SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ) (1)
GENERAL MICROWAVE CORPORATION
(Name of Issuer)
Common Stock
(Title of Class of Securities)
370307100
(CUSIP Number)
David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
(Name , Address and Telephone Number of Person Authorized to Receive Notice and
Communications)
August 21, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
GMC Acquisition Corp.
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: AF
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: New York
7 Number of Shares
Sole Voting Power: 356,059
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 356,059
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 390,759
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 32.5%
14 Type of Reporting Person*: CO
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Herley Industries, Inc.
23-2413500
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: WC;BK
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: Delaware
7 Number of Shares
Sole Voting Power: 240,000
8 Beneficially
Shared Voting Power: 356,059
9 Owned by Each Reporting
Sole Dispositive Power: 240,000
10 Person With
Shared Dispositive Power: 356,059
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 630,759
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 52.5%
14 Type of Reporting Person*: CO
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Howard Cohen
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 17,290
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 17,290
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 1%
14 Type of Reporting Person* IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Robert DeBrecht
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 3,750
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 3,750
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Frederick Zissu
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: 213,396
10 Person With
Shared Dispositive Power: -0-
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 213,396
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 17.8%
14 Type of Reporting Person*: IN
- ------------------------------
(1) To the extent that this joint filing of a Statement on Form 13D relates to
Mr. Zissu, it shall be deemed to constitute Amendment No. 2 to the Form 13D
previously filed by Mr. Zissu.
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Sherman A. Rinkel
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b)[X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 85,872
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 85,872
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 7%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Moe Wind
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 34,470
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 34,470
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 3%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Stanley Simon
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 2,155
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 2,155
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Mitchell Tuckman
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 11,838
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 11,838
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 1%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Edmond D. Franco
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) {X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 2,025
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 2,025
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Michael I. Stolzar
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 1,025
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 1,025
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Michael D. Magidson
2 Check the Appropriate Box if a Member of a Group* (a) [ ] )b) [X]
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 1,376
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 1,376
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Arnold H. Levine
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 5,000
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 5,000
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 0%
14 Type of Reporting Person*: IN
<PAGE>
SCHEDULE 13D
CUSIP No. 370307100
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Rozalie Schachter
2 Check the Appropriate Box if a Member of a Group* (a) [ ] (b) [X]
3 SEC Use Only:
4 Source of Funds: OO
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization: U.S.A.
7 Number of Shares
Sole Voting Power: -0-
8 Beneficially
Shared Voting Power: -0-
9 Owned by Each Reporting
Sole Dispositive Power: -0-
10 Person With
Shared Dispositive Power: 12,562
11 Aggregate Amount Beneficially Owned by Each Reporting Person: 12,562
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11): 1%
14 Type of Reporting Person*: IN
<PAGE>
Item 1: Security and Issuer.
The securities to which this Schedule 13D relate are the shares of Common
Stock, par value $.01 per share ( "Shares") of General Microwave Corporation, a
corporation organized under the laws of the State of New York. The address of
the Issuer's principal executive office is 5500 New Horizons Boulevard,
Amityville, New York 11701.
Item 2:
This statement is being filed by fourteen (14) persons comprised of two (2)
corporations and twelve (12) individuals. Both corporations and eleven (11)
individuals are parties to an Agreement and Plan of Merger ("Agreement") by and
among the Issuer, eleven (11) shareholders of the Issuer, GMC Acquisition
Corporation ("GMCAC") and Herley Industries, Inc. ("Herley"). GMCAC is a
wholly-owned subsidiary of Herley. The other filing person, Mr. Frederick Zissu,
granted his irrevocable proxy to GMCAC pursuant to the requirements of the
Agreement. In addition, pursuant to the Agreement, each of the eleven (11)
aforementioned shareholders granted to GMCAC an irrevocable proxy with respect
to all shares then owned by such shareholders or afterward acquired pursuant to
options. Following is the information called for by Item 2 of the Schedule 13D
with respect to each of such fourteen (14) persons:
