)
Other assets 52,670 43,650 (1,973)
---------- ---------- ----------
Net cash provided by (used in)
operating activities 266,814 (196,782) 2,183,793
---------- ---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment, net of disposals (576,578) (485,145) (356,196)
Proceeds from sale of fixed assets 13,511 26,790 1,936
Purchase of additional interest in subsidiary (279,000) (84,600) (220,500)
Purchases of intangible assets (18,480) (34,178) (40,156)
Sale of short-term investments, net 757,909 1,737,466 314,183
---------- ---------- ----------
Net cash provided by (used in)
investing activities (102,638) 1,160,333 (300,733)
---------- ---------- ----------
Cash flows from financing activities:
Principal payments on long-term debt (575,000) (575,000) (475,000)
Proceeds from long-term debt 404,009 - -
Net proceeds from short-term borrowings 78,751 244,712 -
Proceeds from issuance of common stock 13,934 27,100 166,306
Payments to acquire treasury stock - (1,430,115) (347,502)
Cash dividends paid - - (337,169)
---------- ---------- ----------
Net cash used in financing activities (78,306) (1,733,303) (993,365)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 85,870 (769,752) 889,695
Cash and cash equivalents at beginning of year 1,053,861 1,823,613 933,918
---------- ---------- ----------
Cash and cash equivalents at end of year $ 1,139,731 1,053,861 1,823,613
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
February 29, 1996 and February 28, 1995
(1) Summary of Significant Accounting Policies and Practices
--------------------------------------------------------
(a) Description of Business
-----------------------
General Microwave Corporation and its subsidiaries (the Company) are
engaged primarily in the design, development, manufacture and marketing
of microwave, electronic and fiber optic systems, equipment, and
components. The Company is organized into four operating divisions in
three locations. A majority of the Company's microwave products are
sold to manufacturers and users of microwave systems and equipment for
applications in the defense electronics industry. The Company also sells
these components and equipment for use in the industrial sector, as well
as in commercial telecommunications industries. Typical applications
for the Company's microwave products include electronic warfare and
countermeasures; airborne and shipboard navigation and communications;
radar systems; missile guidance systems; automatic test equipment; and
satellite communications.
A substantial portion of the Company's revenues is derived from military
sources. The Company manufactures components and instruments for a
number of ongoing military programs and is currently engaged in the
design and manufacture of prototypes in connection with various
electronic countermeasures, electronic warfare, radar, navigation and
communications programs of the United States Government and foreign
governments and agencies thereof. The slowdown in defense spending by
the United States Government and sharpened government purchasing
practices has created significantly greater competitive pressures on
suppliers in the microwave industry.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of General
Microwave Corporation (GMC), its wholly-owned subsidiaries, General
Microwave Foreign Sales Corporation (FSC), Micro-El Patent Corporation
and Math Associates, Inc. (Math); its indirect wholly-owned
subsidiaries, General Microwave Israel Corporation (GMIC) and General
Microwave Israel (1987) Ltd. (GMIL); and its majority-owned
subsidiary, General Microcircuits Corporation (GMCC). All intercompany
accounts and transactions have been eliminated in consolidation.
(Continued)
22
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(c) Revenue Recognition
-------------------
Sales are recorded as units are delivered with the cost of sales
recognized on each shipment based upon an average estimated final
contract unit cost, including overhead costs. Customer advances
received on fixed price contracts are recognized as revenue ratably
as partial shipments are made. Losses on contracts are recorded
when known.
(d) Cash Equivalents
----------------
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents
consist of money market accounts held by an investment bank at
February 29, 1996 and February 28, 1995.
(e) Investments
-----------
As of March 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). SFAS 115 generally requires that debt
and equity securities that have readily determinable fair values be
carried at fair value unless they are classified as held to maturity.
If not classified as held to maturity, such securities must be
classified as trading securities or securities available for sale.
Unrealized gains or losses for securities available for sale are to be
excluded from earnings and reported as a net amount as a separate
component of stockholders' equity. Unrealized holding gains and losses
for trading securities are to be included in earnings. The Company had
classified its investments, which consisted of municipal bond funds, as
available for sale as of February 28, 1995, however, unrealized gains
and losses were not reported as a separate component of stockholders'
equity as the Company had determined such unrealized gains and losses
to be immaterial. No investments existed at February 29, 1996.
(f) Inventories
-----------
Work-in-process inventory reflects all accumulated production costs,
which are comprised of direct production costs and overhead, reduced
by amounts attributable to units delivered. Work-in-process inventory
is reduced to its estimated net realizable value by a charge to cost
of sales in the period excess costs are identified. Raw materials and
finished goods inventories are reflected at the lower of cost or
market, computed on the first-in, first-out (FIFO) method.
(Continued)
23
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(g) Property, Plant and Equipment
-----------------------------
Property, plant and equipment are recorded at cost. Depreciation is
charged to operations over the estimated service lives of the related
assets (ranging from four to twenty-five years) using the straight-line
method. Assets acquired under capital lease and leasehold improvements
are amortized over the life of the lease or the estimated life of the
asset, whichever is less.
(h) Debt Issuance Costs
-------------------
Costs incurred in connection with the issuance of Industrial Development
Revenue Bonds, amounting to $313,000, are being amortized over the life
of the bonds (fifteen years) on a straight-line basis.
(i) Intangible Assets
-----------------
Intangible assets include patents recorded at cost which are amortized on
a straight-line basis over a period not to exceed seventeen years and
covenants not-to-compete associated with the Math acquisition which are
amortized on a straight-line basis over the periods of the related
employment contracts ranging from three to five years. Accumulated
amortization aggregated $281,613 and $223,857 at February 29, 1996 and
February 28, 1995, respectively.
The costs in excess of fair value of net assets acquired relate to the
acquisition of GMCC and Math and are amortized on a straight-line basis
over fifteen years. Additionally, these costs include the cost of
additional ownership of GMCC increasing from 80% to 97% (note 3), which
are amortized on a straight-line basis over the remaining life of the
original asset. Accumulated amortization aggregated $282,664 and
$196,195 at February 29, 1996 and February 28, 1995, respectively.
The Company continually evaluates the recoverability of the intangible
assets by assessing whether the amortized value can be recovered
through expected future results.
(j) Pension Expense
---------------
Pension expense for eligible employees is provided under an actuarial
cost method. The Company's policy is to make annual contributions to
the plan in accordance with actuarially determined funding
requirements.
(Continued)
24
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(k) Income Taxes
------------
Effective March 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No.109, "Accounting for Income Taxes"
which requires recognition of deferred tax liabilities and assets for
the expected future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax liabilities and assets are determined using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be realized or settled. Under
Statement 109, the effect on deferred tax liabilities and assets of a
change in tax rates is recognized in income in the period that includes
the enactment date. Prior years' financial statements were not
restated and the adoption of the Statement did not have a significant
impact on net income for fiscal 1994.
(l) Earnings Per Share
------------------
Earnings per share is computed based on the weighted average number of
common shares outstanding during the year (including common stock
equivalents of 5,758 and 7,273 in fiscal 1995 and 1994, respectively)
of 1,196,682 in fiscal 1996, 1,234,596 in fiscal 1995 and 1,366,258 in
fiscal 1994.
(m) Reconciliation to United States Generally Accepted Accounting Principles
------------------------------------------------------------------------
The financial statements of the Company's Israeli operations, GMIC and
GMIL, were prepared in accordance with generally accepted accounting
principles in Israel. The differences between generally accepted
accounting principles in Israel and generally accepted accounting
principles in the United States as they pertain to GMIC and GMIL are
not considered material to the consolidated financial statements of
the Company.
(n) Foreign Currency Translation
----------------------------
The financial position and the results of operations of the Company's
Israeli operations are measured using the dollar as the functional
currency. Gains or losses resulting from translating transactions
denominated in a foreign currency were immaterial in fiscal 1996,
1995, and 1994.
(Continued)
25
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(o) Use of Estimates
----------------
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities at the date of the consolidated financial
statements and the reported amount of revenues and expenses during the
reported period. Actual results could differ from those estimates.
(p) Reclassifications
-----------------
Reclassifications are made whenever necessary to conform with the current
year's presentation.
<TABLE>Inventories on hand
<CAPTION>
(2) Inventories
-----------
Inventories are comprised of the following:
1996 1995
---- ----
<S> <C> <C>
Raw materials $ 2,962,588 3,638,119
Work-in-process 3,514,340 3,303,562
Finished goods 773,925 945,629
--------- ---------
7,250,853 7,887,310
Less progress billings (506,650) (292,784)
--------- ---------
$ 6,744,203 7,594,526
========= =========
</TABLE>
(3) Majority-Owned Subsidiary
-------------------------
At February 29, 1996, the Company owns 97% of GMCC's outstanding common
stock (291,000 shares). The agreement associated with the Company's
investment in GMCC states that, at the option of the minority
stockholders, the Company may be required to purchase up to 100% of the
outstanding common stock of GMCC at various dates as defined in the
agreement. If not exercised at the stipulated dates, the option to
require the Company to purchase the GMCC stock is cumulative. The
purchase price is based upon GMCC's net earnings as defined by the
agreement, as amended in September 1990, payable in cash up to a
cumulative aggregate amount of $1,000,000 and, thereafter, with a
combination of cash and common stock of the Company, at the Company's
option, in accordance with the provisions of the option.
(Continued)
26
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
During fiscal 1996 and 1995, the Company acquired 15,000 and 9,000 shares,
respectively, of GMCC common stock for $279,000 and $84,600,
respectively, resulting in an aggregate increase in the Company's
ownership to 97%. These transactions are accounted for by the purchase
method of accounting. The purchase price in excess of the additional
ownership acquired is recorded as an addition to costs in excess of
fair value of net assets acquired which amounted to $238,051 and
$84,600 in fiscal 1996 and 1995.
Additionally, the Company owns all of the outstanding preferred stock of
GMCC. The interest in the investment in GMCC outstanding common stock
not owned by the Company is recorded as minority interest on the
accompanying consolidated balance sheets.
<TABLE>Supplemental Cash Flow Information
<CAPTION>
(4) Supplemental Cash Flow Information
----------------------------------
Following is supplemental information relating to the consolidated
statements of cash flows:
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 193,668 150,355 122,957
======= ======= =======
Income taxes $ 146,161 425,477 381,724
======= ======= =======
</TABLE>
(Continued)
27
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
<TABLE>Property Plant and Equipment
<CAPTION>
(5) Property, Plant and Equipment
-----------------------------
A summary of property, plant and equipment is as follows:
1996 1995
---- ----
<S> <C> <C>
Land $ 1,169,299 1,169,299
Buildings and improvements 5,826,907 5,796,793
Test equipment 1,354,004 1,452,812
Machinery and equipment 3,171,627 3,161,498
Furniture and office equipment 1,525,743 1,533,463
Leasehold improvements 259,212 252,143
Transportation equipment 276,942 199,407
Tooling 25,683 8,432
Construction-in-process 84,084 -
---------- ----------
13,693,501 13,573,847
Less accumulated depreciation
and amortization 7,337,449 6,987,284
---------- ----------
$ 6,356,052 6,586,563
========== ==========
</TABLE>
Depreciation expense aggregated $798,445, $826,422 and $876,465 in fiscal
1996, 1995 and 1994, respectively.
Repairs and maintenance costs are expensed as incurred and amounted to
approximately $371,000, $441,000, and $382,000 at February 29, 1996
and February 28, 1995 and 1994, respectively.
(Continued)
28
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
<TABLE>Income tax expense (benefit)
<CAPTION>
(6) Income Taxes
------------
The components of income tax expense (benefit) are as follows:
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ (423,000) 110,000 329,000
State (29,000) 110,000 138,000
Foreign 1,000 (24,000) 90,000
-------- ------- -------
(451,000) 196,000 557,000
-------- ------- -------
Deferred:
Federal and State (103,000) (617,000) (112,000)
-------- -------- --------
$ (554,000) (421,000) 445,000
======== ======== ========
</TABLE>
Included in the current Federal provision for income taxes in fiscal 1994
is a $104,600 tax benefit from utilizing net operating loss
carryforwards.
(Continued)
29
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
<TABLE>Reconciliation of income taxes
<CAPTION>
A reconciliation of income taxes (benefit) computed at the Federal
statutory rate to reported income taxes (benefit) is as follows:
1996 1995 1994
----------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Tax at Federal statutory rate $ (792,500) (34.0)% $ (83,800) (34.0)% $ 505,800 34.0%
Change in beginning of the
year balance of the valua-
tion allowance for deferred
tax assets allocated to
income tax expense 322,700 13.9 (28,500) (11.6) (104,600) (7.0)
Benefit of lower tax rate
on foreign income - - (24,300) (9.9) - -
Loss of subsidiary not
consolidated for tax
purposes 58,600 2.5 - - - -
State income taxes (benefit),
net (115,000) (4.9) 72,500 29.4 82,800 5.6
FSC benefit - - - - (15,400) (1.0)
Tax exempt income - - (19,300) (7.8) (42,300) (2.8)
Amortization of costs in
excess of fair value of
net assets acquired 29,400 1.3 22,100 9.0 18,900 1.2
Reversal of prior years'
overprovisions (67,000) (2.8) (368,000) (149.5) - -
Other, net 9,800 - 8,300 3.4 (200) -
-------- ----- -------- ------ -------- ----
Income taxes (benefit) $ (554,000) (24.0)% $ (421,000) (171.0)% $ 445,000 30.0%
======== ===== ======== ====== ======== ====
</TABLE>
(Continued)
30
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
<TABLE>Deferred taxes
<CAPTION>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
February 29 and February 28 are presented as follows:
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Inventories, principally due to additional costs
inventoried for tax purposes pursuant to the Tax
Reform Act of 1986 and obsolescence reserve $ 515,803 626,982
Net operating loss carryforwards 246,064 -
Tax credit carryforwards 144,200 -
Allowance for doubtful accounts receivable 17,874 27,979
Warranty reserve 32,179 26,443
Other 46,560 14,529
--------- -------
Total deferred tax assets 1,002,680 695,933
Less valuation allowance (367,217) (44,469)
--------- -------
Net deferred tax assets 635,463 651,464
--------- -------
</TABLE>
<TABLE>Deferred tax liabilities
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally due to differences
in depreciation and capitalized interest $ 584,068 612,656
Undistributed income of foreign subsidiary 69,446 105,177
Pension funding greater than expense - 35,568
Other 5,944 24,754
-------- --------
Total deferred tax liabilities 659,458 778,155
-------- --------
Net deferred liabilities $ 23,995 126,691
======== ========
</TABLE>
(Continued)
31
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The valuation allowance for deferred tax assets as of March 1, 1995 and
1994 was $44,469 and $73,000, respectively. The net change in the
total valuation allowance in fiscal 1996 and 1995 was $322,748 and
$(28,531), respectively. In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.
Management considered the scheduled reversal of deferred tax assets
and liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of
historical taxable income and projections of future taxable income
over the periods which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will
realize the benefits of the net deferred tax assets. The amount of
the deferred tax assets considered realizable, however, could be
reduced in the near term if estimates of future taxable income are
reduced.
At February 29, 1996, the Company has Federal net operating loss
carryforwards of $300,000, state net operating loss carryforwards of
$2,732,987 and Federal tax credits of $144,200 which are available to
offset future taxable income, if any. The Federal and New York State
net operating loss carryforwards expire starting in fiscal 2009. The
Federal and state net operating loss carryforwards and the Federal
credits have been fully reserved for in the valuation allowance.
Massachusetts State net operating losses of $388,000 expire in fiscal
2001.
During fiscal 1995, the Company paid $115,366 of federal income taxes
related to a foreign subsidiary, which is included in the reduction of
the deferred tax liabilities.
Earnings before provision for (benefit of) income taxes, without giving
effect to intercompany eliminations, include losses from foreign
operations of $541,212, $12,728 and $333,460 in fiscal 1996, 1995 and
1994, respectively.
(7) Employee Benefit Plans
----------------------
(a) Pension Benefits
----------------
The Company has a noncontributory defined benefit pension plan covering
all eligible employees. Pension expense is accrued in accordance with
the projected unit credit actuarial cost method. Although the Company
reserves the right to terminate the plan at any time, it is obligated
to fund the recommended contribution as long as the plan remains in
effect.
(Continued)
32
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The net pension expense includes the following components:
<TABLE>Net pension expense
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned during
the period $ 128,900 149,300 164,900
Interest cost on projected benefit
obligation 267,000 222,200 214,400
Actual return on assets (506,200) (177,100) (87,100)
Net amortization and deferral 288,300 (16,800) (89,100)
-------- -------- --------
Net pension expense $ 178,000 177,600 203,100
======== ======== ========
</TABLE>
Assumptions used in the accounting for net pension expense in fiscal
1996, 1995 and 1994 were:
<TABLE>Net pension expense
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 7.5% 8.5% 7.5%
Average rate of increase in compensation levels 5.0 6.0 6.0
Expected long-term rate of return on assets 8.5 8.0 8.5
=== === ===
</TABLE>
(Continued)
33
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The following table sets forth the Company's defined benefit plan funded
status and the prepaid pension asset at February 29 and February 28:
<TABLE>Defined benefit plan
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of accumulated benefit
obligation, including vested benefits of
$2,971,300 in 1996 and $2,305,800 in 1995 $ 3,053,900 2,394,900
========== ==========
Projected benefit obligation for services
rendered to date (3,845,300) (2,899,300)
Plan assets at fair value 3,220,800 2,767,900
---------- ----------
Funded status - projected benefit
obligation in excess of plan assets (624,500) (131,400)
Unrecognized net gain from past experience
different from that assumed 486,700 24,200
Unrecognized prior service cost 267,900 295,500
Unrecognized net asset as of March 1, 1987 being
recognized over approximately 20 years (60,800) (66,200)
-------- --------
Prepaid pension asset included in other assets $ 69,300 122,100
======== ========
</TABLE>
Pension plan assets consist principally of United States Government
securities and marketable equity securities.
(b) Employee 401(k) Plan
--------------------
The Company maintains an Employee 401(k) Savings Plan. The plan is a
defined contribution plan administered by the Company covering all
eligible employees. The plan provides for growth in savings though
contributions and income from investments. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA), as amended. Plan participants are allowed to contribute a
specified percentage of their base salary. The Company does not
contribute to the plan.
(8) Short-term Borrowing
--------------------
The Company's Israeli subsidiary has an outstanding short-term borrowing
balance with a bank of $323,463 and $244,712 at February 29, 1996 and
February 28, 1995, respectively, which is due on May 31, 1996. The
short term borrowings interest rate was 8.38% and 9.00% at February 29,
1996 and February 28, 1995, respectively.
(Continued)
34
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) Long-term Debt
--------------
Long-term debt consists of the following:
<TABLE>Long-term debt
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Industrial Development Revenue Bonds $ 2,200,000 2,700,000
Bank loan payable 835,259 506,250
--------- ---------
3,035,259 3,206,250
Less current installments 709,670 575,000
--------- ---------
$ 2,325,589 2,631,250
========= =========
</TABLE>
Under the terms of an agreement with the Town of Babylon Industrial
Development Agency and a bank, the Agency issued 1984 Variable Rate
7-Day Demand Industrial Development Revenue Bonds in the amount of
$6,000,000 to provide a substantial portion of the funds for the
construction and equipping of the Company's manufacturing facility
in Amityville, New York. Interest is payable semi-annually at a
variable rate which approximates 65% of the yield on 13-week U.S.
Treasury bills. Such rate was 3.10% and 3.80% at February 29, 1996
and February 28, 1995, respectively. Under the terms of the agreement,
the Company obtained an irrevocable bank letter of credit for the
amount of the bonds plus certain interest. The letter of credit, which
amounted to approximately $2,377,000 and $2,877,000 at February 29,
1996 and February 28, 1995, respectively, will be drawn on in the event
the Town of Babylon defaults on its obligations to the bondholders.
This letter of credit expires on September 15, 1996, and management is
presently negotiating the extension of this letter of credit with the
bank. At any time prior to maturity, the bonds are redeemable at the
option of the Company at a redemption price of 100%. The bonds are
due on October 1, 1999 with annual sinking fund requirements increasing
from $500,000 in fiscal 1995 to $600,000 at maturity. All property,
plant and equipment acquired or constructed by the Company with the
proceeds of the bonds collateralize the obligation.
(Continued)
35
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The aforementioned bond agreement includes certain restrictive covenants.
The Company must, among other things, maintain a minimum ratio of
current assets to current liabilities and interest coverage ratio, a
minimum level of tangible net worth, as defined, and must not exceed a
specified debt to equity ratio. After giving effect to the results of
operations for the quarter ended December 2, 1995, the Company required
and received a waiver that modified this requirement to the Company's
tangible net worth level as defined as of December 2, 1995, and agreed
to a covenant to maintain profitable operations in future quarters. In
connection with the foregoing, the Company also agreed to make monthly
sinking fund payments commencing April 1, 1996, towards its October 1,
1996, $500,000 bond payment. In addition, in connection with obtaining
the waiver of the tangible net worth covenant contained in one of the
agreements relating to the bond agreement, the Company and two of its
subsidiaries, Math and GMCC, guaranteed and granted a security interest
in their accounts receivable to the bondholders and the letter of
credit issuer as additional security for the Company's bond related
debt. The balance of such accounts receivable is $4,410,775 at
February 29, 1996. Further, the tangible net worth covenant limits the
ability of the Company to pay cash dividends. As a result of such
covenant, there is approximately $424,000 of unrestricted funds
available for the payment of cash dividends as of February 29, 1996.
As of February 29, 1996, the Company is in compliance with the
covenants of the bond agreement.
During fiscal 1992 the Company's subsidiary, GMIL, entered into a capital
lease on its operating facility in the Talpiot Industrial Zone of
Jerusalem, Israel at a cost of $841,875. This transaction was
primarily financed with a $750,000 long-term bank loan due in November
2001, bearing interest at LIBOR plus 2% (8.031% and 6.125% at February
29, 1996 and February 28, 1995, respectively), of which $431,250 and
$506,250 was outstanding at February 29, 1996 and February 28, 1995,
respectively.
During fiscal 1996, GMIL, obtained working capital financing of $404,009.
This long-term bank loan is due December 7, 1998, bearing interest at
LIBOR plus 2.5% (8.704% at February 29, 1996).
The loans are secured by the premises, all of GMIL's assets and a
guarantee by the Company of $300,000.
(Continued)
36
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Required principal payments on long-term debt are summarized as follows:
1997 $ 709,670
1998 698,447
1999 809,669
2000 686,222
2001 75,000
Thereafter 56,250
---------
$ 3,035,259
=========
(10) Stockholders' Equity
--------------------
On May 27, 1994, the Company purchased 178,200 shares of its common
stock held by an individual who was a beneficial owner (as defined
by Securities and Exchange Commission regulations) of more than 5% of
the Company's common stock for $1,425,600, the then prevailing market
price on the American Stock Exchange.
On January 10, 1994, the Company declared a cash dividend of $.25 per
share to shareholders of record on January 26, 1994, which was paid
on February 9, 1994. Retained earnings was charged $337,169 as a
result of the cash dividend.
The 1990 Stock Option Plan (1990 Plan) provides for the issuance of up
to 125,000 shares of common stock to key employees including officers
and directors who are employees. Options under the 1990 Plan, which
expires on June 26, 2000, may be either incentive stock options (ISO)
or options not qualified under the Internal Revenue Code. The
purchase price of common stock under each option shall be determined
by the Stock Option Committee of the Board of Directors; provided,
however, that the stock purchase price pursuant to an ISO may not be
less than the fair market value of the common stock subject to the
option on the date that the option was granted, and may in no event
be less than the par value of the stock. Options granted to date
under the 1990 Plan were at the fair market value at the date of
grant. The 1990 Plan permits option holders to pay the option
exercise price with previously owned common stock of the Company or
a combination of cash and common stock. During fiscal 1996 and 1995,
638 and 602 shares, respectively, of common stock held greater than
six months was received as payment for the exercise price of options.
If any employee to whom an ISO is granted owns common stock amounting
to more than 10% of the total voting power of all classes of stock of
the Company, the option exercise price must be at least 110% of the
fair market value of common stock at the time the option is granted
and the option must terminate no later than five years from the date
the option is granted.
(Continued)
37
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
A summary of stock option transactions follows:
1990 Plan
-----------------
Number Average price
of shares per share
--------- ---------
Outstanding, February 28, 1993 36,500 $ 5.615
Granted 24,000 6.375
Exercised (23,250) 5.805
------- -----
Outstanding, February 28, 1994 37,250 5.986
Granted 10,500 7.310
Exercised (4,800) 5.646
------- -----
Outstanding, February 28, 1995 42,950 6.347
Granted 16,000 6.789
Exercised (3,200) 5.750
Canceled (2,500) 7.500
------- -----
Outstanding, February 29, 1996 53,250 $ 6.462
======= =====
The Company has an Employee Stock Purchase Plan which offers eligible
employees options to purchase common stock of the Company at a
purchase price of 85% of the lesser of the average market value of
the common stock on the date of grant or on the exercise date. The
exercise date is the last business day of the 25th month following
the date of grant. Payment for the shares is made through payroll
deductions over a two-year period. The maximum number of shares that
may be issued under this Plan, as amended, is 83,075. As of February
29, 1996, no additional shares are available for issuance pursuant to
the Plan.
(Continued)
38
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
A summary of employee stock purchase transactions follows:
Number Average price
of shares per share
Outstanding, February 28, 1993 23,366 $ 7.39
Exercised (20,154) 7.39
Canceled (3,212) 7.39
------- ----
Outstanding, February 28, 1994 - -
Granted 15,899 7.44
Canceled (2,616) 7.44
------- ----
Outstanding, February 28, 1995 13,283 7.44
Canceled (4,839) 7.44
------- ----
Outstanding, February 29, 1996 8,444 $ 7.44
======= ====
On April 30, 1996, the remaining options to purchase shares pursuant to
the Plan were exercised at $6.80 per share.
(11) Financial Instruments
---------------------
FASB Statement No. 107, Disclosures about Fair Value of Financial
Instruments, defines the fair value of a financial instrument as the
amounts at which the instrument could be exchanged in a current
transaction between willing parties. The carrying value of all
financial instruments classified as a current asset or current
liability are deemed to approximate fair value because of the short
maturity of these instruments. In the opinion of management, the
carrying value of the Company's bank loan payable (note 9)
approximates fair value as the interest rate is based on the current
LIBOR rate and such rate is believed to approximate the rates that
would be offered to GMIL for debt of the same remaining maturities.
(Continued)
39
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
It was not practicable to estimate the fair value of the Company's
Industrial Development Revenue Bonds of $2,200,000 as of February
29, 1996. The fair value of such bonds would be based upon the rates
an Industrial Development Agency would charge the Company to finance
the construction and/or equipping of a new manufacturing facility.
Such rates are not readily determinable, without incurring excessive
cost. However, because the carrying value of the bonds are based upon
a rate that fluctuates with a U.S. Treasury rate, management is of
the opinion that the difference between the carrying value and fair
value would not be material.
(12) Business and Credit Concentrations
----------------------------------
The Company's operations are in a single industry segment and involve
the manufacture of various types of microwave, electronic and fiber
optic equipment and components. The majority of the Company's
business is defense related and consists of direct and indirect sales
to the United States Government and foreign governments or to other
companies that are manufacturing products for the defense industry.
(a) Foreign and Domestic Operations and Export Sales
------------------------------------------------
Net sales to customers by geographic area are the following:
<TABLE>Sales by geographic area
<CAPTION>
Year ended February 29 or 28,
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
United States $ 17,523,867 17,091,363 16,825,760
Other Western Hemisphere 293,026 256,705 196,643
Europe 2,588,318 2,258,710 2,763,881
Asia 1,537,679 2,475,654 2,562,513
Other 393,298 227,561 323,139
---------- ---------- ----------
$ 22,336,188 22,309,993 22,671,936
========== ========== ==========
</TABLE>
(Continued)
40
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Information concerning foreign and domestic operations for fiscal 1996,
1995 and 1994 is as follows:
<TABLE>Sales to unaffiliated customers
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States $ 19,844,286 20,308,430 19,995,343
Israel 3,732,718 3,166,642 3,147,633
Transfers between geographic areas
(eliminated in consolidation) (1,240,816) (1,165,079) (471,040)
---------- ---------- ----------
$ 22,336,188 22,309,993 22,671,936
========== ========== ==========
Operating earnings (loss):
United States $ (1,606,246) (8,309) 1,847,422
Israel (541,212) (12,728) (333,460)
---------- ---------- ----------
$ (2,147,458) (21,037) 1,513,962
========== ========== ==========
Identifiable assets:
United States $ 17,808,437 19,863,083 22,105,406
Israel 3,773,171 3,578,745 3,076,744
---------- ---------- ----------
$ 21,581,608 23,441,828 25,182,150
========== ========== ==========
</TABLE>
In determining operating earnings (loss) for each geographic area, sales
and purchases between areas have been accounted for on the basis of
internal prices set by the Company. Identifiable assets are those
tangible and intangible assets used in operations in each geographic
area. Identifiable assets of the Israeli operations include trade
accounts receivable from GMC of $116,464, $125,003 and $52,680 for the
years ended February 29, 1996 and February 28, 1995 and 1994.
(Continued)
41
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(b) Credit Concentrations
---------------------
During fiscal 1996 one customer represented 8% of net sales of the
Company. During fiscal 1995 and 1994, one customer represented 10%
of net sales of the Company. In addition, the Company had
seven and four customers with individual balances in excess of 5% of
accounts receivable, which aggregated approximately $2,600,000 and
$2,175,000, at February 29, 1996 and February 28, 1995, respectively.
The Company grants credit to customers based upon analysis of their
financial position and other factors. Consequently, an adverse
change in those factors could affect the Company's estimate of its
bad debts. The Company estimates an allowance for doubtful accounts
based upon the creditworthiness of its customers as well as general
economic conditions. As the majority of the Company's sales are made
and credit is granted to the United States Government and customers
in the defense industry, the Company considers the credit risks
associated with its customers to be minimal.
(13) Employment Agreements
---------------------
In connection with the acquisition of Math, one former principal
stockholder received an employment contract which provides for a
minimum annual salary and expires on August 8, 1996. Additionally,
the Company has two three-year agreements not to compete and
consulting agreements with its former president and one former
officer, expiring on various dates through March 1, 1998. The minimum
payments under all of the above agreements aggregate approximately
$204,000 for fiscal 1997.
The Company's employment agreements with three officers of GMCC
specifying minimum annual salaries expired on March 28, 1995.
(Continued)
42
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(14) Unaudited Quarterly Financial Information
-----------------------------------------
The following is a summary of quarterly operating results for fiscal
1996 and 1995 (in thousands, except per share amounts):
<TABLE>Unaudited quarterly operating results
<CAPTION>
1996
----------------------------------------
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $ 4,405 5,391 5,655 6,885
Gross profit 1,076 1,456 762 2,095
Net earnings (loss) (881) (99) (1,055) 258
Earnings (loss) per share (.74) (.08) (.88) .22
===== ===== ===== =====
1995
----------------------------------------
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
Net sales $ 5,033 4,929 6,139 6,209
Gross profit 1,682 1,500 2,052 1,713
Net earnings (loss) 54 (218) 39 299
Earnings (loss) per share .04 (.18) .03 .25
===== ===== ===== =====
</TABLE>
Earnings per share calculations for each of the quarters are based on
weighted average number of shares outstanding in each period, therefore,
the sum of the quarters does not necessarily equal the years' earnings
per share.
(End of Notes)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
43
<PAGE>
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
---------------------------------------------------
Information relating to directors of the Registrant and compliance with
Section 16(a) of the Exchange Act will be contained in a definitive Proxy
Statement involving the election of directors which the Registrant will file
with the Securities and Exchange Commission pursuant to Regulation 14A under
the Securities Exchange Act of 1934 not later than 120 days after the
Company's fiscal year end and such information is incorporated herein by
reference. Information relating to Executive Officers of the Registrant
appears at page 9 of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
-----------------------
Information relating to executive compensation will be contained in the
Proxy Statement referred to above in "Item 10. Directors and Executive
Officers of the Registrant", and such information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT.
-----------
Information relating to security ownership of certain beneficial owners
and management will be contained in the Proxy Statement referred to above in
"Item 10. Directors and Executive Officers of the Registrant", and such
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
Information relating to certain relationships and related transactions
will be contained in the Proxy Statement referred to above in "Item 10.
Directors and Executive Officers of the Registrant", and such information is
incorporated herein by reference.
44
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
-----------------------------------------------------------------
(a) The following documents are filed as part of this report:
1. Financial Statements Page
----
. Independent Auditors' Reports 16
. Consolidated Balance Sheets - February
29, 1996 and February 28, 1995 18
. Consolidated Statements of Operations -
years ended February 29, 1996, February
28, 1995 and February 28, 1994 19
. Consolidated Statements of Stockholders'
Equity - years ended February 29, 1996,
February 28, 1995 and February 28, 1994 20
. Consolidated Statements of Cash Flows -
years ended February 29, 1996, February
28, 1995 and February 28, 1994 21
. Notes to Consolidated Financial Statements 22
2. Financial Statement Schedules
The following consolidated financial statement
schedule is filed as part of this report:
Page
----
II - Valuation and Qualifying Accounts 49
Schedules other than those listed above are omitted because they are not
applicable or the information required is included in the consolidated
financial statements or the notes thereto.
45
<PAGE>
3. Exhibits
(a) See the exhibit index to this Annual Report on
Form 10-K. The following exhibits on the Exhibit
Index are filed with this Annual Report on Form 10-K.
Exhibit No.
-----------
3(ii) By-laws of General Microwave Corporation.
10(a)(14) Security Agreement dated as of January 16, 1996 between
General Microcircuits Corp. and Shawmut Bank N.A.
10(a)(15) Security Agreement dated as of January 16, 1996 between
Math Associates, Inc. and Shawmut Bank N.A.
10(a)(16) Security Agreement dated as of January 16, 1996 between
General Microcircuits Corp. and Natwest Bank N.A.
10(a)(17) Security Agreement dated as of January 16, 1996 between
Math Associates, Inc. and Natwest Bank N.A.
10(a)(18) Guarantee of General Microcircuits Corp. dated January
16, 1996 to Shawmut Bank N.A.
10(a)(19) Guarantee of Math Associates, Inc. dated January 16, 1996
to Shawmut Bank N.A.
10(a)(20) Guarantee of General Microcircuits Corp. dated January
16, 1996 to Natwest Bank N.A.
10(a)(21) Guarantee of Math Associates, Inc. dated January 16, 1996
to Natwest Bank N.A.
10(a)(22) Cash Collateral Agreement dated as of January 16, 1996
between General Microwave Corporation and NatWest Bank N.A.
10(a)(23) Amendment and Waiver of Reimbursement Agreement dated
January 16, 1996 between Natwest Bank N.A. and General
Microwave Corporation.
10(d) Executive Incentive Bonus Plan adopted May 28, 1996.
22 Subsidiaries of the Registrant.
23 Independent Auditors' Consents.
27 Financial Data Schedule (filed with electronically filed
copy only)
(b) Reports on Form 8-K
None.
(c) The following management contracts or compensatory plans,
contracts or arrangements are filed with or incorporated
by reference in this Annual Report on Form 10-K.
46
<PAGE>
Exhibit No.
-----------
10(c) 1990 Stock Option Plan - Incorporated by reference to
Annual Report on Form 10-K for the fiscal year ended
February 28, 1995, filed May 26, 1995.
10(d) General Microwave Corporation Executive Incentive Bonus
Plan adopted May 28, 1996.
10(e)(1) Consulting Agreement dated as of March 1, 1995 between
General Microwave Corporation and Sherman A. Rinkel -
Incorporated by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995, filed May 26,
1995.
10(e)(2) Noncompetition Agreement dated as of March 1, 1995 between
General Microwave Corporation and Sherman A. Rinkel -
Incorporated by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995, filed May 26,
1995.
10(f)(1) Consulting Agreement dated as of December 1, 1994 between
General Microwave Corporation and Bernard Grand -
Incorporated by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995, filed May
26, 1995.
10(f)(2) Noncompetition Agreement dated as of December 1, 1994
between General Microwave Corporation and Bernard Grand -
Incorporated by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995, filed May
26, 1995.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securi-
ties Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
GENERAL MICROWAVE CORPORATION
By:s/ MITCHELL TUCKMAN
---------------------------
Mitchell Tuckman, President
and Chief Executive Officer
Date: May 28, 1996
47
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
By:s/ MITCHELL TUCKMAN President, Chief Executive May 28, 1996
----------------------- Officer and Director (Prin-
Mitchell Tuckman cipal Executive Officer)
By:s/ ARNOLD H. LEVINE Vice President-Finance, May 28, 1996
----------------------- Treasurer and Chief Financial
Arnold H. Levine Officer (Principal Financial
and Accounting Officer)
By:s/ FREDERICK ZISSU Director May 28, 1996
-----------------------
Frederick Zissu
By:s/ SHERMAN A. RINKEL Director May 28, 1996
-----------------------
Sherman A. Rinkel
By:s/ MOE WIND Director May 28, 1996
-----------------------
Moe Wind
By:s/ WINTON CHARLOP Director May 28, 1996
-----------------------
Winton Charlop
By:s/ STANLEY SIMON Director May 28, 1996
-----------------------
Stanley Simon
By:s/ EDMOND D. FRANCO Director May 28, 1996
-----------------------
Edmond D. Franco
By:s/ MICHAEL I. STOLZAR Director May 28, 1996
-----------------------
Michael I. Stolzar
48
<PAGE>
Schedule II
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEAR PERIOD ENDED FEBRUARY 29, 1996
INVENTORY
---------
Additions
----------
Balance at charged to Balance at
beginning costs and end of
Year Ended of period expenses Deductions period
---------- ---------- --------- ---------- ----------
Inventory
February 29, 1996 $ 1,154,000 755,000 612,000 1,297,000
Inventory
February 29, 1995 $ 455,000 699,000 --- 1,154,000
Inventory
February 29, 1994 $ 354,000 101,000 --- 455,000
ACCOUNTS RECEIVABLE
-------------------
Additions
----------
Balance at charged to Balance at
beginning costs and (1) end of
Year Ended of period expenses Deductions period
---------- ---------- --------- ---------- ----------
Accounts
Receivable
February 29, 1996 $ 90,000 --- 39,300 50,700
Accounts
Receivable
February 29, 1995 $ 171,000 --- 81,000 90,000
Accounts
Receivable
February 29, 1994 $ 120,000 77,000 26,000 171,000
(1) Represents accounts written off in fiscal 1994 and reduction in
required allowance for doubtful accounts in fiscal 1995 and 1996.
49
<PAGE>
EXHIBIT INDEX
-------------
Page Number
in Sequential
Numbering
Exhibit No. -------------
- -----------
3(i)(a) Certificate of Incorporation of General *
Microwave Corporation dated June 13, 1960 -
Incorporated by reference to Annual Report
on Form 10-K for the fiscal year ended
February 28, 1995, filed May 26, 1995.
3(i)(b) Certificate of Amendment of Certificate of *
Incorporation of General Microwave Corpora-
tion dated December 21, 1961 - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
3(i)(c) Certificate of Change of General Microwave *
Corporation dated September 24, 1981 -
Incorporated by reference to Annual Report
on Form 10-K for the fiscal year ended
February 28, 1995, filed May 26, 1995.
3(i)(d) Certificate of Amendment of Certificate of *
of Incorporation of General Microwave Cor-
poration dated June 25, 1985 - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
3(i)(e) Certificate of Change of General Microwave *
Corporation dated June 24, 1986 - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
3(i)(f) Certificate of Amendment of Certificate *
of Incorporation of General Microwave
Corporation dated June 28, 1988 - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
3(ii) By-laws of General Microwave Corporation. 55
4 Not applicable.
9 Not applicable.
_________
* Incorporated by reference
50
<PAGE>
10(a)(1) Indenture of Mortgage and Trust dated as of *
October 1, 1984 by and between Town of Baby-
lon Industrial Development Agency and National
Westminster Bank USA, as Trustee - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(a)(2) Lease Agreement dated as of October 1, 1984 *
by and between Town of Babylon Industrial
Development Agency and General Microwave
Corporation - Incorporated by reference to
Annual Report on Form 10-K for the fiscal
year ended February 28, 1995, filed May 26,
1995.
10(a)(3) Lease Modification Agreement dated as of *
April 1, 1986 between Town of Babylon
Industrial Development Agency and General
Microwave Corporation - Incorporated by
reference to Annual Report on Form 10-K for
the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(a)(4) Reimbursement Agreement dated as of October *
1, 1984 between General Microwave Corporation
and National Westminster Bank USA, as Letter
of Credit Issuer - Incorporated by reference
to Annual Report on Form 10-K for the fiscal
year ended February 28, 1995, filed May 26,
1995.
10(a)(5) Guaranty dated as of October 1, 1984 of *
General Microwave Corporation to National
Westminster Bank USA, as Trustee - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(a)(6) Remarketing Agreement dated as of April *
2, 1990 among Citicorp Securities Markets,
Inc., General Microwave Corporation and
Town of Babylon Industrial Development
Agency - Incorporated by reference to Annual
Report on Form 10-K for the fiscal year
ended February 28, 1995, filed May 26, 1995.
_________
* Incorporated by reference
51
<PAGE>
10(a)(7) Second Mortgage dated as of October 1, 1984 *
from the Town of Babylon Industrial Develop-
ment Agency to National Westminster Bank USA,
as Letter of Credit Issuer - Incorporated by
reference to Annual Report on Form 10-K for
the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(a)(8) Second Pledge and Assignment dated as of *
October 1, 1984 from the Town of Babylon
Industrial Development Agency to National
Westminster Bank USA, as Letter of Credit
Issuer - Incorporated by reference to Annual
Report on Form 10-K for the fiscal year
ended February 28, 1995, filed May 26, 1995.
10(a)(9) Assignment of Mortgage and Pledge and assign- *
ment dated as of October 1, 1984 from National
Westminster Bank USA, as Letter of Credit
Issuer, to National Westminster Bank USA,
as Trustee - Incorporated by reference to
Annual Report on Form 10-K for the fiscal year
ended February 28, 1995, filed May 26, 1995.
10(a)(10) Acknowledgment and Acceptance dated as of *
September 26, 1990 among National Westminster
Bank USA, The Connecticut National Bank, Town
of Babylon Industrial Development Agency and
General Microwave Corporation - Incorporated
by reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(a)(11) Security Agreement dated as of July 20, 1995 *
between General Microwave Corporation and
Shawmut Bank N.A., as Trustee - Incorporated
by reference to Quarterly Report on Form 10-Q
for the quarter ended September 2, 1995,
filed October 16, 1995.
10(a)(12) Security Agreement dated as of July 20, 1995 *
between General Microwave Corporation and
Natwest Bank N.A. - Incorporated by reference
to Quarterly Report on Form 10-Q for the
quarter ended September 2, 1995, filed
October 16, 1995.
10(a)(13) Amendment and Waiver of Reimbursement Agree- *
ment dated July 17, 1995 between Natwest Bank,
N.A. and General Microwave Corporation -
Incorporated by reference to Quarterly Report
on Form 10-Q for the quarter ended September
2, 1995, filed October 16, 1995.
_________
* Incorporated by reference
52
<PAGE>
10(a)(14) Security Agreement dated as of January 16, 72
1996 between General Microcircuits Corp. and
Shawmut Bank N.A.
10(a)(15) Security Agreement dated as of January 16, 80
1996 between Math Associates, Inc. and
Shawmut Bank N.A.
10(a)(16) Security Agreement dated as of January 16, 88
1996 between General Microcircuits Corp. and
Natwest Bank N.A.
10(a)(17) Security Agreement dated as of January 16, 95
1996 between Math Associates, Inc. and
Natwest Bank N.A.
10(a)(18) Guarantee of General Microcircuits Corp. 102
dated January 16, 1996 to Shawmut Bank N.A.
10(a)(19) Guarantee of Math Associates, Inc. dated 113
January 16, 1996 to Shawmut Bank N.A.
10(a)(20) Guarantee of General Microcircuits Corp. 123
dated January 16, 1996 to Natwest Bank N.A.
10(a)(21) Guarantee of Math Associates, Inc. dated 134
January 16, 1996 to Natwest Bank N.A.
10(a)(22) Cash Collateral Agreement dated as of 145
January 16, 1996 between General Microwave
Corporation and NatWest Bank N.A.
10(a)(23) Amendment and Waiver of Reimbursement Agree- 146
ment dated January 16, 1996 between Natwest
Bank N.A. and General Microwave Corporation.
10(c) 1990 Stock Option Plan - Incorporated by *
reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(d) General Microwave Corporation Executive 147
Incentive Bonus Plan adopted May 28, 1996.
10(e)(1) Consulting Agreement dated as of March 1, *
1995 between General Microwave Corporation
and Sherman A. Rinkel - Incorporated by
reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
_________
* Incorporated by reference
53
<PAGE>
10(e)(2) Noncompetition Agreement dated as of March *
1, 1995 between General Microwave Corpora-
tion and Sherman A. Rinkel - Incorporated by
reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(f)(1) Consulting Agreement dated as of December *
1, 1994 between General Microwave Corpora-
tion and Bernard Grand - Incorporated by
reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
10(f)(2) Noncompetition Agreement dated as of December *
1, 1994 between General Microwave Corporation
and Bernard Grand - Incorporated by
reference to Annual Report on Form 10-K
for the fiscal year ended February 28, 1995,
filed May 26, 1995.
11 Not applicable.
12 Not applicable.
13 Not applicable.
16 Not applicable.
18 Not applicable.
19 Not applicable.
22 Subsidiaries of the Registrant. 148
23 Independent Auditors' Consents. 149
24 Not applicable.
25 Not applicable.
27 Financial Data Schedule (filed with 150
electronically filed copy only)
28 Not applicable.
99 Not applicable.
_________
* Incorporated by reference
54
<PAGE>
Exhibit 3(ii) EFF. 2/14/96
-------------
BY-LAWS
-------
GENERAL MICROWAVE CORPORATION
-----------------------------
ARTICLE I
Office and Seal
----------------
Section 1. The principal office of the corporation
----------
in the State of New York shall be located in the Town of Babylon,
County of Suffolk and State of New York. The corporation may also
have offices at such other places, within or without the State of
New York, as the Board of Directors from time to time may appoint
or the business of the corporation may require.
Section 2. The corporate seal of the corporation
----------
shall be circular in form and shall have inscribed thereon, around
the inner circumference thereof, the name of the corporation and
inside the circle the words "Corporate Seal 1960 New York."
ARTICLE II
Stockholders
------------
Section 1. All meetings of the stockholders shall be
----------
held at the office of the corporation in the City and State of New
York, or at such other place within the said State as shall be
specified in the notice of call thereof.
Section 2. The Annual Meeting of Stockholders for the
----------
election of directors and the transaction of other business shall
be held on the fourth Tuesday in June of each year at 5:00 p.m. at a
place fixed by the Board of Directors. At their discretion, the
Board of Directors may substitute any other date, time or place for
the annual meeting.
55
<PAGE>
Section 3. Special meetings of the stockholders, for
----------
any purpose or purposes, unless otherwise prescribed by statute,
may be called at any time by the president or any vice-president
and shall be called by the president, vice-president or secretary
at the request in writing or by vote of a majority of the Board of
Directors.
Section 4. The holders of a majority of the shares of
----------
the capital stock of the corporation issued and outstanding and
entitled to vote thereat, present in person or represented by
proxy, shall be requisite for and shall constitute a quorum for the
transaction of business at all meetings of the stockholders, except
as is otherwise provided by law.
Section 5. At all meetings of the stockholders every
----------
stockholder having the right to vote shall be entitled to vote in
person or by proxy appointed by an instrument in writing subscribed
by such stockholder. Each stockholder shall be entitled to one
vote for each share of stock having voting power registered in his
name upon the books of the corporation.
56
<PAGE>
Section 6. Notice of any meeting of stockholders
----------
shall be in writing signed by the president or vice-president or
the secretary or an assistant secretary. Such notice shall state
the purpose or purposes for which the meeting is called and shall
state the time when and the place within the State where it is to
be held, and a copy of such notice shall be served either
personally or by mail, upon each stockholder of record entitled to
vote at such meeting not less than ten days nor more than forty
days before the meeting. If mailed, it shall be directed to each
stockholder at his address as it appears upon the stock book of the
corporation, unless he shall have filed with the Secretary of the
corporation a written request that notices intended for him be
mailed to some other address, in which case it shall be mailed to
the address designated in such request.
Section 7. The Board of Directors may fix a day not more
----------
than fifty days prior to the date of the holding of any meeting of
stockholders as the day as of which stockholders entitled to notice
of, and to vote at, such meeting shall be determined, and all persons
who are holders of record of voting stock on such day, and no others,
shall be entitled to notice of and to vote at, such meeting.
57
<PAGE>
ARTICLE III
Directors
---------
Section 1. The property and affairs of the Corporation
----------
shall be managed and controlled by its Board of Directors who shall be
elected by the stockholders at the annual meeting, or at a special
meeting called for such purpose as provided by law and each of whom
shall hold office until the next annual election or until his successor
shall be duly elected and qualified, unless sooner displaced pursuant
to law or these by-laws. Each director need not be a stockholder of
the corporation. Following the adoption of these by-laws, the number of
directors shall be eight. Such number of directors may be altered from
time to time within the maximum limits prescribed in the certificate of
incorporation by amendment of these by-laws as hereinafter provided.
Section 2. The Board of Directors of the Corporation
----------
shall consist of seven (7) directors.
Section 3. Newly elected directors may hold their
----------
first meeting for the purpose of organization and the transaction
of business, if a quorum be present, immediately after the annual
meeting of the stockholders; or the time and place of such meeting
may be fixed by notice in writing to all the directors.
Section 4. Regular meeting of the directors may be
----------
held without notice at such places and times as shall be determined
from time to time by resolution of the Board.
58
<PAGE>
Section 5. Special meetings of the Board of Directors
----------
may be called at any time by the president and shall be called by
the president or the secretary at the written request of any two
directors, on notice to each director mailed at least three days,
or telegraphed or delivered personally at least one day, before the
meeting.
Section 6. At all meetings of the Board a majority of
----------
the directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise provided by statute or by these by-laws.
Section 7. Except where it is required by statute,
----------
the certification of incorporation or these by-laws, that action
shall be taken by the stockholders of the corporation, all
corporate powers shall be exercised by the Board of Directors.
Subject to the provisions of statute, the certificate of
incorporation, and these by-laws, the Board of Directors shall have
absolute and entire management of the business of the corporation
of every kind, nature and description, and may exercise all such
powers and do all such acts or things as may be exercised or done
by the corporation. It may from time to time, so far as is
permitted by law, delegate the exercise and doing thereof or of any
one or more of such powers, acts or things to any executive or
other committee, officers or other person or persons as it may deem
proper.
59
<PAGE>
Section 8. Any one or more members of the Board of
----------
Directors or any committee thereof may participate in a meeting of
the Board or committee by means of a conference telephone or
similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE IV
Officers
--------
Section 1. The officers of the corporation shall be
----------
a president, a vice-president, a secretary and a treasurer. Such
officers shall be elected by the directors annually at the first
meeting of the Board following the annual meeting of stockholders
at which a quorum is present and each shall hold office for one
year or until such successor is elected and has qualified, subject
to the provisions of these by-laws.
Section 2. The Board of Directors may from time to
----------
time appoint, and similarly remove, one or more additional vice
presidents and such assistant or subordinate officers and agents as
it may deem desirable, with such titles and with such powers and
duties as the Board may by resolution from time to time declare.
Section 3. One person may hold more than one office.
----------
Section 4. Any officer may be removed, with or
----------
without cause, at any regular or special meeting of the Board by
vote of a majority of the entire membership of the Board.
60
<PAGE>
ARTICLE V
Duties of the Officers
----------------------
Section 1. The president shall have general and
----------
active management of the business of the corporation, shall see
that all orders and resolutions of the Board are carried into
effect, shall execute all contracts and agreements authorized by
the Board, shall be subject to the approval of the directors,
appoint and discharge employees and agents of the company and fix
their compensation, and shall generally do and perform all acts
incident to the office of president.
Section 2. The vice-president shall be vested with
----------
all powers and shall perform all the duties of the president during
his absence or inability to act, and whenever the office of
president shall be vacant, unless or until the directors shall
otherwise determine, he shall have such other duties as shall be
prescribed by the directors. If there is more than one vice-president,
then the duties of the vice-president shall be deemed to apply to the
first vice-president, and if he is absent or unable to act, then to the
second vice-president, and so on in order.
Section 3. The secretary shall attend all meetings of the
----------
directors and stockholders when so requested and act as clerk thereof and
record all votes and minutes of all proceedings in a book to be kept for
that purpose. He shall perform like duties for all committees when
required. He shall give or cause to be given, notice of all meetings of
stockholders and directors and all other notices required by law or by
these by-laws, and in case of his absence or refusal or neglect so to do,
any such notice may be given by any person thereunto directed by the
president or by the directors or stockholders upon whose request the
meeting is called, as provided in these by-laws.
61
<PAGE>
Section 4. The treasurer shall have the custody of
----------
all funds, securities, evidences of indebtedness and other valuable
documents of the corporation, and shall deposit the same in the
name and to the credit of the corporation in such depositaries as
may from time to time be designated by the Board of Directors; he
shall receive and give, or cause to be given, receipts and
acquittances for moneys paid in on account of the corporation and
shall pay out of the funds on hand all just debts of the
corporation of whatever nature upon maturity of the same; he shall
enter or cause to be entered in the books of the corporation to be
kept for that purpose full and accurate accounts of all moneys
received and paid out on account of the corporation, and whenever
required by the president or the directors, he shall keep or cause
to be kept such other books as will show a true record of the
expenses, losses, gains, assets and liabilities of the corporation;
he shall, unless otherwise determined by the directors, have charge
of the original stock books, transfer books and stock ledgers and
act as transfer agent in respect of the stock and securities of the
corporation; and he shall perform all of the other duties incident
to the office of treasurer and such other duties as may from time
to time be prescribed by the Board of Directors.
Section 5. In case of the absence or inability to act
----------
of any officer of the corporation, the Board of Directors may
delegate the power or duties of such officer to any other officer
or to any director or other person for the time being.
62
<PAGE>
ARTICLE VI
Resignations and Filling of Vacancies
-------------------------------------
Section 1. Any director, member of any committee or
----------
officer may resign at any time. Such resignation shall be made in
writing and shall take effect at the time specified therein, and if
no time be specified, at the time of its receipt by the president
or secretary. The acceptance of a resignation shall not be
necessary to make it effective.
Section 2. If the position or office of any director,
----------
member of any committee, or officer becomes vacant, the directors
in office may appoint any qualified person to fill such vacancy,
who shall hold office for the unexpired term and until his
successor shall be duly chosen, provided, however, that in case of
a vacancy in the Board of Directors, the stockholder may elect any
qualified person to fill such vacancy, and the person so elected
shall ipso facto take the place of the persons appointed by the
board of directors.
ARTICLE VII
Stock Certificates and Transfers
--------------------------------
Section 1. The stock certificates of the corporation
----------
shall be signed by the president or a vice-president and by the
secretary or the treasurer, and shall be sealed with the corporate
seal of the corporation. All transfers of stock shall be made upon
the books of the corporation by the holders of the shares in person,
or by their legal representatives. Certificates of stock shall be
surrendered and cancelled at the time of transfer. The board of
directors may appoint such registration or transfer agents of the
stock of the corporation as it may deem proper.
63
<PAGE>
Section 2. The Board of Directors may, in its
----------
discretion, order the transfer books of the corporation closed for
not more than fifty days preceding the date set for the payment of
any dividend or dividends, or the date set for any stockholders'
meeting, or, in lieu of closing the transfer books, the Board of
Directors may, in its discretion, fix a day not more than fifty days
preceding the date set for the payment of any dividend or dividends,
or the date set for any stockholders' meeting, as the day as of which
stockholders entitled to notice of and to vote at any such meeting shall
be determined, and all persons who are holders of record of such stock on
such day, and no others, shall be entitled to participate in such dividend
or dividends, or shall be entitled to notice of or to vote at such meeting.
Section 3. The corporation shall be entitled to treat the
----------
holder of record of any share or shares of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of the State of New York.
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 1. The fiscal year of the corporation shall be
----------
from March 1st to the following February 28th.
Section 2. All checks, drafts, or other orders for the
----------
payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers,
agent or agents of the corporation and in such other manner as shall from
time to time be determined by resolution of the Board of Directors.
64
<PAGE>
Section 3. Whenever under the provisions of statute, of
----------
the certificate of incorporation or of these by-laws, notice is required
to be given to any director, officer or stockholder, it shall be construed
to mean personal notice, unless so stated, but such notice may, unless
otherwise expressly provided, be given in writing by depositing the same in
any United States post office or letter box, in a first class, postpaid
sealed wrapper, properly addressed, or by delivering the same to a telegraph
company for transmission by wire, the cost thereof being prepaid, addressed
to such director, officer or stockholder, as the case may be, at his last
known post office address. The time when any notice shall be so mailed, or
shall be so delivered to a telegraph company, shall be deemed to be the
time of the giving of such notice. Any stockholder, director or officer of
the corporation may at any time, either before or after the event, waive in
writing any notice required to be given under the provisions of any statute,
or of the certificate of incorporation or of these by-laws, so far as is
permitted by law. Stockholders not entitled to vote shall not be entitled
to receive notice of any meeting unless otherwise provided by statute.
Section 4. The term Capital Stock, within the meaning of
----------
these By-laws, shall be deemed to refer to the total of Common Stock and
Preferred Stock. The term stockholders, within the meaning of these
By-laws, shall refer to the holders of both Common Stock and Preferred Stock.
ARTICLE IX
Amendments
----------
Section 1. The stockholders, by the affirmative vote
----------
of holders of a majority of the stock issued and outstanding, or the
board of directors, by the affirmative vote of a majority of the
directors, may at any meeting, alter, repeal or amend any of these
by-laws or enact new by-laws.
65
<PAGE>
ARTICLE X
Indemnification
---------------
Section 1. To the extent permitted by law, the
----------
corporation shall indemnify any person made, or, threatened to be
made, a party to an action by or in the right of the corporation to
procure a judgment in its favor, by reason of the fact that he, his
testator or intestate, is or was a director or officer of the
corporation, or is or was serving at the request of the corporation
as a director or officer of any other corporation of any type or kind,
domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or
officer acted in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interests of the corporation, except
that no indemnification under this Section shall be made in respect of
(a) a threatened action or a pending action which is settled or otherwise
disposed of, or (b) any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court in which the action was brought, or, if no
action was brought, any court of competent jurisdiction, determines upon
application that, in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such portion of the
settlement amount and expenses as the court deems proper.
66
<PAGE>
Section 2. (a) To the extent permitted by law, the
----------
corporation shall indemnify any person made, or threatened to be
made, a party to an action or proceeding (other than one by or in
the right of the corporation to procure a judgment in its favor),
whether civil or criminal, including an action by or in the right of
any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the corporation
served in any capacity at the request of the corporation, by reason
of the fact that he, his testator or intestate, was a director or
officer of the corporation, or served such other corporation
partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid
in settlement and reasonable expenses including attorneys' fees,
actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer
acted, in good faith, for a purpose which he reasonably believed to
be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
67
<PAGE>
(b) The termination of any such civil or
criminal action or proceeding by judgment, settlement, conviction or
upon a plea of nolo contendere, or its equivalent, shall not in
itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or
any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
corporation or that he had reasonable cause to believe that his conduct
was unlawful.
Section 3. For the purpose of this Article, the
----------
corporation shall be deemed to have requested a person to serve an
employee benefit plan where the performance by such person of his
duties to the corporation also imposes duties on, or otherwise
involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with
respect to an employee benefit plan pursuant to applicable law shall
be considered fines; and action taken or omitted by a person with
respect to an employee benefit plan in the performance of such
person's duties for a purpose reasonably believed by such person to
be in the interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
Section 4. A person who has been successful, on the
----------
merits or otherwise, in the defense of a civil or criminal action or
proceeding of the character described in Section 1 or 2 shall be
entitled to indemnification as authorized in such Sections.
68
<PAGE>
Section 5. Except as provided by Section 4, any
----------
indemnification under Sections 1, 2 and/or 3 or otherwise permitted
by Sections 6 and 9, unless ordered by a court, shall be made by the
corporation, only if authorized in the specific case:
(a) By the Board of Directors of the corporation
acting by a quorum consisting of directors who are not parties to
such action or proceeding upon a finding that the director or
officer has met the standard of conduct set forth in Section 1, 2
and/or 3 or established pursuant to Section 4, as the case may be,
or
(b) If a quorum under subsection (a) is not obtain-
able or, even if obtainable, a quorum of disinterested directors so
directs,
(1) By the Board upon the opinion in writing of
independent legal counsel that indemnification is proper
in the circumstances because the applicable standard of
conduct set forth in such sections has been met by such
director or officer, or
(2) By the stockholders upon a finding that the
director or officer has met the applicable standard of
conduct set forth in such sections.
Section 6. Expenses incurred in defending a civil or
----------
criminal action or proceeding may be paid by the corporation in
advance of the final disposition of such action or proceeding upon
receipt of an undertaking by or on behalf of such director or
officer to repay such amount as, and to the extent, required by
Section 7.
69
<PAGE>
Section 7. All expenses incurred in defending a civil
----------
or criminal action or proceeding which are advanced by the
corporation in accordance with Section 6 shall be repaid in case the
person receiving such advancement or allowance is ultimately found
under the procedure set forth in this Article or by law not to be
entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced by the corporation exceed the
indemnification to which he is entitled.
Section 8. No indemnification, advancement or
----------
allowance shall be made under this Article in any circumstance where
it appears:
(a) That the indemnification would be inconsistent
with the law of the jurisdiction of incorporation of a foreign
corporation which prohibits or otherwise limits such indemnification
(b) That the indemnification would be inconsistent
with a provision of the certificate of incorporation of the corporation,
these by-laws, a resolution of the Board of Directors of the
corporation or of the stockholders, an agreement or other proper
corporate action, in effect at the time of the accrual of the
alleged cause of action asserted in threatened or pending action or
proceeding in which the expenses were incurred or other amounts were
paid, which prohibits or otherwise limits indemnification; or
(c) If there has been a settlement approved by the
court, that the indemnification would be inconsistent with any
condition with respect to indemnification expressly imposed by the
court in approving the settlement.