(1) GMCAC, a New York corporation, was formed on August 20, 1998
solely for the purpose of acquiring shares and being the surviving corporation
of a merger with the Issuer. GMCAC has not conducted any business as of the date
hereof. GMCAC's principal place of business and principal offices are located at
10 Industry Drive, Lancaster, Pennsylvania 17603, c/o Herley Industries, Inc.
During the last five years, GMCAC has neither been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which GMCAC was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(2) Herley, a Delaware corporation, has its principal business and
principal office located at 10 Industry Drive, Lancaster, Pennsylvania 17603.
Herley principally designs, manufactures and sells flight instrumentation
components and systems, chiefly to the United States Government, foreign
governments and aerospace companies.
During the last five years, Herley has neither been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which Herley was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(3) Sherman A. Rinkel, who is retired, is Chairman of the Board of
Directors of the Issuer. The Issuer is engaged primarily in the design,
development, manufacture and marketing of microwave and electronic systems,
equipment and components. His address is c/o the Issuer, 5500 New Horizons
Boulevard, Amityville, NY 11701.
During the last five years, Mr. Rinkel has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Rinkel was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
<PAGE>
(4) Moe Wind is a retired former Senior Vice President, Treasurer and
Secretary of the Issuer. His address is 31 Longwood Drive, Dix Hills, NY 11746.
During the last five years, Mr. Wind has neither been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which Mr. Wind was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(5) Stanley Simon is the owner of Stanley Simon & Associates,
management and financial consultants. His business address is 70 Pine Street,
New York, NY 10270.
During the last five years, Mr. Simon has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Simon was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(6) Mitchell Tuckman is President and Chief Executive Officer of the
Issuer. His business address is c/o the Issuer, 5500 New Horizons Boulevard,
Amityville, NY 11701.
During the last five years, Mr. Tuckman has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Tuckman was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(7) Edmond D. Franco is a principal of Franco, Lewis & Company, Inc.,
an investment banking firm. His business address is 63 Wall Street, New York, NY
10005.
During the last five years, Mr. Franco has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Franco was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(8) Michael I. Stolzar is an attorney with and member of the firm of
Zissu, Gumbinger & Stolzar LLP, 950 Third Avenue, New York, NY 10022.
During the last five years, Mr. Stolzar has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Stolzar was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(9) Michael D. Magidson is Executive Vice President of Gerald metals,
Inc., an industrial metals merchant, refiner and processor with an address of
High Ridge Park, Stamford, CT 06904.
<PAGE>
During the last five years, Mr. Magidson has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Magidson was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(10) Arnold H. Levine is Vice President - Finance, Treasurer, Chief
Financial Officer and Assistant Secretary of the Issuer. His business address is
c/o the Issuer, 5500 New Horizons Boulevard, Amityville, NY 11701.
During the last five years, Mr. Levine has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Levine was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(11) Rozalie Schachter is Vice President - Business Development of the
Issuer. Her business address is c/o the Issuer, 5500 New Horizons Boulevard,
Amityville, NY 11701.
During the last five years, Ms. Schachter has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Ms. Schachter was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(12) Robert D. DeBrecht is Vice President - Engineering of the Issuer.
His business address is c/o the Issuer, 5500 New Horizons Boulevard, Amityville,
NY 11701.
During the last five years, Mr. DeBrecht has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. DeBrecht was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(13) Howard Cohen is the Vice President - Administration of the Issuer
with a business address c/o the Issuer, 5500 New Horizons Boulevard, Amityville,
NY 11701.
During the last five years, Mr. Cohen has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Mr. Cohen was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(14) Frederick Zissu is a business and financial consultant. His
business address is 500 Valley Road, Wayne, NJ 07470.
During the last five years, Mr. Zissu has neither been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
been a party to a civil proceeding of a judicial or administrative body of
<PAGE>
competent jurisdiction as a result of which Mr. Zissu was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3: Source or Amount of Funds or Other Consideration.