70
<PAGE>
Section 9. The indemnification and advancement of
----------
expenses granted pursuant to, or provided by, this Article shall not
be deemed exclusive of any other rights to which a director or
officer seeking indemnification or advancement of expenses may be
entitled, whether contained in the certificate of incorporation of
the corporation or these by-laws, or, when authorized by the
certificate of incorporation of the corporation or these by-laws,
(a) a resolution of stockholders, (b) a resolution of directors, or
(c) an agreement providing for such indemnification, provided that
no indemnification may be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the
director or officer establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and
were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to
which he was not legally entitled. Nothing contained in this
Article shall affect any rights to indemnification to which
corporate personnel other than directors and officers may be
entitled by contract or otherwise under law.
71
<PAGE>
Exhibit 10(a)(14)
-----------------
CONTINUING GENERAL SECURITY AGREEMENT
-------------------------------------
THIS SECURITY AGREEMENT, dated as of January 16, 1996
between GENERAL MICROCIRCUITS CORP. (the "Debtor") and SHAWMUT BANK
N.A., as Trustee, a national banking association duly organized and
existing under the laws of the United States of America (the
"Trustee"):
WHEREAS, at the request of General Microwave Corporation
(the "Company"), the Town of Babylon Industrial Development Agency
(the "Issuer") issued $6,000,000 in the aggregate principal amount of
1984 Variable Rate 7-Day Demand Industrial Development Revenue Bonds
(General Microwave Corporation Facility) (the "Bonds) in order to
finance the costs of acquisition, construction and equipping of an
industrial development facility, together with machinery and equipment
to be used therein or in connection therewith, to be located in the
Town of Babylon, Suffolk County, New York (the "Facility"); and
WHEREAS, pursuant to the Indenture of Mortgage and
Trust dated as of October 1, 1984 (the "Indenture") between the
Issuer and NatWest Bank N.A. (formerly National Westminster Bank
USA) ("NatWest") NatWest was appointed Trustee for the holder of the
Bonds; and
WHEREAS, Shawmut Bank N.A. has succeeded NatWest as
such Trustee and is now the successor Trustee for the holders of the
Bonds under the Indenture; and
WHEREAS, pursuant to the Reimbursement Agreement dated
as of October 1, 1984 between the Company and NatWest (the "Reimbursement
Agreement"), NatWest issued, for the account of the Company, its
irrevocable, transferable letter of credit (the "Letter of Credit") in
the amount of $6,595,890.41 to support payment when due of the principal
of, premium, if any, and interest not in excess of seven months on the
Bonds; and
WHEREAS, the Letter of Credit remains outstanding in
favor of the Trustee and the unpaid principal amount of the Bonds as
of January 1, 1996 is $2,376,589.05 and the Company and the Debtor
has therefore agreed that in addition to the collateral described in
Section 3 of the Reimbursement Agreement (being the same collateral
described in the Granting Clauses of the Indenture), it will further
secure its obligations to NatWest arising under the Reimbursement
Agreement and its obligations to the Trustee, as Trustee, by granting
to the Bank and to the Trustee guaranties of the obligations of the
Company to the Bank and to the Trustee (individually, a "Guaranty")
to be secured by a security interest in all of its present and future
accounts receivable upon the terms and conditions hereinafter set forth.
72
<PAGE>
NOW THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration the receipt of which is
hereby acknowledged by the Debtor, it is hereby agreed as follows:
1. As security for the due and punctual payment of
any and all of the present and future Obligations of the Debtor (as
defined in Section 2 below), the Debtor hereby grants to the Trustee
a continuing security interest in (a) all of the Collateral (as
defined in Section 3 below), whether now or hereafter existing or
acquired, and (b) all present and future products and proceeds of
the Collateral.
2. As used herein, the term "Obligations" means all
liabilities of the Debtor for the payment of all amounts owing on
its Guaranty issued for the benefit of the Trustee.
3. As used herein, the term "Collateral" means the
property described below in this Section 3:
Accounts and Chattel Paper. All of the Debtor's present
and future rights to the payment of money arising out of the sale
(or lease) of goods or services including, but not limited to, accounts,
general intangible and chattel paper (hereinafter collectively referred
to in the plural as "Accounts" and in the singular as "Account"), all
proceeds thereof and all liens, securities, guarantees, remedies, and
privileges pertaining thereto, together with all rights and liens of the
Debtor in and to such goods, including returned or repossessed goods,
and all rights and property of any kind forming the subject matter of
any of the Accounts, including the right of stoppage in transit.
4. The Debtor represents and warrants that: (a) except
for such Financing Statements that may be filed by NatWest, no Financing
Statement is on file (other than any which may have been filed on behalf
of the Trustee) relating to any of the Collateral is on file in any
public office; and (b) the Chief Executive Office of Debtor, and the
Collateral are respectively located at the address(es) set forth at the
end of the Agreement and Debtor will not change such location without
prior written notice to and consent of the Trustee; and (c) except for
the security interest created by the Debtor in favor of NatWest, Debtor
has not created and is not aware of any security interest, lien or
encumbrance on or affecting the Collateral other than created hereby.
5. The Debtor assumes all liability and responsibility
in connection with all Collateral acquired by Debtor; and the obligation
of the Debtor to pay all Obligations shall in no way be affected or
diminished by reason of the fact that any such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to
the Debtor.
73
<PAGE>
6. As long as this Agreement shall remain in effect,
the Debtor agrees:
(a) that, if the Trustee so demands in writing
at any time after the occurrence of an Event of Default (defined in
Section 8 hereof) which is continuing (i) all proceeds of the
Collateral shall be delivered to the Trustee promptly upon their
receipt, instruments and documents pertaining to the Collateral
shall be delivered to the Trustee at the time and place and in the
manner in which specified in the Trustee's demand;
(b) in order to enable the Trustee to comply
with the law of any jurisdiction, including state, federal and
foreign, applicable to any security interest granted hereby or to
the Collateral, to execute and deliver upon request, in form
acceptable to the Trustee, any Financing Statement, notice, statement,
instrument, document, agreement or other paper and/or to perform any
act requested by the Trustee which may be necessary to create, perfect,
preserve, validate or otherwise protect such security interest or to
enable the Trustee to exercise and enforce the Trustee's rights
hereunder or with respect to such security interest;
(c) promptly to pay any filing fees or other
costs in connection with (i) the filing or recordation of such
Financing Statements or any other papers described above and (ii)
such searches of the public records as the Trustee in its sole
discretion shall require;
(d) that the Trustee is authorized to file or
record any such Financing Statements or other papers without the
signature of the Debtor if permitted by applicable law;
(e) the Trustee may file in photographic or
other reproduction of this Agreement in lieu of a Financing Statement
in any filing office where it is permissible to do so;
(f) except for the security interest granted
hereby and the security interest of NatWest, the Debtor shall keep
the Collateral and proceeds thereof free and clear of any security
interest, liens or encumbrances of any kind, the Debtor shall promptly
pay, when due, all taxes and transportation, storage and warehousing
charges and fees affecting or arising out of the Collateral and shall
defend the Collateral against all claims and demands of all persons at
any time claiming the same or any interest therein adverse to the Trustee;
74
<PAGE>
(g) that the Trustee's duty with respect to the
Collateral shall be solely to use reasonable care in the custody and
preservation of collateral in its possession; the Trustee shall not
be obligated to take any steps necessary to preserve any rights in
any of the Collateral against prior parties, and the Debtor hereby
agrees to take such steps; the Debtor shall pay to the Trustees all
costs and expenses, including filing and reasonable attorney's fees,
incurred by the Trustee in connection with the custody, care,
preservation or collection of the Collateral; the Trustee may, but
is not obligated to, exercise any and all rights of conversion or
exchange or similar rights, privileges and options relating to the
Collateral; the Trustee shall have no obligation to sell or otherwise
realize upon any of the Collateral as herein authorized and shall not
be responsible for any failure to do so or for any delay in so doing;
in the event of any litigation, with respect to any manner connected
with this Agreement, the Obligations, the Collateral, or any other
instrument, document or agreement applicable hereto or to any one or
more of them in any respect, Debtor hereby waives the right to trial
by jury and all defenses, rights of setoff; and right to interpose
counterclaims of any nature;
(h) to provide the Trustee with such information
as the Trustee may from time to time reasonably request with respect
to the location of the Collateral and any of its places of business;
(i) that the Trustee will be notified promptly
in writing of any change in any office as set forth below;
(j) that the Debtor will permit the Trustee, by
its officers and agents, to have access to and examine at all reasonable
times and properties, minute books and other corporate records,
and books of account and financial records of the Debtor; and
(k) that the Debtor will promptly notify the
Trustee upon the occurrence of any default, as provided in this
Agreement, of which the Debtor has knowledge.
75
<PAGE>
7. The Debtor further agrees as follows:
A. Upon the occurrence of an Event of Default
(defined in Section 8 hereof) which is continuing the Debtor agrees
as follows: (i) the Debtor will not, without first obtaining the
written consent of the Trustee, renew or extend the time of payment
of any Account; (ii) the Debtor will promptly notify the Trustee in
writing of any compromise, settlement or adjustment with respect to
an Account and will forthwith account therefor to the Trustee in
cash for the amount thereof with demand or notice; (iii) the Debtor
will stamp, in form and manner satisfactory to the Trustee, its
accounts receivable ledger and other books and records pertaining to
the Accounts, with an appropriate reference to the security interest
of the Trustee in the Accounts; (iv) upon request, the Debtor will
furnish the Trustee original or other papers relating to the sale of
merchandise of the performance of labor or services which created
any Account; (v) the Debtor may collect the Account, subject to the
discretion and control of the Trustee, but the Trustee may, without
cause or notice, curtail or terminate such authority at any time;
(vi) the proceeds of the Accounts, when collected by the Debtor,
whether consisting of cash, checks, notes, drafts, money orders,
commercial paper of any kind whatsoever, or other documents,
received in payment of the Accounts shall be promptly remitted by
the Debtor to the Trustee, in precisely the form received, except
for endorsement by the Debtor when required; (vii) such proceeds
until remitted to the Trustee, as aforesaid, shall be held in trust
by the Debtor for, and as the property of, the Trustee and shall not
be commingled with other funds, money or property; (viii) proceeds
of the Accounts will be received by the Trustee subject to final
collection and receipt of proceeds in cash or by unconditional
credit to and accepted by the Trustee; (ix) the Trustee shall apply
in its absolute discretion, all collections received by it on the
Account, toward the payment of any of the Obligations whether due or
not due; (x) the Debtor will promptly notify the Trustee in writing
of the return or rejection of any merchandise represented by the
Accounts and the Debtor will receive and hold all such merchandise
separate and apart, in trust for and subject to the security
interest in favor of the Trustee; (xi) the Trustee is authorized to
sell, for the Debtor's account and sole risk, all or any part of
such merchandise in the manner and under the terms and conditions
hereinafter set forth.
B. The Debtor represents and warrants to the
Trustee that the Debtor is the sole owner of the Accounts and no one
has claims to have an interest of any kind therein or thereto; each
of the debtors named in every such Account is indebted to the Debtor
in the amount and on the terms indicated in the invoice and schedule
of Accounts, each Account is bona fide and arises out of the
performance of labor or services or the sale and deliver or lease of
merchandise or both; and none of the Account is now, nor will at any
time in the future become, contingent upon the fulfillment of any
contract or conditions whatsoever, nor subject to any defense,
offset or counterclaim.
C. The Debtor will maintain accurate and complete
records of the Accounts and will make the same available to the
Trustee upon reasonable notice and at such reasonable times as the
Trustee may reasonable require.
76
<PAGE>
8. Upon the occurrence of any of the following (and
provided any required notice has been given and any applicable grace
or cure period had lapsed): the occurrence of an "Event of Default"
or other event so defined or described in any instrument or
agreement relating to any of the Obligations which entitles the
Trustee to accelerate payment thereof; or non-payment of any of the
Obligations when due; or failure of the Debtor to perform any
agreement on its part to be performed hereunder, then, in any such
event, (each an "Event of Default"), (a) all Obligations shall
become at once due and payable, without notice, presentment, demand
for payment or protest, which are hereby expressly waived; (b) the
Trustee is authorized to take possession of the Collateral and for
that purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral, or any part thereof is,
or may be, placed and removed same; (c) intentionally omitted; (d)
the Trustee may collect the Accounts and apply the proceeds thereof
to the Obligator; (e) the Trustee shall have the right from time to
time to sell, resell, assign, transfer and deliver all or any part
of the Collateral, at public or private sale, at the option of the
Trustee, for cash or on credit for future delivery, in such parcel
or parcels and at such times or times and at such place or places,
and upon such terms, and conditions as the Trustee, may deem proper,
and in connection therewith may grant options and may impose
reasonable conditions, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand
upon the Debtor or right of redemption to the Debtor, which are
hereby expressly waived; the Trustee will give the Debtor reasonable
notice of the time and place of any such public sale or of the time
after which any private sale or any other intended disposition
thereof i s to be made and Debtor agrees that ten (10) days prior
notice shall be deemed reasonable notice; (f) upon each such sale,
the Trustee may, unless prohibited by applicable statute which
cannot be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, rights of
redemption and equities of the Debtor, which are hereby waived and
released; (g) the Trustee's obligations, if any, to give additional
(or to continue) financial accommodations of any kind to the Debtor
shall immediately terminate; and (i) in addition to the rights and
remedies given to the Trustee hereunder or otherwise, the Trustee
shall have all of the rights and remedies of a secured party under
the New York Uniform Commercial Code.
9. In the case of each such sale or any proceedings
to collect any of the Obligations, the Debtor shall pay all costs
and expenses of every kind for collection, sale or delivery,
including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, the Trustee
shall apply any residue to pay any of the Obligations and the Debtor
will continue liable to the Trustee for any deficiency with interest.
10. The Trustee may, but is not obligated to, (a)
demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any
obligations securing any of the Obligations, (b) compromise and
settle with any person liable on such obligation, and/or (c) extend
the time of payment of or otherwise change the terms thereof, as to
any party liable thereon; all without incurring responsibility to
the undersigned or affecting any of the Obligations.
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<PAGE>
11. In order to effectuate the terms and provisions
hereof, Debtor hereby designates and appoints Trustee and its
designees or agents as attorney-in-fact of Debtor, irrevocably and
with power of substitution, with authority to receive, open and
dispose of all mail addressed to Debtor, to notify the Post Office
authorities to change the address for delivery of mail addressed to
Debtor to such address as Trustee may designate; to endorse the name
of Debtor on any notes, acceptances, checks, drafts, money orders,
instruments or other evidence of payment or proceeds of the Collateral
that may come into Trustee's possession; to sign the name of Debtor on
any invoices, documents, drafts against and notices (which also may
direct, among other things, that payment be made directly to the Trustee)
to Account debtors or obligors of Debtor, assignments and request for
verification of Accounts; to execute proof of claim and loss; to execute
any endorsements, assignments, or other instruments of conveyance or
transfer, to adjust and compromise any claims under insurance policies;
to execute releases; and to do all other acts and things necessary and
advisable in the sole discretion of Trustee to carry out and enforce
this Agreement. All acts of said attorney or designee are hereby
ratified and approved and said attorney or designee shall not be liable
for any acts of commission or omission, nor for any error ofjudgment or
mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any of the Obligations shall remain
unpaid; provided, however, that the powers described in the preceding
Section 11 hereof and in this Section 12 shall be exercised only after
the occurrence of an Event of Default which is continuing.
12. All options, powers and rights granted to the Trustee
hereunder or under any promissory note, instrument, document or other
writing delivered to the Trustee shall be cumulative and shall be in
addition to any other options, powers or rights which the Trustee may now
or hereafter have as a secured party under the New York Uniform
Commercial Code or under any other applicable law or otherwise.
13. No delay on the part of the Trustee in exercising
any of its options, powers, or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. Neither this Agreement nor
any provision hereof may be modified, changed, waived, discharged or
terminated orally, but only by an instrument in writing, signed by the
party against whom enforcement of the modification, change, waiver,
discharge or termination is sought. The Trustee shall have the right,
for and in the name, place and stead of the Debtor, to execute
endorsements, assignments or other instruments of conveyance or transfer
with respect to any of the Collateral.
14. Notice of acceptance of this Agreement by the
Trustee is hereby waived. This Agreement shall be immediately
binding upon the Debtor and its successors and assigns, whether or
not the Trustee signs this Agreement.
15. It is the intention of the parties (aa) that,
this Agreement shall constitute a continuing agreement applying to
any and all future, as well as existing Obligations of the Debtor to
the Trustee; and (b) that the security interest provided for herein
shall attach to after-acquired as well as existing Collateral.
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<PAGE>
16. Unless the context otherwise requires, all terms
used herein which are defined in the New York Uniform Commercial
Code shall have the meanings therein stated.
17. Mailing Address of Debtor. For the purpose of
Section 9.402(1) of the Uniform Commercial Code, the following
address of the Debtor is its "Chief Executive Office" and shall be
the Debtor's mailing address:
General Microcircuits Corp.
780 Boston Road
Billerica, Massachusetts 01821
18. Section 15(a) of the Reimbursement Agreement provides
that for so long as the Letter of Credit remains outstanding, NatWest will
not take additional collateral to secure the obligations of the Debtor
arising under the Reimbursement Agreement without providing at least a
co-equal security interest therein the to Trustee for the benefit of the
holders of the Bonds. Accordingly, the Trustee agrees that its security
interest in the Collateral shall be of equal priority with that of NatWest.
The Trustee further agrees that upon payment in full of the Obligations
whether pursuant to the Letter of Credit or otherwise, or the release of
the Bank's security interest in the Accounts, whichever occurs first, the
Trustee will release its security interest in the Collateral described
herein and will than execute and deliver the appropriate UCC-3 termination
statements to the Debtor.
19. This Agreement shall be construed in accordance with
and be governed by the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed the
Agreement this 16th day of January, 1996.
GENERAL MICROCIRCUITS CORP.
By s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
SHAWMUT BANK N.A., as Trustee
By___________________________
79
<PAGE>
Exhibit 10(a)(15)
-----------------
CONTINUING GENERAL SECURITY AGREEMENT
-------------------------------------
THIS SECURITY AGREEMENT, dated as of January 16, 1996 between
MATH ASSOCIATES, INC. (the "Debtor") and SHAWMUT BANK N.A., as Trustee,
a national banking association duly organized and existing under the
laws of the United States of America (the "Trustee"):
WHEREAS, at the request of General Microwave Corporation
(the "Company"), the Town of Babylon Industrial Development Agency (the
"Issuer") issued $6,000,000 in the aggregate principal amount of 1984
Variable Rate 7-Day Demand Industrial Development Revenue Bonds (General
Microwave Corporation Facility) (the "Bonds) in order to finance the
costs of acquisition, construction and equipping of an industrial
development facility, together with machinery and equipment to be used
therein or in connection therewith, to be located in the Town of Babylon,
Suffolk County, New York (the "Facility"); and
WHEREAS, pursuant to the Indenture of Mortgage and Trust
dated as of October 1, 1984 (the "Indenture") between the Issuer and
NatWest Bank N.A. (formerly National Westminster Bank USA) ("NatWest")
NatWest was appointed Trustee for the holder of the Bonds; and
WHEREAS, Shawmut Bank N.A. has succeeded NatWest as such
Trustee and is now the successor Trustee for the holders of the Bonds
under the Indenture; and
WHEREAS, pursuant to the Reimbursement Agreement dated as
of October 1, 1984 between the Company and NatWest (the "Reimbursement
Agreement"), NatWest issued, for the account of the Company, its
irrevocable, transferable letter of credit (the "Letter of Credit") in
the amount of $6,595,890.41 to support payment when due of the principal
of, premium, if any, and interest not in excess of seven months on the
Bonds; and
WHEREAS, the Letter of Credit remains outstanding in favor
of the Trustee and the unpaid principal amount of the Bonds as of
January 1, 1996 is $2,376,589.05 and the Company and the Debtor has
therefore agreed that in addition to the collateral described in Section 3
of the Reimbursement Agreement (being the same collateral described in the
Granting Clauses of the Indenture), it will further secure its obligations
to NatWest arising under the Reimbursement Agreement and its obligations
to the Trustee, as Trustee, by granting to the Bank and to the Trustee
guaranties of the obligations of the Company to the Bank and to the Trustee
(individually, a "Guaranty") to be secured by a security interest in
all of its present and future accounts receivable upon the terms and
conditions hereinafter set forth.
80
<PAGE>
NOW THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration the receipt of which is hereby
acknowledged by the Debtor, it is hereby agreed as follows:
20. As security for the due and punctual payment of any
and all of the present and future Obligations of the Debtor (as defined
in Section 2 below), the Debtor hereby grants to the Trustee a continuing
security interest in (a) all of the Collateral (as defined in Section 3
below), whether now or hereafter existing or acquired, and (b) all present
and future products and proceeds of the Collateral.
21. As used herein, the term "Obligations" means all
liabilities of the Debtor for the payment of all amounts owing on
its Guaranty issued for the benefit of the Trustee.
22. As used herein, the term "Collateral" means the
property described below in this Section 3:
Accounts and Chattel Paper. All of the Debtor's present
and future rights to the payment of money arising out of the sale
(or lease) of goods or services including, but not limited to,
accounts, general intangible and chattel paper (hereinafter
collectively referred to in the plural as "Accounts" and in the
singular as "Account"), all proceeds thereof and all liens,
securities, guarantees, remedies, and privileges pertaining thereto,
together with all rights and liens of the Debtor in and to such
goods, including returned or repossessed goods, and all rights and
property of any kind forming the subject matter of any of the
Accounts, including the right of stoppage in transit.
23. The Debtor represents and warrants that: (a)
except for such Financing Statements that may be filed by NatWest,
no Financing Statement is on file (other than any which may have
been filed on behalf of the Trustee) relating to any of the
Collateral is on file in any public office; and (b) the Chief
Executive Office of Debtor, and the Collateral are respectively
located at the address(es) set forth at the end of the Agreement and
Debtor will not change such location without prior written notice to
and consent of the Trustee; and (c) except for the security interest
created by the Debtor in favor of NatWest, Debtor has not created
and is not aware of any security interest, lien or encumbrance on or
affecting the Collateral other than created hereby.
24. The Debtor assumes all liability and responsibility
in connection with all Collateral acquired by Debtor; and the obligation
of the Debtor to pay all Obligations shall in no way be affected or
diminished by reason of the fact that any such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable
to the Debtor.
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25. As long as this Agreement shall remain in effect,
the Debtor agrees:
(a) that, if the Trustee so demands in writing
at any time after the occurrence of an Event of Default (defined in
Section 8 hereof) which is continuing (i) all proceeds of the
Collateral shall be delivered to the Trustee promptly upon their
receipt, instruments and documents pertaining to the Collateral
shall be delivered to the Trustee at the time and place and in the
manner in which specified in the Trustee's demand;
(b) in order to enable the Trustee to comply with
the law of any jurisdiction, including state, federal and foreign,
applicable to any security interest granted hereby or to the Collateral,
to execute and deliver upon request, in form acceptable to the Trustee,
any Financing Statement, notice, statement, instrument, document,
agreement or other paper and/or to perform any act requested by the
Trustee which may be necessary to create, perfect, preserve, validate
or otherwise protect such security interest or to enable the Trustee to
exercise and enforce the Trustee's rights hereunder or with respect to
such security interest;
(c) promptly to pay any filing fees or other
costs in connection with (i) the filing or recordation of such
Financing Statements or any other papers described above and (ii)
such searches of the public records as the Trustee in its sole
discretion shall require;
(d) that the Trustee is authorized to file or
record any such Financing Statements or other papers without the
signature of the Debtor if permitted by applicable law;
(e) the Trustee may file in photographic or
other reproduction of this Agreement in lieu of a Financing
Statement in any filing office where it is permissible to do so;
(f) except for the security interest granted
hereby and the security interest of NatWest, the Debtor shall keep
the Collateral and proceeds thereof free and clear of any security
interest, liens or encumbrances of any kind, the Debtor shall
promptly pay, when due, all taxes and transportation, storage and
warehousing charges and fees affecting or arising out of the
Collateral and shall defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Trustee;
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(g) that the Trustee's duty with respect to the
Collateral shall be solely to use reasonable care in the custody and
preservation of collateral in its possession; the Trustee shall not
be obligated to take any steps necessary to preserve any rights in
any of the Collateral against prior parties, and the Debtor hereby
agrees to take such steps; the Debtor shall pay to the Trustees all
costs and expenses, including filing and reasonable attorney's fees,
incurred by the Trustee in connection with the custody, care,
preservation or collection of the Collateral; the Trustee may, but
is not obligated to, exercise any and all rights of conversion or
exchange or similar rights, privileges and options relating to the
Collateral; the Trustee shall have no obligation to sell or otherwise
realize upon any of the Collateral as herein authorized and shall not
be responsible for any failure to do so or for any delay in so doing;
in the event of any litigation, with respect to any manner connected
with this Agreement, the Obligations, the Collateral, or any other
instrument, document or agreement applicable hereto or to any one or
more of them in any respect, Debtor hereby waives the right to trial
by jury and all defenses, rights of setoff; and right to interpose
counterclaims of any nature;
(h) to provide the Trustee with such information
as the Trustee may from time to time reasonably request with respect
to the location of the Collateral and any of its places of business;
(i) that the Trustee will be notified promptly
in writing of any change in any office as set forth below;
(j) that the Debtor will permit the Trustee, by
its officers and agents, to have access to and examine at all
reasonable times and properties, minute books and other corporate
records, and books of account and financial records of the Debtor;
and
(k) that the Debtor will promptly notify the
Trustee upon the occurrence of any default, as provided in this
Agreement, of which the Debtor has knowledge.
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26. The Debtor further agrees as follows:
A. Upon the occurrence of an Event of Default
(defined in Section 8 hereof) which is continuing the Debtor agrees
as follows: (i) the Debtor will not, without first obtaining the
written consent of the Trustee, renew or extend the time of payment
of any Account; (ii) the Debtor will promptly notify the Trustee in
writing of any compromise, settlement or adjustment with respect to
an Account and will forthwith account therefor to the Trustee in
cash for the amount thereof with demand or notice; (iii) the Debtor
will stamp, in form and manner satisfactory to the Trustee, its
accounts receivable ledger and other books and records pertaining to
the Accounts, with an appropriate reference to the security interest
of the Trustee in the Accounts; (iv) upon request, the Debtor will
furnish the Trustee original or other papers relating to the sale of
merchandise of the performance of labor or services which created
any Account; (v) the Debtor may collect the Account, subject to the
discretion and control of the Trustee, but the Trustee may, without
cause or notice, curtail or terminate such authority at any time;
(vi) the proceeds of the Accounts, when collected by the Debtor,
whether consisting of cash, checks, notes, drafts, money orders,
commercial paper of any kind whatsoever, or other documents,
received in payment of the Accounts shall be promptly remitted by
the Debtor to the Trustee, in precisely the form received, except
for endorsement by the Debtor when required; (vii) such proceeds
until remitted to the Trustee, as aforesaid, shall be held in trust
by the Debtor for, and as the property of, the Trustee and shall not
be commingled with other funds, money or property; (viii) proceeds
of the Accounts will be received by the Trustee subject to final
collection and receipt of proceeds in cash or by unconditional
credit to and accepted by the Trustee; (ix) the Trustee shall apply
in its absolute discretion, all collections received by it on the
Account, toward the payment of any of the Obligations whether due or
not due; (x) the Debtor will promptly notify the Trustee in writing
of the return or rejection of any merchandise represented by the
Accounts and the Debtor will receive and hold all such merchandise
separate and apart, in trust for and subject to the security
interest in favor of the Trustee; (xi) the Trustee is authorized to
sell, for the Debtor's account and sole risk, all or any part of
such merchandise in the manner and under the terms and conditions
hereinafter set forth.
B. The Debtor represents and warrants to the
Trustee that the Debtor is the sole owner of the Accounts and no one
has claims to have an interest of any kind therein or thereto; each
of the debtors named in every such Account is indebted to the Debtor
in the amount and on the terms indicated in the invoice and schedule
of Accounts, each Account is bona fide and arises out of the
performance of labor or services or the sale and deliver or lease of
merchandise or both; and none of the Account is now, nor will at any
time in the future become, contingent upon the fulfillment of any
contract or conditions whatsoever, nor subject to any defense,
offset or counterclaim.
C. The Debtor will maintain accurate and complete
records of the Accounts and will make the same available to the
Trustee upon reasonable notice and at such reasonable times as the
Trustee may reasonable require.
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27. Upon the occurrence of any of the following (and
provided any required notice has been given and any applicable grace
or cure period had lapsed): the occurrence of an "Event of Default"
or other event so defined or described in any instrument or
agreement relating to any of the Obligations which entitles the
Trustee to accelerate payment thereof; or non-payment of any of the
Obligations when due; or failure of the Debtor to perform any
agreement on its part to be performed hereunder, then, in any such
event, (each an "Event of Default"), (a) all Obligations shall
become at once due and payable, without notice, presentment, demand
for payment or protest, which are hereby expressly waived; (b) the
Trustee is authorized to take possession of the Collateral and for
that purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral, or any part thereof is,
or may be, placed and removed same; (c) intentionally omitted; (d)
the Trustee may collect the Accounts and apply the proceeds thereof
to the Obligator; (e) the Trustee shall have the right from time to
time to sell, resell, assign, transfer and deliver all or any part
of the Collateral, at public or private sale, at the option of the
Trustee, for cash or on credit for future delivery, in such parcel
or parcels and at such times or times and at such place or places,
and upon such terms, and conditions as the Trustee, may deem proper,
and in connection therewith may grant options and may impose
reasonable conditions, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand
upon the Debtor or right of redemption to the Debtor, which are
hereby expressly waived; the Trustee will give the Debtor reasonable
notice of the time and place of any such public sale or of the time
after which any private sale or any other intended disposition
thereof i s to be made and Debtor agrees that ten (10) days prior
notice shall be deemed reasonable notice; (f) upon each such sale,
the Trustee may, unless prohibited by applicable statute which
cannot be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, rights of
redemption and equities of the Debtor, which are hereby waived and
released; (g) the Trustee's obligations, if any, to give additional
(or to continue) financial accommodations of any kind to the Debtor
shall immediately terminate; and (i) in addition to the rights and
remedies given to the Trustee hereunder or otherwise, the Trustee
shall have all of the rights and remedies of a secured party under
the New York Uniform Commercial Code.
28. In the case of each such sale or any proceedings
to collect any of the Obligations, the Debtor shall pay all costs
and expenses of every kind for collection, sale or delivery, including
reasonable attorneys' fees, and after deducting such costs and expenses
from the proceeds of sale or collection, the Trustee shall apply any
residue to pay any of the Obligations and the Debtor will continue
liable to the Trustee for any deficiency with interest.
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29. The Trustee may, but is not obligated to, (a)
demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any
obligations securing any of the Obligations, (b) compromise and
settle with any person liable on such obligation, and/or (c) extend
the time of payment of or otherwise change the terms thereof, as to
any party liable thereon; all without incurring responsibility to
the undersigned or affecting any of the Obligations.
30. In order to effectuate the terms and provisions
hereof, Debtor hereby designates and appoints Trustee and its
designees or agents as attorney-in-fact of Debtor, irrevocably and
with power of substitution, with authority to receive, open and
dispose of all mail addressed to Debtor, to notify the Post Office
authorities to change the address for delivery of mail addressed to
Debtor to such address as Trustee may designate; to endorse the name
of Debtor on any notes, acceptances, checks, drafts, money orders,
instruments or other evidence of payment or proceeds of the
Collateral that may come into Trustee's possession; to sign the name
of Debtor on any invoices, documents, drafts against and notices
(which also may direct, among other things, that payment be made
directly to the Trustee) to Account debtors or obligors of Debtor,
assignments and request for verification of Accounts; to execute
proof of claim and loss; to execute any endorsements, assignments,
or other instruments of conveyance or transfer, to adjust and
compromise any claims under insurance policies; to execute releases;
and to do all other acts and things necessary and advisable in the
sole discretion of Trustee to carry out and enforce this Agreement.
All acts of said attorney or designee are hereby ratified and
approved and said attorney or designee shall not be liable for any
acts of commission or omission, nor for any error of judgment or
mistake of fact or law. This power of attorney being coupled with
an interest is irrevocable while any of the Obligations shall remain
unpaid; provided, however, that the powers described in the
preceding Section 11 hereof and in this Section 12 shall be
exercised only after the occurrence of an Event of Default which is
continuing.
31. All options, powers and rights granted to the
Trustee hereunder or under any promissory note, instrument, document
or other writing delivered to the Trustee shall be cumulative and
shall be in addition to any other options, powers or rights which
the Trustee may now or hereafter have as a secured party under the
New York Uniform Commercial Code or under any other applicable law
or otherwise.
32. No delay on the part of the Trustee in
exercising any of its options, powers, or rights, or partial or
single exercise thereof, shall constitute a waiver thereof. Neither
this Agreement nor any provision hereof may be modified, changed,
waived, discharged or terminated orally, but only by an instrument
in writing, signed by the party against whom enforcement of the
modification, change, waiver, discharge or termination is sought.
The Trustee shall have the right, for and in the name, place and
stead of the Debtor, to execute endorsements, assignments or other
instruments of conveyance or transfer with respect to any of the
Collateral.
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33. Notice of acceptance of this Agreement by the
Trustee is hereby waived. This Agreement shall be immediately
binding upon the Debtor and its successors and assigns, whether or
not the Trustee signs this Agreement.
34. It is the intention of the parties (aa) that,
this Agreement shall constitute a continuing agreement applying to
any and all future, as well as existing Obligations of the Debtor to
the Trustee; and (b) that the security interest provided for herein
shall attach to after-acquired as well as existing Collateral.
35. Unless the context otherwise requires, all terms
used herein which are defined in the New York Uniform Commercial
Code shall have the meanings therein stated.
36. Mailing Address of Debtor. For the purpose of
Section 9.402(1) of the Uniform Commercial Code, the following
address of the Debtor is its "Chief Executive Office" and shall be
the Debtor's mailing address:
Math Associates, Inc.
5500 New Horizons Boulevard
Amityville, New York 11701
37. Section 15(a) of the Reimbursement Agreement
provides that for so long as the Letter of Credit remains
outstanding, NatWest will not take additional collateral to secure
the obligations of the Debtor arising under the Reimbursement
Agreement without providing at least a co-equal security interest
therein the to Trustee for the benefit of the holders of the Bonds.
Accordingly, the Trustee agrees that its security interest in the
Collateral shall be of equal priority with that of NatWest. The
Trustee further agrees that upon payment in full of the Obligations
whether pursuant to the Letter of Credit or otherwise, or the
release of the Bank's security interest in the Accounts, whichever
occurs first, the Trustee will release its security interest in the
Collateral described herein and will than execute and deliver the
appropriate UCC-3 termination statements to the Debtor.
38. This Agreement shall be construed in accordance
with and be governed by the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed
the Agreement this 16th day of January, 1996.
MATH ASSOCIATES, INC.
By s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
SHAWMUT BANK N.A., as Trustee
By___________________________
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Exhibit 10(a)(16)
-----------------
CONTINUING GENERAL SECURITY AGREEMENT
-------------------------------------
THIS SECURITY AGREEMENT, dated as of January 16, 1996
between GENERAL MICROCIRCUITS CORP. (the "Debtor") and NATWEST BANK
N.A., a national banking association duly organized and existing
under the laws of the United States of America (the "Bank"):
WHEREAS, at the request of General Microwave
Corporation (the "Company"), the Town of Babylon Industrial
Development Agency (the "Issuer") issued $6,000,000 in the aggregate
principal amount of 1984 Variable Rate 7-Day Demand Industrial
Development Revenue Bonds (General Microwave Corporation Facility)
(the "Bonds) in order to finance the costs of acquisition,
construction and equipping of an industrial development facility,
together with machinery and equipment to be used therein or in
connection therewith, to be located in the Town of Babylon, Suffolk
County, New York (the "Facility"); and
WHEREAS, pursuant to the Reimbursement Agreement
dated as of October 1, 1984 between the General Microwave
Corporation (the "Company") and the Bank (the "Reimbursement
Agreement"), the Bank issued, for the account of the Debtor, its
irrevocable, transferable letter of credit (the "Letter of Credit")
in the amount of $6,595,890.41 to support payment when due of the
principal of, premium, if any, and interest not in excess of seven
months on the Bonds; and
WHEREAS, the Letter of Credit remains outstanding in
favor of Shawmut Bank N.A., as Trustee (the "Trustee") for the
holders of the Bonds, and as successor to the Bank as the original
Trustee (the original expiration date of September 15, 1994 having
been extended by the Bank at the request of the Company) and the
unpaid principal amount of the Bonds as of January 1, 1996 is
$2,376,589.05 and the Debtor has therefore agreed that in addition
to the collateral described in Section 3 of the Reimbursement
Agreement, it will further secure its obligations to the Bank under
the Reimbursement Agreement and its obligations to the Trustee, as
Trustee, by granting to the Bank and to the Trustee guaranties of
the obligations of the Company to the Bank and to the Trustee
(individually, a "Guaranty") to be secured by a security interest in
all of its present and future accounts receivable upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration the receipt of which is
hereby acknowledged by the Debtor, it is hereby agreed as follows:
39. As security for the due and punctual payment of any
and all of the present and future Obligations of the Debtor (as defined
in Section 2 below), the Debtor hereby grants to the Bank a continuing
security interest in (a) all of the Collateral (as defined in Section 3
below), whether now or hereafter existing or acquired, and (b) all
present and future products and proceeds of the Collateral.
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40. As used herein, the term "Obligations" means all
liabilities of the Debtor for the payment of all amounts owing on
its Guaranty issued for the benefit of the Bank.
41. As used herein, the term "Collateral" means the
property described below in this Section 3:
Accounts and Chattel Paper. All of the Debtor's present
and future rights to the payment of money arising out of the sale
(or lease) of goods or services including, but not limited to,
accounts, general intangible and chattel paper (hereinafter
collectively referred to in the plural as "Accounts" and in the
singular as "Account"), all proceeds thereof and all liens,
securities, guarantees, remedies, and privileges pertaining thereto,
together with all rights and liens of the Debtor in and to such
goods, including returned or repossessed goods, and all rights and
property of any kind forming the subject matter of any of the
Accounts, including the right of stoppage in transit.
42. The Debtor represents and warrants that: (a) except
for such Financing Statements that may be filed by the Trustee, no
Financing Statement is on file (other than any which may have been filed
on behalf of the Trustee) relating to any of the Collateral is on file in
any public office; and (b) the Chief Executive Office of Debtor, and the
Collateral are respectively located at the address(es) set forth at the
end of the Agreement and Debtor will not change such location without
prior written notice to and consent of the Bank; and (c) except for the
security interest created by the Debtor in favor of the Trustee, Debtor
has not created and is not aware of any security interest, lien or
encumbrance on or affecting the Collateral other than created hereby.
43. The Debtor assumes all liability and
responsibility in connection with all Collateral acquired by Debtor;
and the obligation of the Debtor to pay all Obligations shall in no
way be affected or diminished by reason of the fact that any such
Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Debtor.
44. As long as this Agreement shall remain in effect,
the Debtor agrees:
(a) that, if the Bank so demands in writing at
any time after the occurrence of an Event of Default (defined in
Section 8 hereof) which is continuing (i) all proceeds of the
Collateral shall be delivered to the Bank promptly upon their
receipt, instruments and documents pertaining to the Collateral
shall be delivered to the Bank at the time and place and in the
manner in which specified in the Bank's demand;
(b) in order to enable the Bank to comply with
the law of any jurisdiction, including state, federal and foreign,
applicable to any security interest granted hereby or to the
Collateral, to execute and deliver upon request, in form acceptable
to the Bank, any Financing Statement, notice, statement, instrument,
document, agreement or other paper and/or to perform any act
requested by the Bank which may be necessary to create, perfect,
preserve, validate or otherwise protect such security interest or to
enable the Bank to exercise and enforce the Bank's rights hereunder
or with respect to such security interest;
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<PAGE>
(c) promptly to pay any filing fees or other
costs in connection with (i) the filing or recordation of such
Financing Statements or any other papers described above and (ii)
such searches of the public records as the Bank in its sole
discretion shall require;
(d) that the Bank is authorized to file or
record any such Financing Statements or other papers without the
signature of the Debtor if permitted by applicable law;
(e) the Bank may file in photographic or other
reproduction of this Agreement in lieu of a Financing Statement in
any filing office where it is permissible to do so;
(f) except for the security interest granted
hereby and the security interest of the Trustee, the Debtor shall
keep the Collateral and proceeds thereof free and clear of any
security interest, liens or encumbrances of any kind, the Debtor
shall promptly pay, when due, all taxes and transportation, storage
and warehousing charges and fees affecting or arising out of the
Collateral and shall defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Bank;
(g) that the Bank's duty with respect to the
Collateral shall be solely to use reasonable care in the custody and
preservation of collateral in its possession; the Bank shall not be
obligated to take any steps necessary to preserve any rights in any
of the Collateral against prior parties, and the Debtor hereby
agrees to take such steps; the Debtor shall pay to the Bank all
costs and expenses, including filing and reasonable attorney's fees,
incurred by the Bank in connection with the custody, care,
preservation or collection of the Collateral; the Bank may, but is
not obligated to, exercise any and all rights of conversion or
exchange or similar rights, privileges and options relating to the
Collateral; the Bank shall have no obligation to sell or otherwise
realize upon any of the Collateral as herein authorized and shall
not be responsible for any failure to do so or for any delay in so
doing; in the event of any litigation, with respect to any manner
connected with this Agreement, the Obligations, the Collateral, or
any other instrument, document or agreement applicable hereto or to
any one or more of them in any respect, Debtor hereby waives the
right to trial by jury and all defenses, rights of setoff; and right
to interpose counterclaims of any nature;
(h) to provide the Bank with such information
as the Bank may from time to time reasonably request with respect to
the location of the Collateral and any of its places of business;
(i) that the Bank will be notified promptly in
writing of any change in any office as set forth below;
(j) that the Debtor will permit the Bank, by its
officers and agents, to have access to and examine at all reasonable
times and properties, minute books and other corporate records, and
books of account and financial records of the Debtor; and
(k) that the Debtor will promptly notify the
Bank upon the occurrence of any default, as provided in this
Agreement, of which the Debtor has knowledge.
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45. The Debtor further agrees as follows:
A. Upon the occurrence of an Event of Default
(defined in Section 8 hereof) which is continuing the Debtor agrees
as follows: (i) the Debtor will not, without first obtaining the
written consent of the Bank, renew or extend the time of payment of
any Account; (ii) the Debtor will promptly notify the Bank in
writing of any compromise, settlement or adjustment with respect to
an Account and will forthwith account therefor to the Bank in cash
for the amount thereof with demand or notice; (iii) the Debtor will
stamp, in form and manner satisfactory to the Bank, its accounts
receivable ledger and other books and records pertaining to the
Accounts, with an appropriate reference to the security interest of
the Bank in the Accounts; (iv) upon request, the Debtor will furnish
the Bank original or other papers relating to the sale of
merchandise of the performance of labor or services which created
any Account; (v) the Debtor may collect the Account, subject to the
discretion and control of the Bank, but the Bank may, without cause
or notice, curtail or terminate such authority at any time; (vi) the
proceeds of the Accounts, when collected by the Debtor, whether
consisting of cash, checks, notes, drafts, money orders, commercial
paper of any kind whatsoever, or other documents, received in
payment of the Accounts shall be promptly remitted by the Debtor to
the Bank, in precisely the form received, except for endorsement by
the Debtor when required; (vii) such proceeds until remitted to the
Bank, as aforesaid, shall be held in trust by the Debtor for, and as
the property of, the Bank and shall not be commingled with other
funds, money or property; (viii) proceeds of the Accounts will be
received by the Bank subject to final collection and receipt of
proceeds in cash or by unconditional credit to and accepted by the
Bank; (ix) the Bank shall apply in its absolute discretion, all
collections received by it on the Account, toward the payment of any
of the Obligations whether due or not due; (x) the Debtor will
promptly notify the Bank in writing of the return or rejection of
any merchandise represented by the Accounts and the Debtor will
receive and hold all such merchandise separate and apart, in trust
for and subject to the security interest in favor of the Bank; (xi)
the Bank is authorized to sell, for the Debtor's account and sole
risk, all or any part of such merchandise in the manner and under
the terms and conditions hereinafter set forth.
B. The Debtor represents and warrants to the Bank that
the Debtor is the sole owner of the Accounts and no one has claims to
have an interest of any kind therein or thereto; each of the debtors
named in every such Account is indebted to the Debtor in the amount and
on the terms indicated in the invoice and schedule of Accounts, each
Account is bona fide and arises out of the performance of labor or
services or the sale and deliver or lease of merchandise or both; and
none of the Account is now, nor will at any time in the future become,
contingent upon the fulfillment of any contract or conditions whatsoever,
nor subject to any defense, offset or counterclaim.
C. The Debtor will maintain accurate and complete
records of the Accounts and will make the same available to the Bank
upon reasonable notice and at such reasonable times as the Bank may
reasonable require.
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46. Upon the occurrence of any of the following (and
provided any required notice has been given and any applicable grace
or cure period had lapsed): the occurrence of an "Event of Default"
or other event so defined or described in any instrument or
agreement relating to any of the Obligations which entitles the Bank
to accelerate payment thereof; or non-payment of any of the
Obligations when due; or failure of the Debtor to perform any
agreement on its part to be performed hereunder, then, in any such
event, (each an "Event of Default"), (a) all Obligations shall
become at once due and payable, without notice, presentment, demand
for payment or protest, which are hereby expressly waived; (b) the
Bank is authorized to take possession of the Collateral and for that
purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral, or any part thereof is,
or may be, placed and removed same; (c) intentionally omitted; (d)
the Bank may collect the Accounts and apply the proceeds thereof to
the Obligator; (e) the Bank shall have the right from time to time
to sell, resell, assign, transfer and deliver all or any part of the
Collateral, at public or private sale, at the option of the Bank,
for cash or on credit for future delivery, in such parcel or parcels
and at such times or times and at such place or places, and upon
such terms, and conditions as the Bank, may deem proper, and in
connection therewith may grant options and may impose reasonable
conditions, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon the
Debtor or right of redemption to the Debtor, which are hereby
expressly waived; the Bank will give the Debtor reasonable notice of
the time and place of any such public sale or of the time after
which any private sale or any other intended disposition thereof i
s to be made and Debtor agrees that ten (10) days prior notice shall
be deemed reasonable notice; (f) upon each such sale, the Bank may,
unless prohibited by applicable statute which cannot be waived,
purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, rights of redemption and equities
of the Debtor, which are hereby waived and released; (g) the Bank's
obligations, if any, to give additional (or to continue) financial
accommodations of any kind to the Debtor shall immediately
terminate; and (i) in addition to the rights and remedies given to
the Bank hereunder or otherwise, the Bank shall have all of the
rights and remedies of a secured party under the New York Uniform
Commercial Code.
47. In the case of each such sale or any proceedings
to collect any of the Obligations, the Debtor shall pay all costs
and expenses of every kind for collection, sale or delivery,
including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, the Bank shall
apply any residue to pay any of the Obligations and the Debtor will
continue liable to the Bank for any deficiency with interest.
48. The Bank may, but is not obligated to, (a)
demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any
obligations securing any of the Obligations, (b) compromise and
settle with any person liable on such obligation, and/or (c) extend
the time of payment of or otherwise change the terms thereof, as to
any party liable thereon; all without incurring responsibility to
the undersigned or affecting any of the Obligations.
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49. In order to effectuate the terms and provisions
hereof, Debtor hereby designates and appoints Bank and its designees
or agents as attorney-in-fact of Debtor, irrevocably and with power
of substitution, with authority to receive, open and dispose of all
mail addressed to Debtor, to notify the Post Office authorities to
change the address for delivery of mail addressed to Debtor to such
address as Bank may designate; to endorse the name of Debtor on any
notes, acceptances, checks, drafts, money orders, instruments or
other evidence of payment or proceeds of the Collateral that may
come into Bank's possession; to sign the name of Debtor on any
invoices, documents, drafts against and notices (which also may
direct, among other things, that payment be made directly to the
Bank) to Account debtors or obligors of Debtor, assignments and
request for verification of Accounts; to execute proof of claim and
loss; to execute any endorsements, assignments, or other instruments
of conveyance or transfer, to adjust and compromise any claims under
insurance policies; to execute releases; and to do all other acts
and things necessary and advisable in the sole discretion of Bank to
carry out and enforce this Agreement. All acts of said attorney or
designee are hereby ratified and approved and said attorney or
designee shall not be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law. This power
of attorney being coupled with an interest is irrevocable while any
of the Obligations shall remain unpaid; provided, however, that the
powers described in the preceding Section 11 hereof and in this
Section 12 shall be exercised only after the occurrence of an Event
of Default which is continuing.
50. All options, powers and rights granted to the Bank
hereunder or under any promissory note, instrument, document or other
writing delivered to the Bank shall be cumulative and shall be in
addition to any other options, powers or rights which the Bank may now
or hereafter have as a secured party under the New York Uniform Commercial
Code or under any other applicable law or otherwise.
51. No delay on the part of the Bank in exercising
any of its options, powers, or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. Neither this Agreement
nor any provision hereof may be modified, changed, waived, discharged
or terminated orally, but only by an instrument in writing, signed by
the party against whom enforcement of the modification, change, waiver,
discharge or termination is sought. The Bank shall have the right, for
and in the name, place and stead of the Debtor, to execute endorsements,
assignments or other instruments of conveyance or transfer with respect
to any of the Collateral.
52. Notice of acceptance of this Agreement by the
Bank is hereby waived. This Agreement shall be immediately binding
upon the Debtor and its successors and assigns, whether or not the
Bank signs this Agreement.
53. It is the intention of the parties (aa) that,
this Agreement shall constitute a continuing agreement applying to
any and all future, as well as existing Obligations of the Debtor to
the Bank; and (b) that the security interest provided for herein
shall attach to after-acquired as well as existing Collateral.
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54. Unless the context otherwise requires, all terms
used herein which are defined in the New York Uniform Commercial
Code shall have the meanings therein stated.
55. Mailing Address of Debtor. For the purpose of
Section 9.402(1) of the Uniform Commercial Code, the following
address of the Debtor is its "Chief Executive Office" and shall be
the Debtor's mailing address:
General Microcircuits Corp.
780 Boston Road
Billerica, Massachusetts 01821
56. Section 15(a) of the Reimbursement Agreement
provides that for so long as the Letter of Credit remains
outstanding, the Bank will not take additional collateral to secure
the obligations of the Debtor arising under the Reimbursement
Agreement without providing at least a co-equal security interest
therein the to the Trustee for the benefit of the holders of the
Bonds. Accordingly, the Bank agrees that its security interest in
the Collateral shall be of equal priority with that of the Trustee.
57. This Agreement shall be construed in accordance
with and be governed by the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed
the Agreement this 16th day of January, 1996.
GENERAL MICROCIRCUITS CORP.
By s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
NATWEST BANK N.A.
By s/PETER G. BRANDEL
Name: Peter G. Brandel
Title: Vice President
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Exhibit 10(a)(17)
-----------------
CONTINUING GENERAL SECURITY AGREEMENT
-------------------------------------
THIS SECURITY AGREEMENT, dated as of January 16, 1996
between MATH ASSOCIATES, INC. (the "Debtor") and NATWEST BANK N.A.,
a national banking association duly organized and existing under the
laws of the United States of America (the "Bank"):
WHEREAS, at the request of General Microwave
Corporation (the "Company"), the Town of Babylon Industrial
Development Agency (the "Issuer") issued $6,000,000 in the aggregate
principal amount of 1984 Variable Rate 7-Day Demand Industrial
Development Revenue Bonds (General Microwave Corporation Facility)
(the "Bonds) in order to finance the costs of acquisition,
construction and equipping of an industrial development facility,
together with machinery and equipment to be used therein or in
connection therewith, to be located in the Town of Babylon, Suffolk
County, New York (the "Facility"); and
WHEREAS, pursuant to the Reimbursement Agreement
dated as of October 1, 1984 between the General Microwave
Corporation (the "Company") and the Bank (the "Reimbursement
Agreement"), the Bank issued, for the account of the Debtor, its
irrevocable, transferable letter of credit (the "Letter of Credit")
in the amount of $6,595,890.41 to support payment when due of the
principal of, premium, if any, and interest not in excess of seven
months on the Bonds; and
WHEREAS, the Letter of Credit remains outstanding in
favor of Shawmut Bank N.A., as Trustee (the "Trustee") for the
holders of the Bonds, and as successor to the Bank as the original
Trustee (the original expiration date of September 15, 1994 having
been extended by the Bank at the request of the Company) and the
unpaid principal amount of the Bonds as of January 1, 1996 is
$2,376,589.05 and the Debtor has therefore agreed that in addition
to the collateral described in Section 3 of the Reimbursement
Agreement, it will further secure its obligations to the Bank under
the Reimbursement Agreement and its obligations to the Trustee, as
Trustee, by granting to the Bank and to the Trustee guaranties of
the obligations of the Company to the Bank and to the Trustee
(individually, a "Guaranty") to be secured by a security interest in
all of its present and future accounts receivable upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration the receipt of which is
hereby acknowledged by the Debtor, it is hereby agreed as follows:
58. As security for the due and punctual payment of
any and all of the present and future Obligations of the Debtor (as
defined in Section 2 below), the Debtor hereby grants to the Bank a
continuing security interest in (a) all of the Collateral (as
defined in Section 3 below), whether now or hereafter existing or
acquired, and (b) all present and future products and proceeds of
the Collateral.
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59. As used herein, the term "Obligations" means all
liabilities of the Debtor for the payment of all amounts owing on
its Guaranty issued for the benefit of the Bank.
60. As used herein, the term "Collateral" means the
property described below in this Section 3:
Accounts and Chattel Paper. All of the Debtor's present
and future rights to the payment of money arising out of the sale
(or lease) of goods or services including, but not limited to,
accounts, general intangible and chattel paper (hereinafter
collectively referred to in the plural as "Accounts" and in the
singular as "Account"), all proceeds thereof and all liens,
securities, guarantees, remedies, and privileges pertaining thereto,
together with all rights and liens of the Debtor in and to such
goods, including returned or repossessed goods, and all rights and
property of any kind forming the subject matter of any of the
Accounts, including the right of stoppage in transit.
61. The Debtor represents and warrants that: (a)
except for such Financing Statements that may be filed by the
Trustee, no Financing Statement is on file (other than any which may
have been filed on behalf of the Trustee) relating to any of the
Collateral is on file in any public office; and (b) the Chief
Executive Office of Debtor, and the Collateral are respectively
located at the address(es) set forth at the end of the Agreement and
Debtor will not change such location without prior written notice to
and consent of the Bank; and (c) except for the security interest
created by the Debtor in favor of the Trustee, Debtor has not
created and is not aware of any security interest, lien or encumbrance
on or affecting the Collateral other than created hereby.
62. The Debtor assumes all liability and responsibility in
connection with all Collateral acquired by Debtor; and the obligation of
the Debtor to pay all Obligations shall in no way be affected or diminished
by reason of the fact that any such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Debtor.
63. As long as this Agreement shall remain in
effect, the Debtor agrees:
(a) that, if the Bank so demands in writing at
any time after the occurrence of an Event of Default (defined in
Section 8 hereof) which is continuing (i) all proceeds of the
Collateral shall be delivered to the Bank promptly upon their
receipt, instruments and documents pertaining to the Collateral
shall be delivered to the Bank at the time and place and in the
manner in which specified in the Bank's demand;
(b) in order to enable the Bank to comply with
the law of any jurisdiction, including state, federal and foreign,
applicable to any security interest granted hereby or to the
Collateral, to execute and deliver upon request, in form acceptable
to the Bank, any Financing Statement, notice, statement, instrument,
document, agreement or other paper and/or to perform any act
requested by the Bank which may be necessary to create, perfect,
preserve, validate or otherwise protect such security interest or to
enable the Bank to exercise and enforce the Bank's rights hereunder
or with respect to such security interest;
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<PAGE>
(c) promptly to pay any filing fees or other
costs in connection with (i) the filing or recordation of such
Financing Statements or any other papers described above and (ii)
such searches of the public records as the Bank in its sole
discretion shall require;
(d) that the Bank is authorized to file or
record any such Financing Statements or other papers without the
signature of the Debtor if permitted by applicable law;
(e) the Bank may file in photographic or other
reproduction of this Agreement in lieu of a Financing Statement in
any filing office where it is permissible to do so;
(f) except for the security interest granted
hereby and the security interest of the Trustee, the Debtor shall
keep the Collateral and proceeds thereof free and clear of any
security interest, liens or encumbrances of any kind, the Debtor
shall promptly pay, when due, all taxes and transportation, storage
and warehousing charges and fees affecting or arising out of the
Collateral and shall defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Bank;
(g) that the Bank's duty with respect to the
Collateral shall be solely to use reasonable care in the custody and
preservation of collateral in its possession; the Bank shall not be
obligated to take any steps necessary to preserve any rights in any
of the Collateral against prior parties, and the Debtor hereby
agrees to take such steps; the Debtor shall pay to the Bank all
costs and expenses, including filing and reasonable attorney's fees,
incurred by the Bank in connection with the custody, care,
preservation or collection of the Collateral; the Bank may, but is
not obligated to, exercise any and all rights of conversion or
exchange or similar rights, privileges and options relating to the
Collateral; the Bank shall have no obligation to sell or otherwise
realize upon any of the Collateral as herein authorized and shall
not be responsible for any failure to do so or for any delay in so
doing; in the event of any litigation, with respect to any manner
connected with this Agreement, the Obligations, the Collateral, or
any other instrument, document or agreement applicable hereto or to
any one or more of them in any respect, Debtor hereby waives the
right to trial by jury and all defenses, rights of setoff; and right
to interpose counterclaims of any nature;
(h) to provide the Bank with such information
as the Bank may from time to time reasonably request with respect to
the location of the Collateral and any of its places of business;
(i) that the Bank will be notified promptly in
writing of any change in any office as set forth below;
(j) that the Debtor will permit the Bank, by its
officers and agents, to have access to and examine at all reasonable
times and properties, minute books and other corporate records, and
books of account and financial records of the Debtor; and
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<PAGE>
(k) that the Debtor will promptly notify the
Bank upon the occurrence of any default, as provided in this
Agreement, of which the Debtor has knowledge.
64. The Debtor further agrees as follows:
A. Upon the occurrence of an Event of Default
(defined in Section 8 hereof) which is continuing the Debtor agrees
as follows: (i) the Debtor will not, without first obtaining the
written consent of the Bank, renew or extend the time of payment of
any Account; (ii) the Debtor will promptly notify the Bank in
writing of any compromise, settlement or adjustment with respect to
an Account and will forthwith account therefor to the Bank in cash
for the amount thereof with demand or notice; (iii) the Debtor will
stamp, in form and manner satisfactory to the Bank, its accounts
receivable ledger and other books and records pertaining to the
Accounts, with an appropriate reference to the security interest of
the Bank in the Accounts; (iv) upon request, the Debtor will furnish
the Bank original or other papers relating to the sale of
merchandise of the performance of labor or services which created
any Account; (v) the Debtor may collect the Account, subject to the
discretion and control of the Bank, but the Bank may, without cause
or notice, curtail or terminate such authority at any time; (vi) the
proceeds of the Accounts, when collected by the Debtor, whether
consisting of cash, checks, notes, drafts, money orders, commercial
paper of any kind whatsoever, or other documents, received in
payment of the Accounts shall be promptly remitted by the Debtor to
the Bank, in precisely the form received, except for endorsement by
the Debtor when required; (vii) such proceeds until remitted to the
Bank, as aforesaid, shall be held in trust by the Debtor for, and as
the property of, the Bank and shall not be commingled with other
funds, money or property; (viii) proceeds of the Accounts will be
received by the Bank subject to final collection and receipt of
proceeds in cash or by unconditional credit to and accepted by the
Bank; (ix) the Bank shall apply in its absolute discretion, all
collections received by it on the Account, toward the payment of any
of the Obligations whether due or not due; (x) the Debtor will
promptly notify the Bank in writing of the return or rejection of
any merchandise represented by the Accounts and the Debtor will
receive and hold all such merchandise separate and apart, in trust
for and subject to the security interest in favor of the Bank; (xi)
the Bank is authorized to sell, for the Debtor's account and sole
risk, all or any part of such merchandise in the manner and under
the terms and conditions hereinafter set forth.
B. The Debtor represents and warrants to the Bank that
the Debtor is the sole owner of the Accounts and no one has claims to
have an interest of any kind therein or thereto; each of the debtors named
in every such Account is indebted to the Debtor in the amount and on the
terms indicated in the invoice and schedule of Accounts, each Account is
bona fide and arises out of the performance of labor or services or the
sale and deliver or lease of merchandise or both; and none of the Account
is now, nor will at any time in the future become, contingent upon the
fulfillment of any contract or conditions whatsoever, nor subject to any
defense, offset or counterclaim.
98
<PAGE>
C. The Debtor will maintain accurate and complete
records of the Accounts and will make the same available to the Bank
upon reasonable notice and at such reasonable times as the Bank may
reasonable require.
65. Upon the occurrence of any of the following (and
provided any required notice has been given and any applicable grace
or cure period had lapsed): the occurrence of an "Event of Default"
or other event so defined or described in any instrument or
agreement relating to any of the Obligations which entitles the Bank
to accelerate payment thereof; or non-payment of any of the
Obligations when due; or failure of the Debtor to perform any
agreement on its part to be performed hereunder, then, in any such
event, (each an "Event of Default"), (a) all Obligations shall
become at once due and payable, without notice, presentment, demand
for payment or protest, which are hereby expressly waived; (b) the
Bank is authorized to take possession of the Collateral and for that
purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral, or any part thereof is,
or may be, placed and removed same; (c) intentionally omitted; (d)
the Bank may collect the Accounts and apply the proceeds thereof to
the Obligator; (e) the Bank shall have the right from time to time
to sell, resell, assign, transfer and deliver all or any part of the
Collateral, at public or private sale, at the option of the Bank,
for cash or on credit for future delivery, in such parcel or parcels
and at such times or times and at such place or places, and upon
such terms, and conditions as the Bank, may deem proper, and in
connection therewith may grant options and may impose reasonable
conditions, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon the
Debtor or right of redemption to the Debtor, which are hereby
expressly waived; the Bank will give the Debtor reasonable notice of
the time and place of any such public sale or of the time after
which any private sale or any other intended disposition thereof is to
be made and Debtor agrees that ten (10) days prior notice shall
be deemed reasonable notice; (f) upon each such sale, the Bank may,
unless prohibited by applicable statute which cannot be waived,
purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, rights of redemption and equities
of the Debtor, which are hereby waived and released; (g) the Bank's
obligations, if any, to give additional (or to continue) financial
accommodations of any kind to the Debtor shall immediately
terminate; and (i) in addition to the rights and remedies given to
the Bank hereunder or otherwise, the Bank shall have all of the
rights and remedies of a secured party under the New York Uniform
Commercial Code.
66. In the case of each such sale or any proceedings
to collect any of the Obligations, the Debtor shall pay all costs
and expenses of every kind for collection, sale or delivery,
including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, the Bank shall
apply any residue to pay any of the Obligations and the Debtor will
continue liable to the Bank for any deficiency with interest.
99
<PAGE>
67. The Bank may, but is not obligated to, (a)
demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any
obligations securing any of the Obligations, (b) compromise and
settle with any person liable on such obligation, and/or (c) extend
the time of payment of or otherwise change the terms thereof, as to
any party liable thereon; all without incurring responsibility to
the undersigned or affecting any of the Obligations.
68. In order to effectuate the terms and provisions
hereof, Debtor hereby designates and appoints Bank and its designees
or agents as attorney-in-fact of Debtor, irrevocably and with power
of substitution, with authority to receive, open and dispose of all
mail addressed to Debtor, to notify the Post Office authorities to
change the address for delivery of mail addressed to Debtor to such
address as Bank may designate; to endorse the name of Debtor on any
notes, acceptances, checks, drafts, money orders, instruments or
other evidence of payment or proceeds of the Collateral that may
come into Bank's possession; to sign the name of Debtor on any
invoices, documents, drafts against and notices (which also may
direct, among other things, that payment be made directly to the
Bank) to Account debtors or obligors of Debtor, assignments and
request for verification of Accounts; to execute proof of claim and
loss; to execute any endorsements, assignments, or other instruments
of conveyance or transfer, to adjust and compromise any claims under
insurance policies; to execute releases; and to do all other acts
and things necessary and advisable in the sole discretion of Bank to
carry out and enforce this Agreement. All acts of said attorney or
designee are hereby ratified and approved and said attorney or
designee shall not be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law. This power
of attorney being coupled with an interest is irrevocable while any
of the Obligations shall remain unpaid; provided, however, that the
powers described in the preceding Section 11 hereof and in this
Section 12 shall be exercised only after the occurrence of an Event
of Default which is continuing.
69. All options, powers and rights granted to the
Bank hereunder or under any promissory note, instrument, document or
other writing delivered to the Bank shall be cumulative and shall be
in addition to any other options, powers or rights which the Bank
may now or hereafter have as a secured party under the New York
Uniform Commercial Code or under any other applicable law or
otherwise.
70. No delay on the part of the Bank in exercising any
of its options, powers, or rights, or partial or single exercise thereof,
shall constitute a waiver thereof. Neither this Agreement nor any
provision hereof may be modified, changed, waived, discharged or
terminated orally, but only by an instrument in writing, signed by the
party against whom enforcement of the modification, change, waiver,
discharge or termination is sought. The Bank shall have the right, for
and in the name, place and stead of the Debtor, to execute endorsements,
assignments or other instruments of conveyance or transfer with respect
to any of the Collateral.
71. Notice of acceptance of this Agreement by the
Bank is hereby waived. This Agreement shall be immediately binding
upon the Debtor and its successors and assigns, whether or not the
Bank signs this Agreement.
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72. It is the intention of the parties (aa) that,
this Agreement shall constitute a continuing agreement applying to
any and all future, as well as existing Obligations of the Debtor to
the Bank; and (b) that the security interest provided for herein
shall attach to after-acquired as well as existing Collateral.
73. Unless the context otherwise requires, all terms
used herein which are defined in the New York Uniform Commercial
Code shall have the meanings therein stated.
74. Mailing Address of Debtor. For the purpose of
Section 9.402(1) of the Uniform Commercial Code, the following
address of the Debtor is its "Chief Executive Office" and shall be
the Debtor's mailing address:
Math Associates, Inc.
550 New Horizons Boulevard
Amityville, New York 11701
75. Section 15(a) of the Reimbursement Agreement
provides that for so long as the Letter of Credit remains
outstanding, the Bank will not take additional collateral to secure
the obligations of the Debtor arising under the Reimbursement
Agreement without providing at least a co-equal security interest
therein the to the Trustee for the benefit of the holders of the
Bonds. Accordingly, the Bank agrees that its security interest in
the Collateral shall be of equal priority with that of the Trustee.
76. This Agreement shall be construed in accordance
with and be governed by the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed
the Agreement this 16th day of January, 1996.
MATH ASSOCIATES, INC.
By s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
NATWEST BANK N.A.
By s/PETER G. BRANDEL
Name: Peter G. Brandel
Title: Vice President
101
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Exhibit 10(a)(18)
-----------------
Guarantee
---------
In order to induce Shawmut Bank N.A., as Successor Trustee under
that certain Indenture of Mortgage and Trust between the Town of
Babylon Industrial Development Agency and NatWest Bank N.A.
(formerly known as National Westminster Bank USA) dated as of
10/1/84 (which together with its successors, endorsees and assigns,
is hereinafter called the "Bank") to make such advances, loans or
extensions of credit, directly or indirectly, to General Microwave
Corporation, a New York corporation (hereinafter, whether one or
more, called the "Borrower") and to grant to the Borrower such
renewals, extensions, forbearances, releases of collateral or other
relinquishments of rights as the Bank may deem advisable, and for
other valuable consideration, the receipt of which is hereby
acknowledged, the undersigned (hereinafter, whether one or more,
called the "Guarantor") who, if more than one, shall be jointly and
severally liable hereunder, hereby absolutely unconditionally
guarantees to the Bank the due and punctual payment when due,
whether by acceleration or otherwise, in accordance with the terms
thereof, of the principal of and interest on and all other sums
payable with respect to any and every obligation or liability of the
Borrower to the Bank, whether now existing or hereafter incurred,
whether originally contracted with the Bank or with another and
transferred to the Bank or otherwise acquired by the Bank, whether
contracted by the Borrower alone or jointly with others, and
Continued on Rider annexed hereto and made a part hereof.
102
<PAGE>
This Guarantee is also secured by (a) any and all property of the
Guarantor now or hereafter subject to a security agreement,
mortgage, pledge agreement, assignment, hypothecation or other
document granting the Bank or any Affiliate a security interest or
other lien or encumbrance and (b) any and all collateral described
in any and all credit accommodations, notes, loan agreements, and
any other agreements and documents, now or hereafter existing,
creating, evidencing, guaranteeing, securing or relating to any or
all of the Liabilities, together with all amendments, modifications,
renewals, or extensions thereof. All of the property described in
clauses (i), (ii), (iii), (a) and (b) above shall be collectively
referred to herein as the "Collateral". The Bank at any time,
before or after an Event of Default (as hereinafter defined), may,
but shall not be obligated to, transfer into or out of its own name
or that of its nominee all or any of the Collateral, including
stocks, bonds, and other securities, and the Bank or its nominee may
demand, sue for, collect, receive and hold as like Collateral any or
all interest, dividends and income thereon and if any securities are
held in the name of the Bank or its nominee, the Bank may, after an
Event of Default exercise all voting and other rights pertaining
thereto as if the Bank were the absolute owner thereof, but the Bank
shall not be obligated to demand payment of, protest, or take any
steps necessary to preserve any rights in the Collateral against
prior parties, or to take any action whatsoever in regard to the
Collateral or any part thereof, all of which the Guarantor assumes
and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection
with any conversion, call, redemption, retirement or any other event
relating to any Collateral, unless the Guarantor gives written
notice to the Bank that such action shall be taken not more than
thirty (30) days prior to the time such action may first be taken
and not less than ten (1O) days prior to the expiration of the time
during which such action may be taken.
The Guarantor hereby grants to the Bank full power, without notice
to the Guarantor or to the Borrower, and without in any way
affecting the joint and several obligations of each Guarantor
hereunder, to deal in any manner with the Borrower, the Liabilities,
the Collateral and with any Guarantor hereunder, and any other
guarantor of the liabilities including, without limitation, the
following powers; (a) to modify or otherwise change any terms of all
or any part of the Liabilities and/or the Collateral, to grant any
extension or renewal thereof and any other indulgence with respect
thereto, and to effect any release, subordination, compromise or
settlement with respect to the Borrower, the Liabilities, the
Collateral, and the obligations of any one or more of the
Guarantors; (b) to enter into any agreement of forbearance with
respect to all or any part of the Collateral, or with respect to the
Liabilities of the Borrower or the obligations of any Guarantor, to
change the terms of any such agreement; (c) to forbear from calling
for additional collateral to secure any of the Liabilities or to
secure any obligation comprised in the Collateral; and (d) to
consent to the substitution, exchange, or release of all or any part
of the Collateral, whether or not the collateral, if any, received
by the Bank upon any substitution, exchange, or release shall be of
the same or of a different character or value than the collateral
surrendered by the Bank.
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The Guarantor waives any notice of the acceptance of this
Guarantee, or of the creation, renewal or accrual of any of the
Liabilities, present or future, or of the reliance of the Bank upon
this Guarantee. The Liabilities shall conclusively be presumed to
have been created, contracted for, incurred or suffered to exist in
reliance upon this Guarantee, and all dealings between the Borrower
and the Bank shall likewise be presumed to be in reliance upon this
Guarantee. The Guarantor waives protest, presentment, demand for
payment, notice of default or non-payment, and notice of dishonor to
or upon the Guarantor, the Borrower, or any other party liable for
any of the Liabilities. The Guarantor acknowledges that this
Guarantee and the Guarantor's obligations under this Guarantee are
and shall at all time continue to be absolute and unconditional in
all respects, and shall at all times be valid and enforceable
irrespective of (a) any other agreements or circumstances of any
nature whatsoever which might otherwise constitute a defense to this
Guarantee and the obligations of the Guarantor under this Guarantee,
(b) the obligations of any other person or party (including, without
limitation, the Borrower) relating to this Guarantee, or (c) the
obligations of the Guarantor under this Guarantee or otherwise with
respect to the Liabilities. The obligations of the Guarantor
hereunder, and the rights of the Bank in the Collateral, shall not
be released, discharged or in any way affected, nor shall the
Guarantor have any rights against the Bank by reason of the fact
that the Bank fails to preserve any rights in the Collateral or take
any action whatsoever in regard to the Collateral or that any of the
Collateral may be in default at the time of acceptance thereof by
the Bank or later, nor by reason of the fact that a valid lien on
any of the Collateral may not be conveyed to, or created in favor
of, the Bank; nor by reason of the fact that any of the Collateral
may be subject to equities or defenses or claims in favor of others
or may be invalid or defective in any way; nor by reason of the fact
that any of the Liabilities may be invalid or unenforceable against
the Borrower or any obligor thereon for any reason whatsoever; nor
by reason of the fact that the value of the Collateral, if any, or
the financial condition of the Borrower, or of any obligee under the
guarantee, if any, of the Collateral, may not have been correctly
estimated or was thereafter changed; nor by reason of any
deterioration, waste, or loss by fire, theft, or otherwise of any of
the Collateral; nor by reason of the release, in whole or in part,
with or without consideration, of the Collateral or any of it.
104
<PAGE>
In case the Borrower shall fail to pay all or any part of the
Liabilities when due, the Guarantor immediately will pay to the Bank
the amount due and unpaid by the Borrower under such Liabilities, in
like manner as if such amount constituted the direct and primary
obligation of the Guarantor. The Bank shall have its remedy under
this Guarantee without, being obliged to resort first to the
Collateral or to any other security or to any other remedy or
remedies to enforce payment or collection of the Liabilities, and
may pursue all or any of its remedies at one or at different times.
With respect to the Claims, the Bank shall have the full right on
the part of the Bank in its own name or in the name of the Guarantor
to collect and enforce such Claims by legal action, proof of debt in
bankruptcy or other liquidation proceedings, vote in any proceeding
for the arrangement of debts at any time proposed, or otherwise, the
Bank and each of its officers being hereby irrevocably constituted
attorneys-in-fact for the Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of the
Guarantor any instrument for the payment of money. The Guarantor
will receive as trustee for the Bank and will pay to the Bank
forthwith upon receipt thereof any amounts which the Guarantor may
receive from the Borrower on account of the said Claims. The
Guarantor agrees that at no time hereafter will any of such Claims
be represented by any notes, other negotiable instruments or
writings, except and in such event they shall either be made payable
to the Bank, or if payable to the Guarantor, shall forthwith be
endorsed by the Guarantor to the Bank. The Guarantor agrees that no
payment on account of such Claims or any security interest therein
shall be created, received, accepted or retained nor shall any
financing statement be flied with respect thereto by the Guarantor
unless and until the Borrower has paid and satisfied in full all the
Liabilities. The Bank is hereby authorized and empowered, upon the
occurrence of any Event of Default, to appropriate and apply to the
payment and extinguishment of the Liabilities of the Borrower and
obligations of the Guarantor any and all claims, demands, monies,
property, securities, deposits, or credit balances without demand,
advertisement or notice, all of which are hereby expressly waived.
105
<PAGE>
In the event that the Bank shall receive any payments on account of
any of the Liabilities, whether directly or indirectly, and it shall
subsequently be determined that such payments were for any reason
improper, or a claim shall be made against the Bank that the same
were improper, and the Bank either voluntarily or pursuant to court
order shall return the same, the Guarantor shall be liable, with the
same effect as if the said payments had never been paid to, or
received by, the Bank, for the amount of such repaid or returned
payments, notwithstanding the fact that they may theretofore have
been credited on account of the Liabilities or any of them. If the
Guarantee hereunder with respect to any Guarantor would be held or
determined to be void, invalid or unenforceable on account of the
amount of such Guarantor's aggregate liability under this Guarantee,
then notwithstanding any other provision of this Guarantee to the
contrary, the maximum liability of such Guarantor hereunder shall be
automatically limited and reduced to an amount equal to the maximum
amount that would not render this Guarantee with respect to such
Guarantor void, invalid or unenforceable. The invalidity or
unenforceability of any portion of this Guarantee shall in no way
affect the validity or enforceability of any other portion of this
Guarantee.
106
<PAGE>
If any of the following events shall occur (each an "Event of
Default"): default by the Borrower with respect to the Liabilities
or by the Guarantor with respect to the obligations or liabilities
of either of them to the Bank, or in case the Borrower or any
Guarantor shall die, or become insolvent, or be unable to meet his
or its debts as they mature after 10 days notice, or make any
assignment for the benefit of creditors after 10 days notice, or if
an order for relief under the Federal Bankruptcy Code, as now or
hereafter in effect, shall be entered against the Borrower or any
Guarantor, or if a receiver, trustee or custodian of any kind
(either at law or in equity) of any of the property of the Borrower
or of any Guarantor is appointed, or if a judgment is obtained or a
warrant of attachment issued against the Borrower or any Guarantor
in excess of $50,000.00 which is not fully covered by insurance and
shall continue unsatisfied and unstayed for a period of 60 days, of
if the financial or business condition of the Borrower or any
Guarantor shall so change as in the opinion of the Bank to impair
materially the Bank's security or increase its risk after 10 days
notice, or in the event of any default in the performance of any
obligation comprised in the Collateral or if the Bank in good faith
shall deem itself insecure after 10 days notice, then the
Liabilities of the Borrower and the obligations of the Guarantor to
the Bank, whether direct or contingent, and of every description,
shall, without notice or demand become immediately due and payable
and shall be paid forthwith by the Guarantor, and in such event the
Bank may sell or dispose of the whole or any part of the Collateral,
at public or private sale with or without any previous demand for
performance to the Guarantor or the Borrower. Any legal requirement
of notice of any such sale or other disposition shall be deemed
satisfied by the giving of five days prior written notice which
shall also be deemed reasonable notice. If the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Bank shall not be
required to give notice of public or private sale or other intended
disposition of the Collateral. The Bank may retain from the
proceeds of any such sale all costs and charges incurred by it in
the said taking and sale or other disposal including but not limited
to attorneys' fees, if a deficit should remain after any such sale
or other disposal, the Guarantor will pay the same promptly upon
demand to the Bank. The Bank or its agent may bid and/or purchase
free from any right or equity of redemption at any such public or
private sale. In any event the Guarantor and Borrower agree to pay
attorneys' fees of 20% of all amounts then due and owing from the
Guarantor and the Borrower to the Bank which fees the Guarantor
hereby agrees to be reasonable if any Liabilities of the Borrower or
any obligations of the Guarantor to the Bank arc placed in the hands
of an attorney for collection. Any stocks, bonds or other
securities held by the Bank hereunder may, whether or not the
Borrower or the Guarantor is in default, be registered and held in
the name of the Bank or its nominee, and after default the Bank or
its nominee may exercise all voting and other corporate rights as if
the Bank were the absolute owner thereof.
107
<PAGE>
No delay on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any power or right hereunder or the failure to
exercise same in any instance preclude other or further exercise
thereof or the exercise of any other power or right; nor shall the
Bank be liable for exercising or failing to exercise any such power
or right; the right and remedies hereunder expressly specified are
cumulative and not exclusive of any rights or remedies which the
Bank or any one in whose behalf it has acted or shall act as herein
provided, or its or his or their transferees, may or will otherwise
have.
The term "the Bank" as used throughout this instrument shall be
deemed to include Shawmut Bank N.A. all of its branches and
departments, and any individual, partnership or corporation acting
as its nominee or agent, and any corporate subsidiary the stock of
which is owned or controlled, directly or indirectly, by Shawmut
Bank N.A. The term "Borrower" as used throughout this instrument
shall include the individual or individuals, association,
partnership, limited liability company or corporation named herein
as the Borrower, and (a) any successor, individual or individuals,
association, partnership or limited liability company or corporation
to which all or substantially all of the business or assets of the
Borrower shall have been transferred, (b) in the case of a Borrower
which is a partnership or limited liability company, any new
partnership or limited liability company, as the case may be, which
shall have been created by reason of the admission of any new
partner (member) or partners (members) therein or the dissolution of
the existing partnership (limited liability company) by the death,
resignation or other withdrawal of any partner (member), and (c) in
the case of a Borrower which is a corporation, any other corporation
into or with which the Borrower shall have been merged,
consolidated, reorganized, purchased or absorbed.
108
<PAGE>
The Guarantee shall, without further reference, pass to and may be
relied on and enforced by any successor or assignee of the Bank, and
any transferee or subsequent holder of any of the Liabilities and
the Borrower and/or the Guarantor will not assert any claims it may
have against the Bank against any such assignee, successor,
transferee, or any other subsequent holder. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE BANK OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE BANK FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY
LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED
TO THIS GUARANTEE, THE LIABILITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES
NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM
NOW EXISTS OR HEREAFTER ARISES AND WHETHER OR NOT IT IS NOW KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR. This is a continuing guaranty, and
is to remain in force throughout business relations between the
Borrower and the Bank, and until the payment of all Liabilities of
the Borrower to the Bank, whether now existing or hereafter
incurred, notwithstanding the appointment of a receiver of, or the
dissolution of, and/or any other change in, or with respect to the
Borrower. No change, modification, waiver, or discharge, in whole
or in part, of this Guarantee shall be effective unless in writing
and signed by the party against whom such change, modification,
waiver, or discharge is sought to be enforced. However, this
Guarantee may be terminated with respect to the obligations of any
of the Guarantors (but then only so far as it relates to Liabilities
arising after such termination), only upon written notice to that
effect delivered by such Guarantor to the Bank and receipt thereof
acknowledged in writing by an officer of the Bank. In the event of
termination such Guarantor and his, her or its respective executors,
administrators and assigns shall nevertheless remain liable with
respect to the Liabilities theretofore created or arising, and with
respect to such Liabilities and any renewals, or other liabilities
arising out of the same, this instrument shall continue in full
force and effect and the Bank shall have all the rights herein
provided for as if no such termination had occurred; and the
Guarantors, if any, who have not joined in such termination shall
continue to be liable hereunder as if no such termination had been
effected. In addition to all rights and remedies granted herein,
the Bank shall have all of the rights of a Secured Party under the
Uniform Commercial Code of the Governing State (which term as used
in this Guarantee shall mean the state indicated as such below;
provided, that, if no such state is indicated then Governing State
shall mean the state where the Bank's office that originated the
Liabilities is located). This Guarantee shall be deemed to have
been made in the Governing State, the Guarantor consents to the
jurisdiction of the state and federal courts of the Governing State,
and the rights and liabilities of the parties shall be determined in
accordance with the laws of the Governing State.
109
<PAGE>
The Guarantor has made an independent investigation of the Borrower
and of the financial condition of the Borrower. The Bank has not
made and does not make any representations or warranties as to the
income, expense, operation, finances or any other matter or thing
affecting the Borrower nor has the Bank made any representation or
warranties as to the amount or nature of the Liabilities of the
Borrower to which this Guarantee applies as specifically herein set
forth, nor has the Bank or any officer, agent or employee of the
Bank or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature,
and the Guarantor hereby expressly acknowledges that no such
representations or warranties have been made and the Guarantor
expressly disclaims reliance on any such representations or
warranties. It is agreed that all understandings and agreements
heretofore had between the parties hereto are merged in this
Guarantee, which alone, fully and completely, expresses their
understanding.
EACH GUARANTOR ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY WAIVES
(A) THE RIGHT TO A TRIAL BY JURY IN ANY LITIGATION WITH THE BANK
(WHETHER OR NOT ARISING OUT OF OR RELATING TO ANY NOTE) (B) ALL
RIGHT TO ASSERT ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF
ANY NATURE WHATSOEVER (I) WITH RESPECT TO THIS GUARANTEE OR THE
OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE, OR (II) WITH
RESPECT TO THE OBLIGATIONS OF ANY OTHER PERSON OR PARTY (INCLUDING,
WITHOUT LIMITATION, THE BORROWER) RELATING TO THIS GUARANTEE OR
OTHERWISE WITH RESPECT TO THE LIABILITIES, IN ANY ACTION OR
PROCEEDING BROUGHT BY THE HOLDER HEREOF TO ENFORCE ITS RIGHTS AND
REMEDIES WITH RESPECT TO THE LIABILITIES OR ANY PORTION THEREOF, OR
TO ENFORCE THE OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE;
AND (C) TO THE EXTENT THE UNDERSIGNED IS AN INDIVIDUAL, ANY CLAIM,
RIGHT OR REMEDY, WHICH MAY ARISE BY ANY STATUTE OR OTHERWISE, WHICH
THE GUARANTOR MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST THE BORROWER
THAT ARISES FROM (I) THE EXECUTION OR PERFORMANCE BY THE GUARANTOR
OF ITS OBLIGATIONS TO THE BANK UNDER THIS GUARANTEE, INCLUDING,
WITHOUT LIMITATION, ANY CLAIM, REMEDY OR RIGHT OR SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION, OR INDEMNIFICATION AGAINST
THE BORROWER, OR (II) THE PARTICIPATION BY THE GUARANTOR IN ANY
CLAIM, RIGHT OR REMEDY OF THE BANK AGAINST THE BORROWER OR IN ANY
SECURITY WHICH THE BANK NOW HAS OR HEREAFTER ACQUIRES BY STATUTE,
UNDER COMMON LAWS OR OTHERWISE.
110
<PAGE>
Each Guarantor hereby authorizes the Bank to date this Guarantee and
to complete and fill in any blank spaces in this Guarantee In order
to conform to terms upon which the Guarantee is provided. Each
Guarantor further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any
part thereof and each Guarantor agrees to bear the cost of such
filing(s). The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsers and assigns.
Governing State: New York
Schedule of Specific Possessory Collateral
__________________________________________________________________
__________________________________________________________________
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on the 16th day of January, 1996.
IN THE PRESENCE OF: GUARANTORS;
INDIVIDUAL SIGNORS:
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
CORPORATION, PARTNERSHIP, OR
LIMITED LIABILITY COMPANY
SIGNORS:
General Microcircuits Corp.
Name of Corporation, Partnership
or Limited Liability Company
By: s/ARNOLD H. LEVINE
Bank Officer/Notary Name: Arnold H. Levine
Title: Treasurer
780 Boston Road, Billerica,
Massachusetts 01821
(Address)
111
<PAGE>
RIDER TO GUARANTEE
OF
GENERAL MICROCIRCUITS CORP.
DATED JANUARY 16, 1996
TO
SHAWMUT BANK N.A., AS SUCCESSOR TRUSTEE
OF THE INDEBTEDNESS OF
GENERAL MICROWAVE CORPORATION
*including all penalties and other expenses of and payments by the
Bank, but only in connection with or arising out of the obligations
of the Borrower to the Bank in connection with the 1984 Variable
Rate 7-Day Demand Industrial Development Revenue Bonds (General
Microwave Corporation Facility) (such obligations and liabilities of
the Borrower being hereinafter collectively called the
"Liabilities"). The Bank shall be entitled to apply any payment or
amount received from the Borrower or the Guarantor or in respect of
collateral to either principal of, interest on or other components
of the Liabilities in such order and priority as the Bank shall
determine in its sole discretion. The obligations of the Guarantor
under this Guarantee shall not be reduced as the result of any
proceeding or action by the Bank against the Borrower or against any
collateral given to secure payment of the Liabilities.
GENERAL MICROCIRCUITS CORP.
By:s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
112
<PAGE>
Exhibit 10(a)(19)
-----------------
Guarantee
---------
In order to induce Shawmut Bank N.A., as Successor Trustee under
that certain Indenture of Mortgage and Trust between the Town of
Babylon Industrial Development Agency and NatWest Bank N.A.
(formerly known as National Westminster Bank USA) dated as of
10/1/84 (which together with its successors, endorsees and assigns,
is hereinafter called the "Bank") to make such advances, loans or
extensions of credit, directly or indirectly, to General Microwave
Corporation, a New York corporation (hereinafter, whether one or
more, called the "Borrower") and to grant to the Borrower such
renewals, extensions, forbearances, releases of collateral or other
relinquishments of rights as the Bank may deem advisable, and for
other valuable consideration, the receipt of which is hereby
acknowledged, the undersigned (hereinafter, whether one or more,
called the "Guarantor") who, if more than one, shall be jointly and
severally liable hereunder, hereby absolutely unconditionally
guarantees to the Bank the due and punctual payment when due,
whether by acceleration or otherwise, in accordance with the terms
thereof, of the principal of and interest on and all other sums
payable with respect to any and every obligation or liability of the
Borrower to the Bank, whether now existing or hereafter incurred,
whether originally contracted with the Bank or with another and
transferred to the Bank or otherwise acquired by the Bank, whether
contracted by the Borrower alone or jointly with others, and
Continued on Rider annexed hereto and made a part hereof.
113
<PAGE>
This Guarantee is also secured by (a) any and all property of the
Guarantor now or hereafter subject to a security agreement,
mortgage, pledge agreement, assignment, hypothecation or other
document granting the Bank or any Affiliate a security interest or
other lien or encumbrance and (b) any and all collateral described
in any and all credit accommodations, notes, loan agreements, and
any other agreements and documents, now or hereafter existing,
creating, evidencing, guaranteeing, securing or relating to any or
all of the Liabilities, together with all amendments, modifications,
renewals, or extensions thereof. All of the property described in
clauses (i), (ii), (iii), (a) and (b) above shall be collectively
referred to herein as the "Collateral". The Bank at any time,
before or after an Event of Default (as hereinafter defined), may,
but shall not be obligated to, transfer into or out of its own name
or that of its nominee all or any of the Collateral, including
stocks, bonds, and other securities, and the Bank or its nominee may
demand, sue for, collect, receive and hold as like Collateral any or
all interest, dividends and income thereon and if any securities are
held in the name of the Bank or its nominee, the Bank may, after an
Event of Default exercise all voting and other rights pertaining
thereto as if the Bank were the absolute owner thereof, but the Bank
shall not be obligated to demand payment of, protest, or take any
steps necessary to preserve any rights in the Collateral against
prior parties, or to take any action whatsoever in regard to the
Collateral or any part thereof, all of which the Guarantor assumes
and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection
with any conversion, call, redemption, retirement or any other event
relating to any Collateral, unless the Guarantor gives written
notice to the Bank that such action shall be taken not more than
thirty (30) days prior to the time such action may first be taken
and not less than ten (1O) days prior to the expiration of the time
during which such action may be taken.
The Guarantor hereby grants to the Bank full power, without notice
to the Guarantor or to the Borrower, and without in any way
affecting the joint and several obligations of each Guarantor
hereunder, to deal in any manner with the Borrower, the Liabilities,
the Collateral and with any Guarantor hereunder, and any other
guarantor of the liabilities including, without limitation, the
following powers; (a) to modify or otherwise change any terms of all
or any part of the Liabilities and/or the Collateral, to grant any
extension or renewal thereof and any other indulgence with respect
thereto, and to effect any release, subordination, compromise or
settlement with respect to the Borrower, the Liabilities, the
Collateral, and the obligations of any one or more of the
Guarantors; (b) to enter into any agreement of forbearance with
respect to all or any part of the Collateral, or with respect to the
Liabilities of the Borrower or the obligations of any Guarantor, to
change the terms of any such agreement; (c) to forbear from calling
for additional collateral to secure any of the Liabilities or to
secure any obligation comprised in the Collateral; and (d) to
consent to the substitution, exchange, or release of all or any part
of the Collateral, whether or not the collateral, if any, received
by the Bank upon any substitution, exchange, or release shall be of
the same or of a different character or value than the collateral
surrendered by the Bank.
114
<PAGE>
The Guarantor waives any notice of the acceptance of this
Guarantee, or of the creation, renewal or accrual of any of the
Liabilities, present or future, or of the reliance of the Bank upon
this Guarantee. The Liabilities shall conclusively be presumed to
have been created, contracted for, incurred or suffered to exist in
reliance upon this Guarantee, and all dealings between the Borrower
and the Bank shall likewise be presumed to be in reliance upon this
Guarantee. The Guarantor waives protest, presentment, demand for
payment, notice of default or non-payment, and notice of dishonor to
or upon the Guarantor, the Borrower, or any other party liable for
any of the Liabilities. The Guarantor acknowledges that this
Guarantee and the Guarantor's obligations under this Guarantee are
and shall at all time continue to be absolute and unconditional in
all respects, and shall at all times be valid and enforceable
irrespective of (a) any other agreements or circumstances of any
nature whatsoever which might otherwise constitute a defense to this
Guarantee and the obligations of the Guarantor under this Guarantee,
(b) the obligations of any other person or party (including, without
limitation, the Borrower) relating to this Guarantee, or (c) the
obligations of the Guarantor under this Guarantee or otherwise with
respect to the Liabilities. The obligations of the Guarantor
hereunder, and the rights of the Bank in the Collateral, shall not
be released, discharged or in any way affected, nor shall the
Guarantor have any rights against the Bank by reason of the fact
that the Bank fails to preserve any rights in the Collateral or take
any action whatsoever in regard to the Collateral or that any of the
Collateral may be in default at the time of acceptance thereof by
the Bank or later, nor by reason of the fact that a valid lien on
any of the Collateral may not be conveyed to, or created in favor
of, the Bank; nor by reason of the fact that any of the Collateral
may be subject to equities or defenses or claims in favor of others
or may be invalid or defective in any way; nor by reason of the fact
that any of the Liabilities may be invalid or unenforceable against
the Borrower or any obligor thereon for any reason whatsoever; nor
by reason of the fact that the value of the Collateral, if any, or
the financial condition of the Borrower, or of any obligee under the
guarantee, if any, of the Collateral, may not have been correctly
estimated or was thereafter changed; nor by reason of any
deterioration, waste, or loss by fire, theft, or otherwise of any of
the Collateral; nor by reason of the release, in whole or in part,
with or without consideration, of the Collateral or any of it.
115
<PAGE>
In case the Borrower shall fail to pay all or any part of the
Liabilities when due, the Guarantor immediately will pay to the Bank
the amount due and unpaid by the Borrower under such Liabilities, in
like manner as if such amount constituted the direct and primary
obligation of the Guarantor. The Bank shall have its remedy under
this Guarantee without, being obliged to resort first to the
Collateral or to any other security or to any other remedy or
remedies to enforce payment or collection of the Liabilities, and
may pursue all or any of its remedies at one or at different times.
With respect to the Claims, the Bank shall have the full right on
the part of the Bank in its own name or in the name of the Guarantor
to collect and enforce such Claims by legal action, proof of debt in
bankruptcy or other liquidation proceedings, vote in any proceeding
for the arrangement of debts at any time proposed, or otherwise, the
Bank and each of its officers being hereby irrevocably constituted
attorneys-in-fact for the Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of the
Guarantor any instrument for the payment of money. The Guarantor
will receive as trustee for the Bank and will pay to the Bank
forthwith upon receipt thereof any amounts which the Guarantor may
receive from the Borrower on account of the said Claims. The
Guarantor agrees that at no time hereafter will any of such Claims
be represented by any notes, other negotiable instruments or
writings, except and in such event they shall either be made payable
to the Bank, or if payable to the Guarantor, shall forthwith be
endorsed by the Guarantor to the Bank. The Guarantor agrees that no
payment on account of such Claims or any security interest therein
shall be created, received, accepted or retained nor shall any
financing statement be flied with respect thereto by the Guarantor
unless and until the Borrower has paid and satisfied in full all the
Liabilities. The Bank is hereby authorized and empowered, upon the
occurrence of any Event of Default, to appropriate and apply to the
payment and extinguishment of the Liabilities of the Borrower and
obligations of the Guarantor any and all claims, demands, monies,
property, securities, deposits, or credit balances without demand,
advertisement or notice, all of which are hereby expressly waived.
In the event that the Bank shall receive any payments on account of
any of the Liabilities, whether directly or indirectly, and it shall
subsequently be determined that such payments were for any reason
improper, or a claim shall be made against the Bank that the same
were improper, and the Bank either voluntarily or pursuant to court
order shall return the same, the Guarantor shall be liable, with the
same effect as if the said payments had never been paid to, or
received by, the Bank, for the amount of such repaid or returned
payments, notwithstanding the fact that they may theretofore have
been credited on account of the Liabilities or any of them. If the
Guarantee hereunder with respect to any Guarantor would be held or
determined to be void, invalid or unenforceable on account of the
amount of such Guarantor's aggregate liability under this Guarantee,
then notwithstanding any other provision of this Guarantee to the
contrary, the maximum liability of such Guarantor hereunder shall be
automatically limited and reduced to an amount equal to the maximum
amount that would not render this Guarantee with respect to such
Guarantor void, invalid or unenforceable. The invalidity or
unenforceability of any portion of this Guarantee shall in no way
affect the validity or enforceability of any other portion of this
Guarantee.
116
<PAGE>
If any of the following events shall occur (each an "Event of
Default"): default by the Borrower with respect to the Liabilities
or by the Guarantor with respect to the obligations or liabilities
of either of them to the Bank, or in case the Borrower or any
Guarantor shall die, or become insolvent, or be unable to meet his
or its debts as they mature after 10 days notice, or make any
assignment for the benefit of creditors after 10 days notice, or if
an order for relief under the Federal Bankruptcy Code, as now or
hereafter in effect, shall be entered against the Borrower or any
Guarantor, or if a receiver, trustee or custodian of any kind
(either at law or in equity) of any of the property of the Borrower
or of any Guarantor is appointed, or if a judgment is obtained or a
warrant of attachment issued against the Borrower or any Guarantor
in excess of $50,000.00 which is not fully covered by insurance and
shall continue unsatisfied and unstayed for a period of 60 days, of
if the financial or business condition of the Borrower or any
Guarantor shall so change as in the opinion of the Bank to impair
materially the Bank's security or increase its risk after 10 days
notice, or in the event of any default in the performance of any
obligation comprised in the Collateral or if the Bank in good faith
shall deem itself insecure after 10 days notice, then the
Liabilities of the Borrower and the obligations of the Guarantor to
the Bank, whether direct or contingent, and of every description,
shall, without notice or demand become immediately due and payable
and shall be paid forthwith by the Guarantor, and in such event the
Bank may sell or dispose of the whole or any part of the Collateral,
at public or private sale with or without any previous demand for
performance to the Guarantor or the Borrower. Any legal requirement
of notice of any such sale or other disposition shall be deemed
satisfied by the giving of five days prior written notice which
shall also be deemed reasonable notice. If the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Bank shall not be
required to give notice of public or private sale or other intended
disposition of the Collateral. The Bank may retain from the
proceeds of any such sale all costs and charges incurred by it in
the said taking and sale or other disposal including but not limited
to attorneys' fees, if a deficit should remain after any such sale
or other disposal, the Guarantor will pay the same promptly upon
demand to the Bank. The Bank or its agent may bid and/or purchase
free from any right or equity of redemption at any such public or
private sale. In any event the Guarantor and Borrower agree to pay
attorneys' fees of 20% of all amounts then due and owing from the
Guarantor and the Borrower to the Bank which fees the Guarantor
hereby agrees to be reasonable if any Liabilities of the Borrower or
any obligations of the Guarantor to the Bank arc placed in the hands
of an attorney for collection. Any stocks, bonds or other
securities held by the Bank hereunder may, whether or not the
Borrower or the Guarantor is in default, be registered and held in
the name of the Bank or its nominee, and after default the Bank or
its nominee may exercise all voting and other corporate rights as if
the Bank were the absolute owner thereof.
117
<PAGE>
No delay on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any power or right hereunder or the failure to
exercise same in any instance preclude other or further exercise
thereof or the exercise of any other power or right; nor shall the
Bank be liable for exercising or failing to exercise any such power
or right; the right and remedies hereunder expressly specified are
cumulative and not exclusive of any rights or remedies which the
Bank or any one in whose behalf it has acted or shall act as herein
provided, or its or his or their transferees, may or will otherwise
have.
The term "the Bank" as used throughout this instrument shall be
deemed to include Shawmut Bank N.A. all of its branches and
departments, and any individual, partnership or corporation acting
as its nominee or agent, and any corporate subsidiary the stock of
which is owned or controlled, directly or indirectly, by Shawmut
Bank N.A. The term "Borrower" as used throughout this instrument
shall include the individual or individuals, association,
partnership, limited liability company or corporation named herein
as the Borrower, and (a) any successor, individual or individuals,
association, partnership or limited liability company or corporation
to which all or substantially all of the business or assets of the
Borrower shall have been transferred, (b) in the case of a Borrower
which is a partnership or limited liability company, any new
partnership or limited liability company, as the case may be, which
shall have been created by reason of the admission of any new
partner (member) or partners (members) therein or the dissolution of
the existing partnership (limited liability company) by the death,
resignation or other withdrawal of any partner (member), and (c) in
the case of a Borrower which is a corporation, any other corporation
into or with which the Borrower shall have been merged,
consolidated, reorganized, purchased or absorbed.
118
<PAGE>
The Guarantee shall, without further reference, pass to and may be
relied on and enforced by any successor or assignee of the Bank, and
any transferee or subsequent holder of any of the Liabilities and
the Borrower and/or the Guarantor will not assert any claims it may
have against the Bank against any such assignee, successor,
transferee, or any other subsequent holder. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE BANK OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE BANK FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY
LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED
TO THIS GUARANTEE, THE LIABILITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES
NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM
NOW EXISTS OR HEREAFTER ARISES AND WHETHER OR NOT IT IS NOW KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR. This is a continuing guaranty, and
is to remain in force throughout business relations between the
Borrower and the Bank, and until the payment of all Liabilities of
the Borrower to the Bank, whether now existing or hereafter
incurred, notwithstanding the appointment of a receiver of, or the
dissolution of, and/or any other change in, or with respect to the
Borrower. No change, modification, waiver, or discharge, in whole
or in part, of this Guarantee shall be effective unless in writing
and signed by the party against whom such change, modification,
waiver, or discharge is sought to be enforced. However, this
Guarantee may be terminated with respect to the obligations of any
of the Guarantors (but then only so far as it relates to Liabilities
arising after such termination), only upon written notice to that
effect delivered by such Guarantor to the Bank and receipt thereof
acknowledged in writing by an officer of the Bank. In the event of
termination such Guarantor and his, her or its respective executors,
administrators and assigns shall nevertheless remain liable with
respect to the Liabilities theretofore created or arising, and with
respect to such Liabilities and any renewals, or other liabilities
arising out of the same, this instrument shall continue in full
force and effect and the Bank shall have all the rights herein
provided for as if no such termination had occurred; and the
Guarantors, if any, who have not joined in such termination shall
continue to be liable hereunder as if no such termination had been
effected. In addition to all rights and remedies granted herein,
the Bank shall have all of the rights of a Secured Party under the
Uniform Commercial Code of the Governing State (which term as used
in this Guarantee shall mean the state indicated as such below;
provided, that, if no such state is indicated then Governing State
shall mean the state where the Bank's office that originated the
Liabilities is located). This Guarantee shall be deemed to have
been made in the Governing State, the Guarantor consents to the
jurisdiction of the state and federal courts of the Governing State,
and the rights and liabilities of the parties shall be determined in
accordance with the laws of the Governing State.
119
<PAGE>
The Guarantor has made an independent investigation of the Borrower
and of the financial condition of the Borrower. The Bank has not
made and does not make any representations or warranties as to the
income, expense, operation, finances or any other matter or thing
affecting the Borrower nor has the Bank made any representation or
warranties as to the amount or nature of the Liabilities of the
Borrower to which this Guarantee applies as specifically herein set
forth, nor has the Bank or any officer, agent or employee of the
Bank or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature,
and the Guarantor hereby expressly acknowledges that no such
representations or warranties have been made and the Guarantor
expressly disclaims reliance on any such representations or
warranties. It is agreed that all understandings and agreements
heretofore had between the parties hereto are merged in this
Guarantee, which alone, fully and completely, expresses their
understanding.
EACH GUARANTOR ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY WAIVES
(A) THE RIGHT TO A TRIAL BY JURY IN ANY LITIGATION WITH THE BANK
(WHETHER OR NOT ARISING OUT OF OR RELATING TO ANY NOTE) (B) ALL
RIGHT TO ASSERT ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF
ANY NATURE WHATSOEVER (I) WITH RESPECT TO THIS GUARANTEE OR THE
OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE, OR (II) WITH
RESPECT TO THE OBLIGATIONS OF ANY OTHER PERSON OR PARTY (INCLUDING,
WITHOUT LIMITATION, THE BORROWER) RELATING TO THIS GUARANTEE OR
OTHERWISE WITH RESPECT TO THE LIABILITIES, IN ANY ACTION OR
PROCEEDING BROUGHT BY THE HOLDER HEREOF TO ENFORCE ITS RIGHTS AND
REMEDIES WITH RESPECT TO THE LIABILITIES OR ANY PORTION THEREOF, OR
TO ENFORCE THE OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE;
AND (C) TO THE EXTENT THE UNDERSIGNED IS AN INDIVIDUAL, ANY CLAIM,
RIGHT OR REMEDY, WHICH MAY ARISE BY ANY STATUTE OR OTHERWISE, WHICH
THE GUARANTOR MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST THE BORROWER
THAT ARISES FROM (I) THE EXECUTION OR PERFORMANCE BY THE GUARANTOR
OF ITS OBLIGATIONS TO THE BANK UNDER THIS GUARANTEE, INCLUDING,
WITHOUT LIMITATION, ANY CLAIM, REMEDY OR RIGHT OR SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION, OR INDEMNIFICATION AGAINST
THE BORROWER, OR (II) THE PARTICIPATION BY THE GUARANTOR IN ANY
CLAIM, RIGHT OR REMEDY OF THE BANK AGAINST THE BORROWER OR IN ANY
SECURITY WHICH THE BANK NOW HAS OR HEREAFTER ACQUIRES BY STATUTE,
UNDER COMMON LAWS OR OTHERWISE.
120
<PAGE>
Each Guarantor hereby authorizes the Bank to date this Guarantee and
to complete and fill in any blank spaces in this Guarantee In order
to conform to terms upon which the Guarantee is provided. Each
Guarantor further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any
part thereof and each Guarantor agrees to bear the cost of such
filing(s). The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsers and assigns.
Governing State: New York
Schedule of Specific Possessory Collateral
__________________________________________________________________
__________________________________________________________________
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on the 16th day of January, 1996.
IN THE PRESENCE OF: GUARANTORS;
INDIVIDUAL SIGNORS:
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
CORPORATION, PARTNERSHIP, OR
LIMITED LIABILITY COMPANY
SIGNORS:
Math Associates, Inc.
Name of Corporation, Partnership
or Limited Liability Company
By: s/ARNOLD H. LEVINE
Bank Officer/Notary Name: Arnold H. Levine
Title: Treasurer
5500 New Horizons Boulevard
Amityville, New York 11701
(Address)
121
<PAGE>
RIDER TO GUARANTEE
OF
MATH ASSOCIATES, INC.
DATED JANUARY 16, 1996
TO
SHAWMUT BANK N.A., AS SUCCESSOR TRUSTEE
OF THE INDEBTEDNESS OF
GENERAL MICROWAVE CORPORATION
*including all penalties and other expenses of and payments by the
Bank, but only in connection with or arising out of the obligations
of the Borrower to the Bank in connection with the 1984 Variable
Rate 7-Day Demand Industrial Development Revenue Bonds (General
Microwave Corporation Facility) (such obligations and liabilities of
the Borrower being hereinafter collectively called the
"Liabilities"). The Bank shall be entitled to apply any payment or
amount received from the Borrower or the Guarantor or in respect of
collateral to either principal of, interest on or other components
of the Liabilities in such order and priority as the Bank shall
determine in its sole discretion. The obligations of the Guarantor
under this Guarantee shall not be reduced as the result of any
proceeding or action by the Bank against the Borrower or against any
collateral given to secure payment of the Liabilities.
MATH ASSOCIATES, INC.
By:s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
122
<PAGE>
Exhibit 10(a)(20)
-----------------
Guarantee
---------
In order to induce NatWest Bank N.A. (which together with its
successors, endorsees and assigns, is hereinafter called the "Bank")
to make such advances, loans or extensions of credit, directly or
indirectly, to General Microwave Corporation, a New York corporation
(hereinafter, whether one or more, called the "Borrower") and to
grant to the Borrower such renewals, extensions, forbearances,
releases of collateral or other relinquishments of rights as the
Bank may deem advisable, and for other valuable consideration, the
receipt of which is hereby acknowledged, the undersigned
(hereinafter, whether one or more, called the "Guarantor") who, if
more than one, shall be jointly and severally liable hereunder,
hereby absolutely unconditionally guarantees to the Bank the due and
punctual payment when due, whether by acceleration or otherwise, in
accordance with the terms thereof, of the principal of and interest
on and all other sums payable with respect to any and every
obligation or liability of the Borrower to the Bank,
Continued on Rider annexed hereto and made a part hereof.
123
<PAGE>
As collateral security for the performance of this Guarantee and all
other obligations of the Guarantor to the Bank, whether now or
hereafter owed to, or held by the Bank (and/or any entity
controlling, controlled by or under common control with the Bank,
each such entity referred to herein as an "Affiliate"), including,
without limitation, the Liabilities, the Guarantor hereby grants to
the Bank a security interest in and transfers and assigns to the
Bank the following property: (i) any and all monies and/or other
property now or hereafter held by the Bank and/or any Affiliate on
deposit, in safekeeping, or otherwise, for the account of or to the
credit of or belong to the Guarantor or in which the Guarantor shall
have any interest, (ii) any and all claims and demands, presently
existing or hereafter arising, and all interest heretofore or
hereafter accrued thereon, and any and all collateral or security
interests relating thereto and the proceeds thereof, which the
Guarantor now has or may hereafter have or acquire against the
Borrower (such claims and demands referred to herein as the
"Claims") and (iii) any and all property described on the "Schedule
of Specific Possessory Collateral" on the reverse side hereof,
together with any additions and accessions thereto and substitution
therefor and the products and proceeds thereof. This Guarantee is
also secured by (a) any and all property of the Guarantor now or
hereafter subject to a security agreement, mortgage, pledge
agreement, assignment, hypothecation or other document granting the
Bank or any Affiliate a security interest or other lien or
encumbrance and (b) any and all collateral described in any and all
credit accommodations, notes, loan agreements, and any other
agreements and documents, now or hereafter existing, creating,
evidencing, guaranteeing, securing or relating to any or all of the
Liabilities, together with all amendments, modifications, renewals,
or extensions thereof. All of the property described in clauses
(i), (ii), (iii), (a) and (b) above shall be collectively referred
to herein as the "Collateral". The Bank at any time, before or
after an Event of Default (as hereinafter defined), may, but shall
not be obligated to, transfer into or out of its own name or that of
its nominee all or any of the Collateral, including stocks, bonds,
and other securities, and the Bank or its nominee may demand, sue
for, collect, receive and hold as like Collateral any or all
interest, dividends and income thereon and if any securities are
held in the name of the Bank or its nominee, the Bank may, after an
Event of Default exercise all voting and other rights pertaining
thereto as if the Bank were the absolute owner thereof, but the Bank
shall not be obligated to demand payment of, protest, or take any
steps necessary to preserve any rights in the Collateral against
prior parties, or to take any action whatsoever in regard to the
Collateral or any part thereof, all of which the Guarantor assumes
and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection
with any conversion, call, redemption, retirement or any other event
relating to any Collateral, unless the Guarantor gives written
notice to the Bank that such action shall be taken not more than
thirty (30) days prior to the time such action may first be taken
and not less than ten (1O) days prior to the expiration of the time
during which such action may be taken.
124
<PAGE>
The Guarantor hereby grants to the Bank full power, without notice
to the Guarantor or to the Borrower, and without in any way
affecting the joint and several obligations of each Guarantor
hereunder, to deal in any manner with the Borrower, the Liabilities,
the Collateral and with any Guarantor hereunder, and any other
guarantor of the liabilities including, without limitation, the
following powers; (a) to modify or otherwise change any terms of all
or any part of the Liabilities and/or the Collateral, to grant any
extension or renewal thereof and any other indulgence with respect
thereto, and to effect any release, subordination, compromise or
settlement with respect to the Borrower, the Liabilities, the
Collateral, and the obligations of any one or more of the
Guarantors; (b) to enter into any agreement of forbearance with
respect to all or any part of the Collateral, or with respect to the
Liabilities of the Borrower or the obligations of any Guarantor, to
change the terms of any such agreement; (c) to forbear from calling
for additional collateral to secure any of the Liabilities or to
secure any obligation comprised in the Collateral; and (d) to
consent to the substitution, exchange, or release of all or any part
of the Collateral, whether or not the collateral, if any, received
by the Bank upon any substitution, exchange, or release shall be of
the same or of a different character or value than the collateral
surrendered by the Bank.
125
<PAGE>
The Guarantor waives any notice of the acceptance of this
Guarantee, or of the creation, renewal or accrual of any of the
Liabilities, present or future, or of the reliance of the Bank upon
this Guarantee. The Liabilities shall conclusively be presumed to
have been created, contracted for, incurred or suffered to exist in
reliance upon this Guarantee, and all dealings between the Borrower
and the Bank shall likewise be presumed to be in reliance upon this
Guarantee. The Guarantor waives protest, presentment, demand for
payment, notice of default or non-payment, and notice of dishonor to
or upon the Guarantor, the Borrower, or any other party liable for
any of the Liabilities. The Guarantor acknowledges that this
Guarantee and the Guarantor's obligations under this Guarantee are
and shall at all time continue to be absolute and unconditional in
all respects, and shall at all times be valid and enforceable
irrespective of (a) any other agreements or circumstances of any
nature whatsoever which might otherwise constitute a defense to this
Guarantee and the obligations of the Guarantor under this Guarantee,
(b) the obligations of any other person or party (including, without
limitation, the Borrower) relating to this Guarantee, or (c) the
obligations of the Guarantor under this Guarantee or otherwise with
respect to the Liabilities. The obligations of the Guarantor
hereunder, and the rights of the Bank in the Collateral, shall not
be released, discharged or in any way affected, nor shall the
Guarantor have any rights against the Bank by reason of the fact
that the Bank fails to preserve any rights in the Collateral or take
any action whatsoever in regard to the Collateral or that any of the
Collateral may be in default at the time of acceptance thereof by
the Bank or later, nor by reason of the fact that a valid lien on
any of the Collateral may not be conveyed to, or created in favor
of, the Bank; nor by reason of the fact that any of the Collateral
may be subject to equities or defenses or claims in favor of others
or may be invalid or defective in any way; nor by reason of the fact
that any of the Liabilities may be invalid or unenforceable against
the Borrower or any obligor thereon for any reason whatsoever; nor
by reason of the fact that the value of the Collateral, if any, or
the financial condition of the Borrower, or of any obligee under the
guarantee, if any, of the Collateral, may not have been correctly
estimated or was thereafter changed; nor by reason of any
deterioration, waste, or loss by fire, theft, or otherwise of any of
the Collateral; nor by reason of the release, in whole or in part,
with or without consideration, of the Collateral or any of it.
126
<PAGE>
In case the Borrower shall fail to pay all or any part of the
Liabilities when due, the Guarantor immediately will pay to the Bank
the amount due and unpaid by the Borrower under such Liabilities, in
like manner as if such amount constituted the direct and primary
obligation of the Guarantor. The Bank shall have its remedy under
this Guarantee without, being obliged to resort first to the
Collateral or to any other security or to any other remedy or
remedies to enforce payment or collection of the Liabilities, and
may pursue all or any of its remedies at one or at different times.
With respect to the Claims, the Bank shall have the full right on
the part of the Bank in its own name or in the name of the Guarantor
to collect and enforce such Claims by legal action, proof of debt in
bankruptcy or other liquidation proceedings, vote in any proceeding
for the arrangement of debts at any time proposed, or otherwise, the
Bank and each of its officers being hereby irrevocably constituted
attorneys-in-fact for the Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of the
Guarantor any instrument for the payment of money. The Guarantor
will receive as trustee for the Bank and will pay to the Bank
forthwith upon receipt thereof any amounts which the Guarantor may
receive from the Borrower on account of the said Claims. The
Guarantor agrees that at no time hereafter will any of such Claims
be represented by any notes, other negotiable instruments or
writings, except and in such event they shall either be made payable
to the Bank, or if payable to the Guarantor, shall forthwith be
endorsed by the Guarantor to the Bank. The Guarantor agrees that no
payment on account of such Claims or any security interest therein
shall be created, received, accepted or retained nor shall any
financing statement be flied with respect thereto by the Guarantor
unless and until the Borrower has paid and satisfied in full all the
Liabilities. The Bank is hereby authorized and empowered, upon the
occurrence of any Event of Default, to appropriate and apply to the
payment and extinguishment of the Liabilities of the Borrower and
obligations of the Guarantor any and all claims, demands, monies,
property, securities, deposits, or credit balances without demand,
advertisement or notice, all of which are hereby expressly waived.
In the event that the Bank shall receive any payments on account of
any of the Liabilities, whether directly or indirectly, and it shall
subsequently be determined that such payments were for any reason
improper, or a claim shall be made against the Bank that the same
were improper, and the Bank either voluntarily or pursuant to court
order shall return the same, the Guarantor shall be liable, with the
same effect as if the said payments had never been paid to, or
received by, the Bank, for the amount of such repaid or returned
payments, notwithstanding the fact that they may theretofore have
been credited on account of the Liabilities or any of them. If the
Guarantee hereunder with respect to any Guarantor would be held or
determined to be void, invalid or unenforceable on account of the
amount of such Guarantor's aggregate liability under this Guarantee,
then notwithstanding any other provision of this Guarantee to the
contrary, the maximum liability of such Guarantor hereunder shall be
automatically limited and reduced to an amount equal to the maximum
amount that would not render this Guarantee with respect to such
Guarantor void, invalid or unenforceable. The invalidity or
unenforceability of any portion of this Guarantee shall in no way
affect the validity or enforceability of any other portion of this
Guarantee.
127
<PAGE>
If any of the following events shall occur (each an "Event of
Default"): default by the Borrower with respect to the Liabilities
or by the Guarantor with respect to the obligations or liabilities
of either of them to the Bank, or in case the Borrower or any
Guarantor shall die, or become insolvent, or be unable to meet his
or its debts as they mature after 10 days notice, or make any
assignment for the benefit of creditors after 10 days notice, or if
an order for relief under the Federal Bankruptcy Code, as now or
hereafter in effect, shall be entered against the Borrower or any
Guarantor, or if a receiver, trustee or custodian of any kind
(either at law or in equity) of any of the property of the Borrower
or of any Guarantor is appointed, or if a judgment is obtained or a
warrant of attachment issued against the Borrower or any Guarantor
in excess of $50,000.00 which is not fully covered by insurance and
shall continue unsatisfied and unstayed for a period of 60 days, of
if the financial or business condition of the Borrower or any
Guarantor shall so change as in the opinion of the Bank to impair
materially the Bank's security or increase its risk after 10 days
notice, or in the event of any default in the performance of any
obligation comprised in the Collateral or if the Bank in good faith
shall deem itself insecure after 10 days notice, then the
Liabilities of the Borrower and the obligations of the Guarantor to
the Bank, whether direct or contingent, and of every description,
shall, without notice or demand become immediately due and payable
and shall be paid forthwith by the Guarantor, and in such event the
Bank may sell or dispose of the whole or any part of the Collateral,
at public or private sale with or without any previous demand for
performance to the Guarantor or the Borrower. Any legal requirement
of notice of any such sale or other disposition shall be deemed
satisfied by the giving of five days prior written notice which
shall also be deemed reasonable notice. If the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Bank shall not be
required to give notice of public or private sale or other intended
disposition of the Collateral. The Bank may retain from the
proceeds of any such sale all costs and charges incurred by it in
the said taking and sale or other disposal including but not limited
to attorneys' fees, if a deficit should remain after any such sale
or other disposal, the Guarantor will pay the same promptly upon
demand to the Bank. The Bank or its agent may bid and/or purchase
free from any right or equity of redemption at any such public or
private sale. In any event the Guarantor and Borrower agree to pay
attorneys' fees of 20% of all amounts then due and owing from the
Guarantor and the Borrower to the Bank which fees the Guarantor
hereby agrees to be reasonable if any Liabilities of the Borrower or
any obligations of the Guarantor to the Bank arc placed in the hands
of an attorney for collection. Any stocks, bonds or other
securities held by the Bank hereunder may, whether or not the
Borrower or the Guarantor is in default, be registered and held in
the name of the Bank or its nominee, and after default the Bank or
its nominee may exercise all voting and other corporate rights as if
the Bank were the absolute owner thereof.
128
<PAGE>
No delay on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any power or right hereunder or the failure to
exercise same in any instance preclude other or further exercise
thereof or the exercise of any other power or right; nor shall the
Bank be liable for exercising or failing to exercise any such power
or right; the right and remedies hereunder expressly specified are
cumulative and not exclusive of any rights or remedies which the
Bank or any one in whose behalf it has acted or shall act as herein
provided, or its or his or their transferees, may or will otherwise
have.
The term "the Bank" as used throughout this instrument shall be
deemed to include Shawmut Bank N.A. all of its branches and
departments, and any individual, partnership or corporation acting
as its nominee or agent, and any corporate subsidiary the stock of
which is owned or controlled, directly or indirectly, by Shawmut
Bank N.A. The term "Borrower" as used throughout this instrument
shall include the individual or individuals, association,
partnership, limited liability company or corporation named herein
as the Borrower, and (a) any successor, individual or individuals,
association, partnership or limited liability company or corporation
to which all or substantially all of the business or assets of the
Borrower shall have been transferred, (b) in the case of a Borrower
which is a partnership or limited liability company, any new
partnership or limited liability company, as the case may be, which
shall have been created by reason of the admission of any new
partner (member) or partners (members) therein or the dissolution of
the existing partnership (limited liability company) by the death,
resignation or other withdrawal of any partner (member), and (c) in
the case of a Borrower which is a corporation, any other corporation
into or with which the Borrower shall have been merged,
consolidated, reorganized, purchased or absorbed.
129
<PAGE>
The Guarantee shall, without further reference, pass to and may be
relied on and enforced by any successor or assignee of the Bank, and
any transferee or subsequent holder of any of the Liabilities and
the Borrower and/or the Guarantor will not assert any claims it may
have against the Bank against any such assignee, successor,
transferee, or any other subsequent holder. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE BANK OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE BANK FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY
LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED
TO THIS GUARANTEE, THE LIABILITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES
NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM
NOW EXISTS OR HEREAFTER ARISES AND WHETHER OR NOT IT IS NOW KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR. This is a continuing guaranty, and
is to remain in force throughout business relations between the
Borrower and the Bank, and until the payment of all Liabilities of
the Borrower to the Bank, whether now existing or hereafter
incurred, notwithstanding the appointment of a receiver of, or the
dissolution of, and/or any other change in, or with respect to the
Borrower. No change, modification, waiver, or discharge, in whole
or in part, of this Guarantee shall be effective unless in writing
and signed by the party against whom such change, modification,
waiver, or discharge is sought to be enforced. However, this
Guarantee may be terminated with respect to the obligations of any
of the Guarantors (but then only so far as it relates to Liabilities
arising after such termination), only upon written notice to that
effect delivered by such Guarantor to the Bank and receipt thereof
acknowledged in writing by an officer of the Bank. In the event of
termination such Guarantor and his, her or its respective executors,
administrators and assigns shall nevertheless remain liable with
respect to the Liabilities theretofore created or arising, and with
respect to such Liabilities and any renewals, or other liabilities
arising out of the same, this instrument shall continue in full
force and effect and the Bank shall have all the rights herein
provided for as if no such termination had occurred; and the
Guarantors, if any, who have not joined in such termination shall
continue to be liable hereunder as if no such termination had been
effected. In addition to all rights and remedies granted herein,
the Bank shall have all of the rights of a Secured Party under the
Uniform Commercial Code of the Governing State (which term as used
in this Guarantee shall mean the state indicated as such below;
provided, that, if no such state is indicated then Governing State
shall mean the state where the Bank's office that originated the
Liabilities is located). This Guarantee shall be deemed to have
been made in the Governing State, the Guarantor consents to the
jurisdiction of the state and federal courts of the Governing State,
and the rights and liabilities of the parties shall be determined in
accordance with the laws of the Governing State.
130
<PAGE>
The Guarantor has made an independent investigation of the Borrower
and of the financial condition of the Borrower. The Bank has not
made and does not make any representations or warranties as to the
income, expense, operation, finances or any other matter or thing
affecting the Borrower nor has the Bank made any representation or
warranties as to the amount or nature of the Liabilities of the
Borrower to which this Guarantee applies as specifically herein set
forth, nor has the Bank or any officer, agent or employee of the
Bank or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature,
and the Guarantor hereby expressly acknowledges that no such
representations or warranties have been made and the Guarantor
expressly disclaims reliance on any such representations or
warranties. It is agreed that all understandings and agreements
heretofore had between the parties hereto are merged in this
Guarantee, which alone, fully and completely, expresses their
understanding.
EACH GUARANTOR ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY WAIVES
(A) THE RIGHT TO A TRIAL BY JURY IN ANY LITIGATION WITH THE BANK
(WHETHER OR NOT ARISING OUT OF OR RELATING TO ANY NOTE) (B) ALL
RIGHT TO ASSERT ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF
ANY NATURE WHATSOEVER (I) WITH RESPECT TO THIS GUARANTEE OR THE
OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE, OR (II) WITH
RESPECT TO THE OBLIGATIONS OF ANY OTHER PERSON OR PARTY (INCLUDING,
WITHOUT LIMITATION, THE BORROWER) RELATING TO THIS GUARANTEE OR
OTHERWISE WITH RESPECT TO THE LIABILITIES, IN ANY ACTION OR
PROCEEDING BROUGHT BY THE HOLDER HEREOF TO ENFORCE ITS RIGHTS AND
REMEDIES WITH RESPECT TO THE LIABILITIES OR ANY PORTION THEREOF, OR
TO ENFORCE THE OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE;
AND (C) TO THE EXTENT THE UNDERSIGNED IS AN INDIVIDUAL, ANY CLAIM,
RIGHT OR REMEDY, WHICH MAY ARISE BY ANY STATUTE OR OTHERWISE, WHICH
THE GUARANTOR MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST THE BORROWER
THAT ARISES FROM (I) THE EXECUTION OR PERFORMANCE BY THE GUARANTOR
OF ITS OBLIGATIONS TO THE BANK UNDER THIS GUARANTEE, INCLUDING,
WITHOUT LIMITATION, ANY CLAIM, REMEDY OR RIGHT OR SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION, OR INDEMNIFICATION AGAINST
THE BORROWER, OR (II) THE PARTICIPATION BY THE GUARANTOR IN ANY
CLAIM, RIGHT OR REMEDY OF THE BANK AGAINST THE BORROWER OR IN ANY
SECURITY WHICH THE BANK NOW HAS OR HEREAFTER ACQUIRES BY STATUTE,
UNDER COMMON LAWS OR OTHERWISE.
131
<PAGE>
Each Guarantor hereby authorizes the Bank to date this Guarantee and
to complete and fill in any blank spaces in this Guarantee In order
to conform to terms upon which the Guarantee is provided. Each
Guarantor further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any
part thereof and each Guarantor agrees to bear the cost of such
filing(s). The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsers and assigns.
Governing State: New York
Schedule of Specific Possessory Collateral
__________________________________________________________________
__________________________________________________________________
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on the 16th day of January, 1996.
IN THE PRESENCE OF: GUARANTORS;
INDIVIDUAL SIGNORS:
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
CORPORATION, PARTNERSHIP, OR
LIMITED LIABILITY COMPANY
SIGNORS:
General Microcircuits Corp.
Name of Corporation, Partnership
or Limited Liability Company
s/PETER G. BRANDEL, V.P. By: s/ARNOLD H. LEVINE
Bank Officer/Notary Name: Arnold H. Levine
Title: Treasurer
780 Boston Road, Billerica,
Massachusetts 01821
(Address)
132
<PAGE>
RIDER TO GUARANTEE
OF
GENERAL MICROCIRCUITS CORP.
DATED JANUARY 16, 1996
TO
NATWEST BANK N.A., AS SUCCESSOR TRUSTEE
OF THE INDEBTEDNESS OF
GENERAL MICROWAVE CORPORATION
*including all penalties and other expenses of and payments by the
Bank, but only in connection with or arising out of the
Reimbursement Agreement dated as of October 1, 1994 between the
Borrower and the Bank as same may have been or may hereafter be
amended, modified, supplemented or extended from time to time
together with any other documents or agreements executed in
connection therewith (such obligations and liabilities of the
Borrower being hereinafter collectively called the "Liabilities").
The Bank shall be entitled to apply any payment or amount received
from the Borrower or the Guarantor or in respect of collateral to
either principal of, interest on or other components of the
Liabilities in such order and priority as the Bank shall determine
in its sole discretion. The obligations of the Guarantor under this
Guarantee shall not be reduced as the result of any proceeding or
action by the Bank against the Borrower or against any collateral
given to secure payment of the Liabilities.
GENERAL MICROCIRCUITS CORP.
By:s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
133
<PAGE>
Exhibit 10(a)(21)
-----------------
Guarantee
---------
In order to induce NatWest Bank N.A. (which together with its
successors, endorsees and assigns, is hereinafter called the "Bank")
to make such advances, loans or extensions of credit, directly or
indirectly, to General Microwave Corporation, a New York corporation
(hereinafter, whether one or more, called the "Borrower") and to
grant to the Borrower such renewals, extensions, forbearances,
releases of collateral or other relinquishments of rights as the
Bank may deem advisable, and for other valuable consideration, the
receipt of which is hereby acknowledged, the undersigned
(hereinafter, whether one or more, called the "Guarantor") who, if
more than one, shall be jointly and severally liable hereunder,
hereby absolutely unconditionally guarantees to the Bank the due and
punctual payment when due, whether by acceleration or otherwise, in
accordance with the terms thereof, of the principal of and interest
on and all other sums payable with respect to any and every
obligation or liability of the Borrower to the Bank,
Continued on Rider annexed hereto and made a part hereof.
134
<PAGE>
As collateral security for the performance of this Guarantee and all
other obligations of the Guarantor to the Bank, whether now or
hereafter owed to, or held by the Bank (and/or any entity
controlling, controlled by or under common control with the Bank,
each such entity referred to herein as an "Affiliate"), including,
without limitation, the Liabilities, the Guarantor hereby grants to
the Bank a security interest in and transfers and assigns to the
Bank the following property: (i) any and all monies and/or other
property now or hereafter held by the Bank and/or any Affiliate on
deposit, in safekeeping, or otherwise, for the account of or to the
credit of or belong to the Guarantor or in which the Guarantor shall
have any interest, (ii) any and all claims and demands, presently
existing or hereafter arising, and all interest heretofore or
hereafter accrued thereon, and any and all collateral or security
interests relating thereto and the proceeds thereof, which the
Guarantor now has or may hereafter have or acquire against the
Borrower (such claims and demands referred to herein as the
"Claims") and (iii) any and all property described on the "Schedule
of Specific Possessory Collateral" on the reverse side hereof,
together with any additions and accessions thereto and substitution
therefor and the products and proceeds thereof. This Guarantee is
also secured by (a) any and all property of the Guarantor now or
hereafter subject to a security agreement, mortgage, pledge
agreement, assignment, hypothecation or other document granting the
Bank or any Affiliate a security interest or other lien or
encumbrance and (b) any and all collateral described in any and all
credit accommodations, notes, loan agreements, and any other
agreements and documents, now or hereafter existing, creating,
evidencing, guaranteeing, securing or relating to any or all of the
Liabilities, together with all amendments, modifications, renewals,
or extensions thereof. All of the property described in clauses
(i), (ii), (iii), (a) and (b) above shall be collectively referred
to herein as the "Collateral". The Bank at any time, before or
after an Event of Default (as hereinafter defined), may, but shall
not be obligated to, transfer into or out of its own name or that of
its nominee all or any of the Collateral, including stocks, bonds,
and other securities, and the Bank or its nominee may demand, sue
for, collect, receive and hold as like Collateral any or all
interest, dividends and income thereon and if any securities are
held in the name of the Bank or its nominee, the Bank may, after an
Event of Default exercise all voting and other rights pertaining
thereto as if the Bank were the absolute owner thereof, but the Bank
shall not be obligated to demand payment of, protest, or take any
steps necessary to preserve any rights in the Collateral against
prior parties, or to take any action whatsoever in regard to the
Collateral or any part thereof, all of which the Guarantor assumes
and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection
with any conversion, call, redemption, retirement or any other event
relating to any Collateral, unless the Guarantor gives written
notice to the Bank that such action shall be taken not more than
thirty (30) days prior to the time such action may first be taken
and not less than ten (1O) days prior to the expiration of the time
during which such action may be taken.
135
<PAGE>
The Guarantor hereby grants to the Bank full power, without notice
to the Guarantor or to the Borrower, and without in any way
affecting the joint and several obligations of each Guarantor
hereunder, to deal in any manner with the Borrower, the Liabilities,
the Collateral and with any Guarantor hereunder, and any other
guarantor of the liabilities including, without limitation, the
following powers; (a) to modify or otherwise change any terms of all
or any part of the Liabilities and/or the Collateral, to grant any
extension or renewal thereof and any other indulgence with respect
thereto, and to effect any release, subordination, compromise or
settlement with respect to the Borrower, the Liabilities, the
Collateral, and the obligations of any one or more of the
Guarantors; (b) to enter into any agreement of forbearance with
respect to all or any part of the Collateral, or with respect to the
Liabilities of the Borrower or the obligations of any Guarantor, to
change the terms of any such agreement; (c) to forbear from calling
for additional collateral to secure any of the Liabilities or to
secure any obligation comprised in the Collateral; and (d) to
consent to the substitution, exchange, or release of all or any part
of the Collateral, whether or not the collateral, if any, received
by the Bank upon any substitution, exchange, or release shall be of
the same or of a different character or value than the collateral
surrendered by the Bank.
136
<PAGE>
The Guarantor waives any notice of the acceptance of this
Guarantee, or of the creation, renewal or accrual of any of the
Liabilities, present or future, or of the reliance of the Bank upon
this Guarantee. The Liabilities shall conclusively be presumed to
have been created, contracted for, incurred or suffered to exist in
reliance upon this Guarantee, and all dealings between the Borrower
and the Bank shall likewise be presumed to be in reliance upon this
Guarantee. The Guarantor waives protest, presentment, demand for
payment, notice of default or non-payment, and notice of dishonor to
or upon the Guarantor, the Borrower, or any other party liable for
any of the Liabilities. The Guarantor acknowledges that this
Guarantee and the Guarantor's obligations under this Guarantee are
and shall at all time continue to be absolute and unconditional in
all respects, and shall at all times be valid and enforceable
irrespective of (a) any other agreements or circumstances of any
nature whatsoever which might otherwise constitute a defense to this
Guarantee and the obligations of the Guarantor under this Guarantee,
(b) the obligations of any other person or party (including, without
limitation, the Borrower) relating to this Guarantee, or (c) the
obligations of the Guarantor under this Guarantee or otherwise with
respect to the Liabilities. The obligations of the Guarantor
hereunder, and the rights of the Bank in the Collateral, shall not
be released, discharged or in any way affected, nor shall the
Guarantor have any rights against the Bank by reason of the fact
that the Bank fails to preserve any rights in the Collateral or take
any action whatsoever in regard to the Collateral or that any of the
Collateral may be in default at the time of acceptance thereof by
the Bank or later, nor by reason of the fact that a valid lien on
any of the Collateral may not be conveyed to, or created in favor
of, the Bank; nor by reason of the fact that any of the Collateral
may be subject to equities or defenses or claims in favor of others
or may be invalid or defective in any way; nor by reason of the fact
that any of the Liabilities may be invalid or unenforceable against
the Borrower or any obligor thereon for any reason whatsoever; nor
by reason of the fact that the value of the Collateral, if any, or
the financial condition of the Borrower, or of any obligee under the
guarantee, if any, of the Collateral, may not have been correctly
estimated or was thereafter changed; nor by reason of any
deterioration, waste, or loss by fire, theft, or otherwise of any of
the Collateral; nor by reason of the release, in whole or in part,
with or without consideration, of the Collateral or any of it.
137
<PAGE>
In case the Borrower shall fail to pay all or any part of the
Liabilities when due, the Guarantor immediately will pay to the Bank
the amount due and unpaid by the Borrower under such Liabilities, in
like manner as if such amount constituted the direct and primary
obligation of the Guarantor. The Bank shall have its remedy under
this Guarantee without, being obliged to resort first to the
Collateral or to any other security or to any other remedy or
remedies to enforce payment or collection of the Liabilities, and
may pursue all or any of its remedies at one or at different times.
With respect to the Claims, the Bank shall have the full right on
the part of the Bank in its own name or in the name of the Guarantor
to collect and enforce such Claims by legal action, proof of debt in
bankruptcy or other liquidation proceedings, vote in any proceeding
for the arrangement of debts at any time proposed, or otherwise, the
Bank and each of its officers being hereby irrevocably constituted
attorneys-in-fact for the Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of the
Guarantor any instrument for the payment of money. The Guarantor
will receive as trustee for the Bank and will pay to the Bank
forthwith upon receipt thereof any amounts which the Guarantor may
receive from the Borrower on account of the said Claims. The
Guarantor agrees that at no time hereafter will any of such Claims
be represented by any notes, other negotiable instruments or
writings, except and in such event they shall either be made payable
to the Bank, or if payable to the Guarantor, shall forthwith be
endorsed by the Guarantor to the Bank. The Guarantor agrees that no
payment on account of such Claims or any security interest therein
shall be created, received, accepted or retained nor shall any
financing statement be flied with respect thereto by the Guarantor
unless and until the Borrower has paid and satisfied in full all the
Liabilities. The Bank is hereby authorized and empowered, upon the
occurrence of any Event of Default, to appropriate and apply to the
payment and extinguishment of the Liabilities of the Borrower and
obligations of the Guarantor any and all claims, demands, monies,
property, securities, deposits, or credit balances without demand,
advertisement or notice, all of which are hereby expressly waived.
In the event that the Bank shall receive any payments on account of
any of the Liabilities, whether directly or indirectly, and it shall
subsequently be determined that such payments were for any reason
improper, or a claim shall be made against the Bank that the same
were improper, and the Bank either voluntarily or pursuant to court
order shall return the same, the Guarantor shall be liable, with the
same effect as if the said payments had never been paid to, or
received by, the Bank, for the amount of such repaid or returned
payments, notwithstanding the fact that they may theretofore have
been credited on account of the Liabilities or any of them. If the
Guarantee hereunder with respect to any Guarantor would be held or
determined to be void, invalid or unenforceable on account of the
amount of such Guarantor's aggregate liability under this Guarantee,
then notwithstanding any other provision of this Guarantee to the
contrary, the maximum liability of such Guarantor hereunder shall be
automatically limited and reduced to an amount equal to the maximum
amount that would not render this Guarantee with respect to such
Guarantor void, invalid or unenforceable. The invalidity or
unenforceability of any portion of this Guarantee shall in no way
affect the validity or enforceability of any other portion of this
Guarantee.
138
<PAGE>
If any of the following events shall occur (each an "Event of
Default"): default by the Borrower with respect to the Liabilities
or by the Guarantor with respect to the obligations or liabilities
of either of them to the Bank, or in case the Borrower or any
Guarantor shall die, or become insolvent, or be unable to meet his
or its debts as they mature after 10 days notice, or make any
assignment for the benefit of creditors after 10 days notice, or if
an order for relief under the Federal Bankruptcy Code, as now or
hereafter in effect, shall be entered against the Borrower or any
Guarantor, or if a receiver, trustee or custodian of any kind
(either at law or in equity) of any of the property of the Borrower
or of any Guarantor is appointed, or if a judgment is obtained or a
warrant of attachment issued against the Borrower or any Guarantor
in excess of $50,000.00 which is not fully covered by insurance and
shall continue unsatisfied and unstayed for a period of 60 days, of
if the financial or business condition of the Borrower or any
Guarantor shall so change as in the opinion of the Bank to impair
materially the Bank's security or increase its risk after 10 days
notice, or in the event of any default in the performance of any
obligation comprised in the Collateral or if the Bank in good faith
shall deem itself insecure after 10 days notice, then the
Liabilities of the Borrower and the obligations of the Guarantor to
the Bank, whether direct or contingent, and of every description,
shall, without notice or demand become immediately due and payable
and shall be paid forthwith by the Guarantor, and in such event the
Bank may sell or dispose of the whole or any part of the Collateral,
at public or private sale with or without any previous demand for
performance to the Guarantor or the Borrower. Any legal requirement
of notice of any such sale or other disposition shall be deemed
satisfied by the giving of five days prior written notice which
shall also be deemed reasonable notice. If the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Bank shall not be
required to give notice of public or private sale or other intended
disposition of the Collateral. The Bank may retain from the
proceeds of any such sale all costs and charges incurred by it in
the said taking and sale or other disposal including but not limited
to attorneys' fees, if a deficit should remain after any such sale
or other disposal, the Guarantor will pay the same promptly upon
demand to the Bank. The Bank or its agent may bid and/or purchase
free from any right or equity of redemption at any such public or
private sale. In any event the Guarantor and Borrower agree to pay
attorneys' fees of 20% of all amounts then due and owing from the
Guarantor and the Borrower to the Bank which fees the Guarantor
hereby agrees to be reasonable if any Liabilities of the Borrower or
any obligations of the Guarantor to the Bank arc placed in the hands
of an attorney for collection. Any stocks, bonds or other
securities held by the Bank hereunder may, whether or not the
Borrower or the Guarantor is in default, be registered and held in
the name of the Bank or its nominee, and after default the Bank or
its nominee may exercise all voting and other corporate rights as if
the Bank were the absolute owner thereof.
139
<PAGE>
No delay on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any power or right hereunder or the failure to
exercise same in any instance preclude other or further exercise
thereof or the exercise of any other power or right; nor shall the
Bank be liable for exercising or failing to exercise any such power
or right; the right and remedies hereunder expressly specified are
cumulative and not exclusive of any rights or remedies which the
Bank or any one in whose behalf it has acted or shall act as herein
provided, or its or his or their transferees, may or will otherwise
have.
The term "the Bank" as used throughout this instrument shall be
deemed to include Shawmut Bank N.A. all of its branches and
departments, and any individual, partnership or corporation acting
as its nominee or agent, and any corporate subsidiary the stock of
which is owned or controlled, directly or indirectly, by Shawmut
Bank N.A. The term "Borrower" as used throughout this instrument
shall include the individual or individuals, association,
partnership, limited liability company or corporation named herein
as the Borrower, and (a) any successor, individual or individuals,
association, partnership or limited liability company or corporation
to which all or substantially all of the business or assets of the
Borrower shall have been transferred, (b) in the case of a Borrower
which is a partnership or limited liability company, any new
partnership or limited liability company, as the case may be, which
shall have been created by reason of the admission of any new
partner (member) or partners (members) therein or the dissolution of
the existing partnership (limited liability company) by the death,
resignation or other withdrawal of any partner (member), and (c) in
the case of a Borrower which is a corporation, any other corporation
into or with which the Borrower shall have been merged,
consolidated, reorganized, purchased or absorbed.
140
<PAGE>
The Guarantee shall, without further reference, pass to and may be
relied on and enforced by any successor or assignee of the Bank, and
any transferee or subsequent holder of any of the Liabilities and
the Borrower and/or the Guarantor will not assert any claims it may
have against the Bank against any such assignee, successor,
transferee, or any other subsequent holder. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE BANK OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE BANK FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY
LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED
TO THIS GUARANTEE, THE LIABILITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES
NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM
NOW EXISTS OR HEREAFTER ARISES AND WHETHER OR NOT IT IS NOW KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR. This is a continuing guaranty, and
is to remain in force throughout business relations between the
Borrower and the Bank, and until the payment of all Liabilities of
the Borrower to the Bank, whether now existing or hereafter
incurred, notwithstanding the appointment of a receiver of, or the
dissolution of, and/or any other change in, or with respect to the
Borrower. No change, modification, waiver, or discharge, in whole
or in part, of this Guarantee shall be effective unless in writing
and signed by the party against whom such change, modification,
waiver, or discharge is sought to be enforced. However, this
Guarantee may be terminated with respect to the obligations of any
of the Guarantors (but then only so far as it relates to Liabilities
arising after such termination), only upon written notice to that
effect delivered by such Guarantor to the Bank and receipt thereof
acknowledged in writing by an officer of the Bank. In the event of
termination such Guarantor and his, her or its respective executors,
administrators and assigns shall nevertheless remain liable with
respect to the Liabilities theretofore created or arising, and with
respect to such Liabilities and any renewals, or other liabilities
arising out of the same, this instrument shall continue in full
force and effect and the Bank shall have all the rights herein
provided for as if no such termination had occurred; and the
Guarantors, if any, who have not joined in such termination shall
continue to be liable hereunder as if no such termination had been
effected. In addition to all rights and remedies granted herein,
the Bank shall have all of the rights of a Secured Party under the
Uniform Commercial Code of the Governing State (which term as used
in this Guarantee shall mean the state indicated as such below;
provided, that, if no such state is indicated then Governing State
shall mean the state where the Bank's office that originated the
Liabilities is located). This Guarantee shall be deemed to have
been made in the Governing State, the Guarantor consents to the
jurisdiction of the state and federal courts of the Governing State,
and the rights and liabilities of the parties shall be determined in
accordance with the laws of the Governing State.
141
<PAGE>
The Guarantor has made an independent investigation of the Borrower
and of the financial condition of the Borrower. The Bank has not
made and does not make any representations or warranties as to the
income, expense, operation, finances or any other matter or thing
affecting the Borrower nor has the Bank made any representation or
warranties as to the amount or nature of the Liabilities of the
Borrower to which this Guarantee applies as specifically herein set
forth, nor has the Bank or any officer, agent or employee of the
Bank or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature,
and the Guarantor hereby expressly acknowledges that no such
representations or warranties have been made and the Guarantor
expressly disclaims reliance on any such representations or
warranties. It is agreed that all understandings and agreements
heretofore had between the parties hereto are merged in this
Guarantee, which alone, fully and completely, expresses their
understanding.
EACH GUARANTOR ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY WAIVES
(A) THE RIGHT TO A TRIAL BY JURY IN ANY LITIGATION WITH THE BANK
(WHETHER OR NOT ARISING OUT OF OR RELATING TO ANY NOTE) (B) ALL
RIGHT TO ASSERT ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF
ANY NATURE WHATSOEVER (I) WITH RESPECT TO THIS GUARANTEE OR THE
OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE, OR (II) WITH
RESPECT TO THE OBLIGATIONS OF ANY OTHER PERSON OR PARTY (INCLUDING,
WITHOUT LIMITATION, THE BORROWER) RELATING TO THIS GUARANTEE OR
OTHERWISE WITH RESPECT TO THE LIABILITIES, IN ANY ACTION OR
PROCEEDING BROUGHT BY THE HOLDER HEREOF TO ENFORCE ITS RIGHTS AND
REMEDIES WITH RESPECT TO THE LIABILITIES OR ANY PORTION THEREOF, OR
TO ENFORCE THE OBLIGATIONS OF THE GUARANTOR UNDER THIS GUARANTEE;
AND (C) TO THE EXTENT THE UNDERSIGNED IS AN INDIVIDUAL, ANY CLAIM,
RIGHT OR REMEDY, WHICH MAY ARISE BY ANY STATUTE OR OTHERWISE, WHICH
THE GUARANTOR MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST THE BORROWER
THAT ARISES FROM (I) THE EXECUTION OR PERFORMANCE BY THE GUARANTOR
OF ITS OBLIGATIONS TO THE BANK UNDER THIS GUARANTEE, INCLUDING,
WITHOUT LIMITATION, ANY CLAIM, REMEDY OR RIGHT OR SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION, OR INDEMNIFICATION AGAINST
THE BORROWER, OR (II) THE PARTICIPATION BY THE GUARANTOR IN ANY
CLAIM, RIGHT OR REMEDY OF THE BANK AGAINST THE BORROWER OR IN ANY
SECURITY WHICH THE BANK NOW HAS OR HEREAFTER ACQUIRES BY STATUTE,
UNDER COMMON LAWS OR OTHERWISE.
142
<PAGE>
Each Guarantor hereby authorizes the Bank to date this Guarantee and
to complete and fill in any blank spaces in this Guarantee In order
to conform to terms upon which the Guarantee is provided. Each
Guarantor further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any
part thereof and each Guarantor agrees to bear the cost of such
filing(s). The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsers and assigns.
Governing State: New York
Schedule of Specific Possessory Collateral
__________________________________________________________________
__________________________________________________________________
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on the 16th day of January, 1996.
IN THE PRESENCE OF: GUARANTORS;
INDIVIDUAL SIGNORS:
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
_______________________________ ________________________________
Bank Officer/Notary Name: , Individually
________________________________
(Address)
CORPORATION, PARTNERSHIP, OR
LIMITED LIABILITY COMPANY
SIGNORS:
Math Associates, Inc.
Name of Corporation, Partnership
or Limited Liability Company
s/PETER G. BRANDEL, V.P. By: s/ARNOLD H. LEVINE
Bank Officer/Notary Name: Arnold H. Levine
Title: Treasurer
5500 New Horizons Boulevard
Amityville, New York 11701
(Address)
143
<PAGE>
RIDER TO GUARANTEE
OF
MATH ASSOCIATES, INC.
DATED JANUARY 16, 1996
TO
NATWEST BANK N.A., AS SUCCESSOR TRUSTEE
OF THE INDEBTEDNESS OF
GENERAL MICROWAVE CORPORATION
*including all penalties and other expenses of and payments by the
Bank, but only in connection with or arising out of the
Reimbursement Agreement dated as of October 1, 1994 between the
Borrower and the Bank as same may have been or may hereafter be
amended, modified, supplemented or extended from time to time
together with any other documents or agreements executed in
connection therewith (such obligations and liabilities of the
Borrower being hereinafter collectively called the "Liabilities").
The Bank shall be entitled to apply any payment or amount received
from the Borrower or the Guarantor or in respect of collateral to
either principal of, interest on or other components of the
Liabilities in such order and priority as the Bank shall determine
in its sole discretion. The obligations of the Guarantor under this
Guarantee shall not be reduced as the result of any proceeding or
action by the Bank against the Borrower or against any collateral
given to secure payment of the Liabilities.
MATH ASSOCIATES, INC.
By:s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Treasurer
144
<PAGE>
Exhibit 10(a)(22)
-----------------
CASH COLLATERAL AGREEMENT
-------------------------
This Cash Collateral Agreement, made as of the 16th
day of January, 1996, by and between GENERAL MICROWAVE CORPORATION,
a New York corporation having an office at 5500 New Horizons
Boulevard, Amityville, New York 11701 ("Pledgor") and NatWest Bank
N.A., a national banking association, having an office at 600 Broad
Hollow Road, Melville, New York 11747, for the benefit of itself and
for Shawmut Bank N.A., as successor trustee under that certain
Indenture, as hereinafter defined (the "Bank").
W I T N E S S E T H
WHEREAS, the Pledgor and the Bank entered into a
reimbursement agreement dated as of October 1, 1984, as same may
have been amended from time to time (the "Agreement"), in connection
with a letter of credit issued by the Bank in support of the Town of
Babylon Industrial Development Agency $6,000,000.00 Variable Rate 7-Day
Demand Industrial Development Revenue Bonds (General Microwave
Corporation Facility) Series 1984 (the "Bonds"); and
WHEREAS, as an inducement for the Bank to provide
certain waivers of covenant compliance under the Agreement, the
Pledgor has agreed to pledge certain collateral in accordance with
the terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and
in order to induce the Bank to provide said waivers and for other
good and valuable consideration, receipt of which is hereby
acknowledged, the Pledgor hereby agrees with the Bank as follows:
ARTICLE I
---------
DEFINITIONS
-----------
Section 1 Definitions. For purposes of this Agreement:
"Collateral" shall have the meaning assigned that term
in Section 2.01.
"Event of Default" means the occurrence of any default
under the Agreement or any other document executed in connection with the
Agreement.
"Indenture" means the Indenture of Mortgage and Trust
dated as of October 1, 1984 between the Town of Babylon Industrial
Development Agency and NatWest Bank N.A. (formerly known as National
Westminster Bank USA) executed in connection with the Bonds.
"Obligations" mean
(a) all indebtedness, obligations and liabilities, whether
liquidated or unliquidated, whether fixed in amount or contingent, of the
Pledgor to the Bank arising hereunder or under the Agreement or any other
document executed in connection with the Agreement as well as all
indebtedness, obligations and liabilities, whether liquidated or
unliquidated, whether fixed in amount or contingent, of the Pledgor to
the Trustee arising hereunder or under the Indenture or any other document
executed in connection with the Indenture;
(b) any and all sums at any time advanced by the Bank
or the Trustee in order to preserve the Collateral (or any other
collateral given to the Bank or the Trustee by the Pledgor) or
preserve its security interest in the Collateral (or any other
collateral given to the Bank or the Trustee by the Pledgor); and
(c) in the event of any proceeding for the collection
of liabilities of the Pledgor referred to in clause (a), the
reasonable expenses of preparing for sale, selling or otherwise
disposing or realizing on the Collateral (or any other collateral
given to the Bank or the Trustee by the Pledgor) or of any exercise
by the Bank of its rights hereunder, together with reasonable
attorneys' fees and court costs.
"Trustee" means Shawmut Bank N.A., as successor trustee
under the Indenture.
All other capitalized terms used in this Cash
Collateral Agreement and not defined herein shall have the meanings
assigned to them in the Agreement.
ARTICLE II
----------
SECURITY INTERESTS
------------------
2.01 Grant of Security Interests. As collateral
----------------------------
security for the prompt and complete payment and performance by the
Pledgor when due of all of the Obligations, the Pledgor does hereby
pledge, assign and transfer unto the Bank and the Trustee, and does
hereby grant to the Bank and the Trustee for the benefit of the Bank
and the Trustee, a security interest of first priority in, all of
the right, title and interest of the Pledgor in the Account No.
2517005730 with the Bank (the "Account") as well as in all right,
title and interest of the Pledgor of all income tax refunds and to
the extent provided in this Cash Collateral Agreement, proceeds of
the foregoing (all of the above collectively, the "Collateral").
2.02 Deposits into Account. The Pledgor agrees to
----------------------
deposit the sum of $50,000.00 on the first day of each month into
the Account beginning April 1, 1996 and continuing on the first day
of each month thereafter. In addition, upon receipt of any income
tax refund from any governmental authority, the Pledgor shall
deposit said tax refund into said Account. The Pledgor shall not be
required to deposit any amounts in excess of $500,000.00 in the
aggregate into said Account. In the event there is more than
$500,000.00 in the Account, the Bank and the Trustee shall release
any sums in excess of $500,000.00 to the Pledgor.
2.03 Power of Attorney. The Pledgor hereby
------------------
constitutes and appoints the Bank its true and lawful attorney,
irrevocably, with full power (in the name of the Pledgor or
otherwise) to act, require, demand, receive, compromise and give
acquittance for any and all monies and claims for monies due or to
become due to the Pledgor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any
proceedings which the Bank may deem to be necessary or advisable in
the premises, which appointment as attorney is coupled with an
interest. The Bank shall only exercise its rights under this
Section 2.03 after the occurrence and continuance of an Event of
Default.
2.04 Bank as Agent for Trustee. The Bank agrees
--------------------------
that it is acting for itself and, with respect to the possession of
the Collateral, as agent for the Trustee. In the event there occurs
any default or event of default under any Obligation to the Trustee,
the Bank shall act at the direction of the Trustee in exercising all
rights and remedies granted to the Bank herein. The Pledgor hereby
indemnifies the Bank against and shall hold the Bank harmless from
any and all costs, expenses, losses, reasonable attorneys' fees,
damages, claims and liabilities whatsoever, in any way relating to
or arising from this Cash Collateral Agreement.
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
The Pledgor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution
and delivery of this Cash Collateral Agreement, as follows:
3.01 Power and Authority. Pledgor has full power,
--------------------
authority and legal right to pledge the Collateral pursuant to this
Cash Collateral Agreement and the Cash Collateral Agreement has been
duly authorized, executed and delivered by the Pledgor and
constitutes a legal, valid and binding obligation of the Pledgor,
enforceable in accordance with its terms.
3.02 No Consents Required; No Violation. No consent
-----------------------------------
of any other party and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by the
Pledgor in connection with the execution, delivery or performance of
this Cash Collateral Agreement. The execution, delivery and
performance of this Cash Collateral Agreement will not violate any
provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, or of any mortgage,
indenture, lease, contract, or other agreement, instrument or
undertaking to which the Pledgor is a party or which is binding upon
the Pledgor or upon any of its assets and will not result in the
creation or imposition of any lien, charge or encumbrance on, or
security interest in any of the assets of the Pledgor except as
contemplated by this Cash Collateral Agreement or any other written
agreement among the parties hereto executed on this date making
reference to this Cash Collateral Agreement.
3.03 Necessary Filings. Upon the filing of the UCC-1s
------------------
to be delivered herewith, all filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the
security interest granted by the Pledgor to the Bank and the Trustee
hereby in respect of the Collateral have been accomplished and the
security interest granted to the Bank and the Trustee pursuant to this
Cash Collateral Agreement in the Collateral constitutes a perfected
security interest therein prior to the rights of all other persons
therein and subject to no other liens, and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests.
3.04 No Liens. The Pledgor is, and as to Collateral
---------
hereafter subject to the lien of this Cash Collateral Agreement the
Pledgor will be, the owner of all the Collateral free from any lien,
security interest, encumbrance or other right, title or interest of
any Person and the Pledgor has and will have full power and
authority to pledge such Collateral and to assign, transfer and
deliver such Collateral in the manner and form aforesaid or to cause
such Collateral so to be pledged and such Collateral so to be
assigned, transferred and delivered, and the Pledgor does warrant
and shall defend the title of the Bank and the Trustee to the
Collateral, whether now or hereafter pledged or assigned by the
Pledgor, against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to the Bank.
3.05 Other Financing Statements. There is no
---------------------------
financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral and
so long as any of the Obligations remain unpaid, the Pledgor will
not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to
be filed in respect of and covering the security interests granted
hereby by the Pledgor.
3.06 Protection of Lien.
-------------------
(a) The Pledgor will do all things and take all
actions within its control which are reasonable and necessary to
keep the lien granted pursuant to this Cash Collateral Agreement a
valid first, prior and perfected lien upon the Collateral and
protect its title to the Collateral against loss by reason of any
proceeding to enforce any lien prior to or pari passu with the lien
of this Cash Collateral Agreement.
(b) The Pledgor will:
(i) duly and promptly pay and discharge, or
cause to be paid and discharged, before they become delinquent, all
taxes, assessments, governmental and other charges lawfully levied,
assessed or imposed upon or against any of the Collateral including
the income or profits therefrom and the interest of the Bank and the
Trustee in such Collateral;
(ii) duly observe, and conform in all material
respects to, all valid requirements of any governmental authority
imposed upon the Pledgor relative to any of the Collateral, and all
covenants, terms and conditions under or upon which any part thereof
is held; and
(iii) cause to be paid and discharged all lawful
claims (including, without limitation, income taxes) which, if
unpaid, might become a lien or charge upon the Collateral.
Nothing contained in this Section shall require the
payment of any such tax, assessment, claim, lien or charge or the
compliance with any such requirement so long as the validity,
application or amount thereof shall be contested in good faith.
3.07 Filings. Upon the request of the Bank, the
--------
Pledgor will cause all financing and continuation statements, if
any, with respect to this Cash Collateral Agreement to be kept,
recorded and filed in such manner in such places, if any, as may be
required by law in order to preserve and protect the rights of the
Bank and the Trustee, and will pay all taxes and fees incidental
thereto.
The Pledgor will also cause all Collateral assigned
to the Bank and the Trustee to be kept recorded in such manner and
in such places as may be required by law in order to protect and
preserve the rights of the Bank and the Trustee.
3.08 Further Assurances. The Pledgor will execute
-------------------
and deliver, or cause to be executed and delivered, all such
additional instruments and do, or cause to be done, all such
additional acts as (a) may be necessary or proper hereunder, to
carry out the purposes of this Cash Collateral Agreement and to make
subject to the lien hereof any property intended so to be subject,
(b) may be necessary or proper to transfer to any successor Bank or
successor Trustee, the estate, powers, instruments and funds held in
trust hereunder and to confirm the lien of this Cash Collateral
Agreement or the priority thereof, or (c) the Bank or Trustee may
reasonably request for any of the foregoing purposes. Upon the
request of the Bank or the Trustee the Pledgor will also cause to be
filed, registered or recorded any instruments of conveyance,
transfer, assignment or further assurance in all offices in which
such filing, registering or recording is necessary to the validity
thereof or to give notice thereof. The Pledgor hereby authorizes,
in the event the Pledgor fails to cooperate with the Bank or
Trustee, the Bank and the Trustee to file such financing statements
and continuation statements as the Bank or Trustee may deem
necessary or advisable to make or keep effective the lien of this
Cash Collateral Agreement or the priority thereof.
ARTICLE IV
----------
RELEASE OF COLLATERAL
---------------------
4.01 Release of Collateral. The Bank, for itself and as
----------------------
agent for the Trustee, shall release the Collateral from the pledge
of this Cash Collateral Agreement in order to enable the Pledgor to
make the sinking fund installment on the Bonds due on October 1,
1996. The Pledgor shall deliver to the Bank wire transfer
instructions in order to make said payment.
ARTICLE V
---------
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
--------------------------------------------
5.01 Remedies. If an Event of Default shall have
---------
occurred and be continuing, then the Bank by such officer or agent
as it may appoint, may take one or more of the following actions as
directed by the Bank or the Trustee, as the case may be (the Bank
shall be under no obligation to take any such action unless so
directed by the Trustee):
(i) proceed by one or more suits, actions or
proceedings at law or in equity or otherwise, or by any other
appropriate remedy, to enjoin any sale or disposition of Collateral
by the Pledgor or any person claiming under or by assignment from
the Pledgor or otherwise, or to enforce payment of the Collateral or
to realize on any collateral security for such Collateral, or to
foreclose under this Cash Collateral Agreement or to sell the
Collateral under a judgment or decree of a court or courts of
competent jurisdiction, or by the enforcement of any such other
appropriate legal or equitable remedy as the Bank or Trustee, being
advised by counsel, shall deem effectual to protect and enforce any
of its rights or powers or any of the rights or powers of the Bank
and the Trustee; or
(ii) otherwise exercise in general, all rights and
remedies of a secured party under the Uniform Commercial Code or any
other applicable state law, or do any combination of the foregoing;
or
(iii) apply the Account to payment of the
Obligations; or
(iv) exercise any additional rights and remedies
which are set forth in the Agreement.
5.02 Application of Proceeds. Any moneys collected
------------------------
or to be applied by the Bank and the Trustee pursuant to this
Article shall be applied in the following order from time to time:
(i) first, to the payment of any and all reasonable
expenses and fees (including reasonable attorney's fees) incurred by
the Bank and the Trustee in collection or other realization upon the
Collateral or otherwise in the administration of this Cash
Collateral Agreement;
(ii) second, to the Bank for application towards
payment of the Obligations pursuant to the Agreement.
5.03 Waiver of Claims. The Pledgor hereby
irrevocably waives: to the extent permitted by applicable law,
notice or judicial hearing in connection with the taking possession
or the disposition of any of the Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such rights which Pledgor would otherwise
have under the constitution or any statute of the United States or
of any State, and the Pledgor hereby further waives:
(a) all damages occasioned by any taking of
possession of the Collateral except any damages which are the direct
result of the Bank's or Trustee's gross negligence or willful
misconduct;
(b) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement
of the Bank's and Trustee's rights hereunder; and
(c) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the
enforcement of the Cash Collateral Agreement or the absolute sale of
the Collateral or any portion thereof, and the Pledgor, for itself
and all who may claim under it, insofar as they now or hereafter
lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any
other realization upon, any Collateral in accordance with the terms
hereof shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Pledgor therein and
thereto, and shall be a perpetual bar both at law and in equity
against the Pledgor and against any and all persons claiming or
attempting to claim the Collateral so sold, optioned or realized
upon, or any part thereof, from, through and under the Pledgor.
5.05 Remedies Cumulative. Each and every right,
power and remedy hereby specifically given to the Bank and the
Trustee shall be in addition to every other right, power and remedy
specifically given under this Cash Collateral Agreement or now or
hereafter existing at law or in equity, or by statute and each and
every right, power and remedy may be exercised from time to time or
simultaneously and as often and in such order as may be deemed
expedient by the Bank and the Trustee. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of
exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay by or omission of the Bank
or Trustee in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such
right, power or remedy or shall be construed to be a waiver of any
default or Event or Default or an acquiescence therein. In the
event that the Bank or Trustee shall bring any suit to enforce any
of its rights hereunder and shall be entitled to judgment, then in
such suit the Bank and Trustee may recover reasonable expenses,
including attorneys' fees, and the amount thereof shall be included
in such judgment.
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.01 Notices. Except as otherwise specified herein, all
--------
notices and other communications provided for hereunder shall be in
writing (including telecopies or telegraphic communication) and mailed,
telecopied, telegraphed or delivered, to any party hereto at its address
set forth at the beginning of this Cash Collateral Agreement or at such
other address as such party may hereafter notify the other party in
writing. All such notices shall not be effective until received.
6.02 Waiver; Amendment. No delay on the part of the
------------------
Pledgor, or the Bank or Trustee in exercising any of their rights,
remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a waiver thereof. None of the
terms and conditions of this Cash Collateral Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing
duly signed by each of the parties hereto. No notice to or demand on
the Pledgor in any case shall entitle it to any other or further notice
or demand in similar or other circumstances or constitute a waiver of
any of the rights of the Bank or Trustee to any other or further action
in any circumstances without notice or demand.
6.03 Obligations Absolute. The obligations of the Pledgor
---------------------
hereunder shall remain in full force and effect without regard to, and
shall not be impaired by, (a) any exercise or non-exercise, or any waiver
of, any right, remedy, power or privilege under or in respect of this Cash
Collateral Agreement or the Agreement except as specifically set forth in
a waiver granted pursuant to the restrictions of Section 6.02 hereof; or
(b) any amendment to or modification of any of the documents which have or
may be executed in connection with the Bonds or any security for any of
the Obligations; whether or not the Pledgor shall have notice or knowledge
of any of the foregoing. The rights and remedies of the Bank and Trustee
herein provided are cumulative and not exclusive of any rights or remedies
which they would otherwise have under the Agreement or otherwise.
6.04 Successors and Assigns. This Cash Collateral Agreement
-----------------------
shall be binding upon each of the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties
hereto, the Bank and the Trustee and their respective successors and
assigns, provided that the Pledgor may not transfer or assign any or all
of its rights or obligations hereunder without the written consent of the
Bank and the Trustee. All agreements, statements, representations and
warranties made by the Pledgor herein or in any certificate or other
instrument delivered by the Pledgor or on its behalf under this Cash
Collateral Agreement shall be considered to have been relied upon by the
Bank and shall survive the execution and delivery of this Cash Collateral
Agreement regardless of any investigation made by the Bank or the Trustee
or on their behalf.
6.05 Headings Descriptive. The headings of the several
---------------------
sections of this Cash Collateral Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Cash Collateral Agreement.
6.06 Severability. Any provision of this Cash Collateral
-------------
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
6.07 Pledgor's Duties. It is expressly agreed, anything
-----------------
herein contained to the contrary notwithstanding, that the Pledgor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Bank or Trustee shall not be required or
obligated in any manner to perform or fulfill any of the obligations of the
Pledgor under or with respect to any Collateral.
6.08 Counterparts. This Cash Collateral Agreement may be
-------------
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed an
original, and all of which taken together shall constitute one and the
same agreement.
6.09 Termination; Release. Upon the irrevocable payment
---------------------
in full of all Obligations or the release of all of the Collateral
pursuant to Section 4.01 herein this Cash Collateral Agreement shall
terminate and the Bank at the request and expense of the Pledgor, will
execute and deliver to the Pledgor the proper instruments (including any
necessary Uniform Commercial Code termination statement on form UCC-3
acknowledging the termination of this Cash Collateral Agreement), and will
duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty) such Collateral as may be in
possession of the Bank and has not theretofore been sold or otherwise
applied pursuant to this Cash Collateral Agreement.
6.10 Bank's Rights under Account. Nothing contained
----------------------------
in this Cash Collateral Agreement shall be construed to in any way
effect the Bank's rights with respect to the terms of the Account.
6.11 Governing Law, Consent to Jurisdiction and
------------------------------------------
Service of Process. New York law shall govern the execution,
- -------------------
performance and construction of this Cash Collateral Agreement. The
undersigned hereby submits to the jurisdiction of the Supreme Court
of the State of New York and agrees with Bank and the Trustee that
personal jurisdiction over the undersigned shall rest with the
Supreme Court of the State of New York for purposes of any action on
or related to this Cash Collateral Agreement, the liabilities, or
the enforcement of either or all of the same. The undersigned
hereby waives personal service by manual delivery and agrees that
service of process may be made by post-paid certified mail directed
to the undersigned at undersigned's address set forth above with a
copy to Michael Stolzar, Esq., Zissu, Gimbinger, Stolzar and
Wasserman, 950 Third Avenue, New York, New York 10022 or at such
other address as may be designated in writing by undersigned to the
Bank, and that upon mailing of such process such service be
effective with the same effect as though served by personal manual
delivery upon the undersigned, whether or not the undersigned in
fact receive and accept such certified mail and whether or not the
undersigned acknowledges the same on a return receipt.
6.12 Waiver of Trial by Jury and Counterclaims. The
------------------------------------------
undersigned hereby expressly waives any and every right to a trial
by jury in any action on or related to this Cash Collateral
Agreement, the liabilities or the enforcement of either of all of
the same, and does further expressly waive any and every right to
interpose any counterclaim in any such action or proceeding.
IN WITNESS WHEREOF, the parties hereto have caused
this Cash Collateral Agreement to be executed and delivered by their
duly authorized officers as of the date first above written.
GENERAL MICROWAVE CORPORATION
By: s/ ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Vice President Finance
NATWEST BANK N.A.
By: s/ PETER G. BRANDEL
Peter G. Brandel
Vice President
145
<PAGE>
Exhibit 10(a)(23)
-----------------
AMENDMENT AND WAIVER OF
REIMBURSEMENT AGREEMENT
THIS AMENDMENT is dated the 16th day of January, 1996 by and
between NATWEST BANK N.A. (formerly known as NATIONAL WESTMINSTER BANK
USA), a national banking association, having an office at 600 Broad
Hollow Road, Melville, New York 11747 (the "Bank") and GENERAL MICROWAVE
CORPORATION, a New York corporation having an office at 550 New Horizons
Boulevard, Amityville, New York 11701 (the "Company").
W I T N E S S E T H :
WHEREAS, the Company and the Bank entered into a reimbursement
agreement dated as of October 1, 1984, as same may have been amended from
time to time (the "Agreement"), in connection with a letter of credit
issued by the Bank in support of the Town of Babylon Industrial Development
Agency $6,000,000.00 Variable Rate 7-Day Demand Industrial Development
Revenue Bonds (General Microwave Corporation Facility) Series 1984
(the "Bonds");
WHEREAS, the Company has requested certain modifications
and certain waivers to the Agreement and the Bank has agreed to such
modifications and waivers provided that the Company enters into this
agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company
and the Bank hereby agree as follows:
1. As used in this agreement, capitalized terms not
defined herein shall have the meaning set forth in the Agreement.
2. As an inducement for the Bank to enter into this
Agreement, the Company represents and warrants as follows:
A. That with respect to the Agreement and any other
documents executed in connection therewith:
(i) There are currently no defenses or offsets to
the Company's obligations under the Agreement or any
other documents executed in connection with the
Agreement, and if any such defenses or offsets
currently exist without the knowledge of the
Company, the same are hereby waived.
(ii) All of the representations and warranties made
by the Company in the Agreement are true and correct
in all material respects as if made on the date hereof.
3. The Bank hereby waives until February 29, 1996 any
Default or Event of Default resulting from the failure by the
Company to maintain a minimum tangible net worth of $14,200,000.00
as at the fiscal quarter end December 2, 1995 provided the tangible
net worth is at least $13,100,000.00 until February 29, 1996 and
provided further, for each fiscal year end after February 29, 1996,
the Company shall be required to maintain a minimum tangible net
worth in an amount not less than $13,100,000.00 which shall be
increased by an amount equal to 50% of the net income earned by the
Company during the same fiscal year.
4. The Bank hereby waives any Default or Event of Default
resulting from the failure by the Company to not have a fiscal loss
at fiscal year end February 29, 1996.
5. The following subsection (e) is hereby added to
Section 9 of the Agreement:
"(e) the Company will not have a fiscal loss for the
fiscal quarter ending February 29, 1996 or for any fiscal quarter
thereafter."
6. The Bank hereby waives through February 29, 1996 any
Default or Event of Default resulting from the failure by the Company to
maintain a ratio of net profit plus depreciation and all non-cash expenses
for such year to principal payments to be made on long term debt during
the immediately succeeding fiscal year of not less than 1.5 to 1.0.
7. The following subsection (a)(vi) is hereby added to
Section 7 of the Agreement:
"(vi) as soon as available, but in any event within 45
days after the end of each of the first three fiscal quarterly periods of
each fiscal year, consolidated and consolidating balance sheets of the
Company and its affiliates as of the last day of such quarter, and
consolidated and consolidating statements of income and retained earnings
and changes in financial position, for such quarter, all in reasonable
detail, each such statement to be certified by the chief financial, or
accounting, officer of the Company as having been prepared in accordance
with generally accepted accounting principles consistently applied
(subject to year-end audit adjustments)."
8. As an inducement to the Bank's execution of this amendment,
the Company shall cause to be delivered to the Bank and to Shawmut Bank
N.A., as successor trustee, under the indenture executed and delivered in
connection with the Bonds (the "Trustee"), the following:
(a) Guarantees of the obligations of the Company
relating to the Bonds from each of General Microcircuits Corp. and
Math Associates, Inc. (collectively, the "Guarantors");
(b) Security Agreements from each of the Guarantors
granting to the Bank and to the Trustee a security interest in the
Guarantors' accounts receivables together with UCC-1 financing
statements;
(c) a Cash Collateral Agreement from the Company to
the Bank and to the Trustee pursuant to which the Company agrees to
deposit certain sums (including an income tax refund) with the Bank
which is thereby pledged to the Bank and to the Trustee which sums
may be used by the Company to make the sinking fund installment due
on the Bonds on October 1, 1996;
(d) resolutions from the board of directors of the
Guarantors authorizing their respective Guaranties and Security
Agreements to be delivered within ten (10) days of the date hereof;
and
(e) an opinion of counsel from counsel to the Company
and the Guarantors in form and substance reasonably satisfactory to
the Bank and its counsel to be delivered within ten (10) days of the
date hereof.
9. The Company shall pay to the Bank and shall be otherwise
responsible for all reasonable fees, costs, expenses and disbursements
incurred by the Bank of any kind and description relating to the
negotiation, preparation, enforcement or interpretation of this amendment
and any other documents contemplated hereby, including without limitation,
the fees of the Bank in the amount of $12,000.00 as well as the reasonable
fees and expenses of the Bank's legal counsel.
10. Except as hereby amended, the Agreement and any other
document executed in connection therewith are in all respects
ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have duly executed
this agreement as of the year and date first above written.
GENERAL MICROWAVE CORPORATION
By s/ARNOLD H. LEVINE
Name: Arnold H. Levine
Title: Vice President-Finance
NATWEST BANK N.A.
By: s/PETER G. BRANDEL
Peter G. Brandel
Vice President
146
<PAGE>
Exhibit 10(d)
-------------
GENERAL MICROWAVE CORPORATION
EXECUTIVE INCENTIVE BONUS PLAN
1.0 Name of Plan
------------
The name of the plan set forth herein is the "General
Microwave Corporation Executive Incentive Bonus Plan" (the "Plan").
2.0 Purposes
--------
The purposes of the Plan are to enhance the long-term
profitability and shareholder value of General Microwave Corporation
(the "Corporation") by offering cash incentives to those employees
of the Corporation and its subsidiaries Math Associates, Inc. ("Math"),
General Microwave Israel Corporation ("GMIC"), General Microwave Israel
(1987) Limited ("GMIL") and General Microcircuits Corporation ("GMCC")
who are key to the growth and success of the Corporation, to attract and
retain executives, management and other key personnel with experience and
ability on a basis competitive with industry practices, and to encourage
such personnel to acquire and maintain their positions at the Corporation
and/or its subsidiaries.
3.0 Effective Date
--------------
The effective date of the Plan is the date on which it is
approved by the Board of Directors of the Corporation. It shall be
effective as to any subsidiary of the Corporation on the date on
which the Board of Directors of the particular subsidiary resolves
to have that subsidiary participate in the Plan.
4.0 Eligibility
-----------
4.1 All officers, division heads, managers and key
personnel designated as set forth in the Plan shall be eligible to
participate in the Plan. All decisions with respect to eligibility
and bonus amounts in individual cases and with respect to the
amounts allocated to a bonus pool made as set forth in the Plan
shall be final. The participants for each fiscal year shall be
determined and informed as soon as practical during that year.
4.2 With respect to each fiscal year, there shall be four
amounts payable ("bonus pools") as set forth below. The Chief
Financial Officer of the Corporation shall determine the amount
allocated to each budget pool based upon a review of the results of
operations of each participating subsidiary for each fiscal year.
Following is a list of the bonus pools.
4.2.1 Corporate - This bonus pool is for the
officers of the Corporation.
The amount of this bonus pool
for a particular fiscal year
will be based on the
Corporation's "net income" for
that fiscal year which for these
purposes means the Corporation's
consolidated earnings, if any,
for that fiscal year before
income taxes (benefit) and
extraordinary items computed
before deducting the amount of
this and the other bonus pools.
4.2.2 Amityville - This bonus pool is for the
employees of the Corporation's
Amityville and Math divisions.
The amount of this bonus pool
for a particular fiscal year
will be based on the "net
income" of the Amityville and
Math divisions for that fiscal
year which for these purposes
means the combined earnings, if
any, of the Amityville and Math
divisions for that fiscal year
before income taxes (benefit)
and extraordinary items computed
before deducting the amount of
this and the Corporate bonus
pool.
4.2.3 GMI - This bonus pool is for the
Corporation's Israel division.
The amount of this bonus pool
for a particular fiscal year
will be based on the "net
income" in Israel of GMIC and
GMIL for that fiscal year which
for these purposes means the
combined earnings in Israel, if
any, of GMIC and GMIL for that
fiscal year before income taxes
(benefit) and extraordinary
items computed before deducting
the amount of this bonus pool
but after deducting any expenses
of GMIC or GMIL paid in the
United States of America by the
Corporation, GMIC or GMIL.
4.2.4 GMCC - This bonus pool is for the
Corporation's GMCC division.
The amount of this bonus pool
for a fiscal year will be based
on the "net income" of GMCC for
that fiscal year which for these
purposes means the earnings, if
any, of GMCC for that fiscal
year before income taxes
(benefit) and extraordinary
items computed before deducting
the amount of this bonus pool.
5.0 Bonus Pool Amounts
------------------
5.1 The amount of the Amityville, GMI and GMCC bonus
pools for each fiscal year will be determined as follows:
5.1.1 No bonus pool will be allocated if the
applicable net income is less than $200,000.
5.1.2 If the applicable net income is between
$200,000 and $500,000, the bonus pool will be equal to one (1%)
percent of the applicable net income for each $100,000 of applicable
net income starting from the first dollar. For applicable net
income greater than $500,000, the bonus pool will be equal to
$25,000 plus ten (10%) percent of the amount greater than $500,000.
A summary of the amounts of these bonus pools is shown below:
NET INCOME BONUS POOL
---------- ----------
$0 TO $200,000 $0
$200,000 to $500,000 1% per $100,000 (e.g. a net
income of $350,000 will yield
a bonus pool of 3.5% of the
total amount)
$500,000 $25,000 + 10% of the amount
over $500,000
5.2 The Corporate bonus pool will be calculated as
follows:
5.2.1 No bonus pool will be allocated if the
applicable net income is less than $500,000.
5.2.2 If the applicable net income is above
$500,000, the bonus pool will be equal to five (5%) percent of the
applicable net income in excess of $500,000. A summary of the
amount of this bonus pool is shown below:
NET INCOME BONUS POOL
- ---------- ----------
$0 to $500,000 $0
$500,000 5% of the amount over $500,000
6.0 Allocation and Payment of Bonus Pools
-------------------------------------
6.1 The Amityville, GMI and GMCC bonus pools will be
allocated as follows:
6.1.1 Management - Thirty-seven and one-half
(37.5%) percent of each bonus pool will be allocated to the eligible
management employees of the applicable division in a pro rata manner
based upon their salaries received for that fiscal year excluding
any bonuses, commissions, monetary fringe benefits, overtime or
other incentive payments. The management employees eligible to
participate in each bonus pool for a particular fiscal year will be
the manager of the applicable division and other management
employees selected each year by the manager of the applicable
division, subject to the approval of the Corporation's
President/CEO. The manager of each division is the person indicated
below:
Amityville - The President/CEO of the
Corporation
GMI - The VP/General Manager of GMIL
GMCC - The President of GMCC
Thirty-seven and one-half (37.5%) percent of each
bonus pool will be allocated to the eligible management employees of
the applicable division based upon an evaluation of each
individual's contribution to the achievement of the division for
that fiscal year based on the recommendations of the manager of that
division, subject to the approval of the Corporation's
President/CEO.
6.1.2 Key Employees - The other twenty-five (25%)
percent of each bonus pool will be allocated to the eligible key
employees of the applicable division, based on management
recommendations, subject to the approval of the division manager and
the Corporation's President/CEO. The key employees eligible to
participate in each bonus pool for a particular fiscal year will be
selected each year by the manager of the applicable division,
subject to the approval of the Corporation's President/CEO.
6.2 The salaried officers of the Corporation will be the
only participants in the Corporate bonus pool. The Corporate bonus
pool will be allocated as follows:
President/CEO of the 30% of bonus pool
Corporation
Officers of the 70% of bonus pool divided
Corporation among them pro rata based
on their base salary received
for the applicable year
6.3 In order to receive payment of a bonus with respect
to a particular fiscal year, a pool participant must be an employee
of the Corporation and/or a subsidiary of the Corporation on the
last day of that fiscal year. In the event such employment of a
participant terminates for any reason other than death or disability
before the end of that fiscal year, such participant will not be
eligible to receive any payment under the Plan for that year. In
the event such employment ceased because of death or disability,
payment will be made to the individual's estate or to the individual
in a pro rated amount based upon the portion of the fiscal year the
participant was on the active payroll.
6.4 All payments made under the Plan shall be subject to
all applicable withholding taxes.
6.5 The payment of bonuses from a particular pool will be
made by the corporation or corporations under whose aegis that
division operates.
6.6 It is the intention of the Corporation that payments
with respect to a particular fiscal year under the Plan will be made
within 120 days after the end of that fiscal year. If this does not
happen, a provisional distribution of up to seventy (75%) percent of
the estimated amount of the payment at that time will be made with
the balance to be paid as soon thereafter as possible.
7.0 Modification and Termination of the Plan
----------------------------------------
The Board of Directors of the Corporation, at its sole
discretion, may modify the Plan at any time. The Plan may be
terminated or suspended by a vote of the Board of Directors of the
Corporation or of a participating subsidiary with respect to any
future fiscal year or years or with respect to the current fiscal
year, subject to the condition that, in the latter event, such a
decision shall have been taken within the first quarter of that
fiscal year.
147
<PAGE>
Exhibit 22
----------
Subsidiaries of the Registrant
------------------------------
State or Other
Jurisdiction of Percentage
Name of Subsidiary Incorporation of Ownership
------------------ --------------- ------------
General Microwave Foreign Sales Corporation Guam 100%
General Microcircuits Corporation Delaware 97%
Micro-El Patent Corporation Delaware 100%
General Microwave Israel Corporation Delaware 100%
General Microwave Israel (1987) Limited Israel 100%
Math Associates, Inc. New York 100%
General Microwave Export Corporation and General Microwave
Foreign Sales Corporation do business under their own names or the name
General Microwave. Micro-El Patent Corporation, General Microwave Israel
Corporation, General Microcircuits Corporation, General Microwave Israel
(1987) Limited and Math Associates, Inc. do business under their own names.
148
<PAGE>
Exhibit 23
----------
Independent Auditors' Consent
-----------------------------
The Stockholders and Board of Directors
General Microwave Corporation:
We consent to the incorporation by reference in the
Registration Statements (Nos. 33-15327 and 33-35631) on Form S-8 of
General Microwave Corporation and subsidiaries of our report dated
May 10, 1996, which is based partially upon the report of other auditors,
relating to the consolidated balance sheets of General Microwave Corporation
and subsidiaries as of February 29, 1996 and February 28, 1995 and the
related consolidated statements of operations, stockholders' equity and cash
flows and related schedule for each of the years in the three-year period
ended February 29, 1996, which report appears in the February 29, 1996 annual
report on Form 10-K of General Microwave Corporation and subsidiaries.
KPMG PEAT MARWICK LLP
Jericho, New York
May 24, 1996
Independent Auditors' Consent
-----------------------------
We consent to the incorporation by reference in the
Registration statements Nos. 33-15327 and 33-35631 of our report dated
May 20, 1996 (relating to the financial statements of General Microwave
(Israel) Corporation and Subsidiary not included herein) appearing in this
annual report on Form 10-K of General Microwave Corporation and Subsidiaries
for the year ended February 29, 1996.
Igal Brightman & Co.
Certified Public Accounts
Tel Aviv, Israel
May 20, 1996
149
<PAGE>
GENERAL MICROWAVE CORPORATION
AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
FEBRUARY 29, 1996
page 150 of 150
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