The funds to be used in connection with the proposed transaction will come
from the treasury of Herley and/or amounts drawn down from Herley's credit line
with Dauphin Deposit Bank and Trust Company. Herley currently has approximately
$10 million of its own funds available and approximately $20 million available
from its credit facility. If all the outstanding Shares and options, less those
owned by Herley, are exchanged pursuant to the terms and conditions of the
merger, $19,497,150.00 will be required. The purchase of Shares sufficient to
approve the merger would require $12,271,910.36.
The warrants to purchase Shares of the Common Stock, $.10 par value per
share, of Herley which constitute part of the consideration for the exchange of
Shares shall be issued by Herley, if and only if, such issuance and the merger
are approved by the shareholders of Herley at a meeting of shareholders to be
called for such purpose.
Item 4: Purpose of the Transaction.
GMCAC, on behalf of its parent, Herley, has received from the twelve
individuals joining in the filing of this statement on Form 13D, an irrevocable
proxy to vote the Shares owned by each such person in connection with the
special meeting of shareholders to be called by the Issuer to approve or
disapprove the merger in accordance with the terms and conditions of the
Agreement.
The Agreement provides, among other things, that upon the receipt of the
approval of the Issuer's shareholders constituting 66 2/3% of the Issuer's
outstanding Shares and the approval of the transaction by Herley's shareholders,
the Issuer will be merged into GMCAC, whereupon GMAC shall succeed to the assets
and liabilities of the Issuer. Each Share shall be converted into the right to
receive $18.00 in cash and a warrant to receive one share of Herley Common
Stock, $.10 par value. Upon completion of the merger, the Issuer's Shares will
cease to be traded on the American Stock Exchange.
Those of the reporting persons who serve as directors of the Issuer have
agreed under the Agreement to recommend to the Issuer's shareholders that the
Merger be approved. Certain members of the Issuer's board of directors are
expected to be appointed to serve as directors of GMCAC. Four of the reporting
persons who serve as officers of the Issuer will be offered employment contracts
by Herley and GMCAC and Mr. Rinkel will be engaged as a consultant by Herley and
shall be appointed to the Board of Directors of Herley.
Item 5: Interest in Securities of the Issuer.
There are 1,201,803 Shares which are issued and outstanding, exclusive of
476,108 Shares held by the Issuer in its treasury which are to be cancelled and
retired pursuant to the Agreement. The table below sets forth the number of
Shares beneficially owned by each reporting person and the number of Shares
which such person has the right to acquire.
<TABLE>
<CAPTION>
Name Shares Beneficially Owned Shares Subject to Rights*
- ---- ------------------------- ------------------------
<S> <C> <C>
GMCAC 390,759 34,700
Herley 630,759 -0-
Sherman A. Rinkel 85,872 825
Moe Wind 34,470 825
Stanley Simon 2,155 825
Mitchell Tuckman 11,838 10,000
Edmond D. Franco 2,025 825
Michael I. Stolzar 1,025 825
Michael D. Magidson 1,376 825
Arnold H. Levine 5,000 5,000
Rozalie Schachter 12,562 7,500
Robert DeBrecht 3,750 3,750
Howard Cohen 17,290 3,500
Frederick Zissu 213,396 -0-
<PAGE>
<FN>
* All rights to acquire Shares shall be accelerated as to vesting and
exercisability and each holder thereof shall be entitled to receive, upon the
effectiveness of the Merger, $18.00 per share less the exercise price of such
right and a warrant to receive one Share of Herley's Common Stock. None of the
reporting persons intends to exercise any options or other rights to acquire
Shares prior to the effectiveness or abandonment of the Merger and none of such
rights are transferrable.
</FN>
</TABLE>
By reason of the aforementioned proxies, GMCAC and Herley, respectively,
have directly or indirectly, the sole right to vote or direct the vote of
356,059 Shares in connection with the proposed Merger of the Issuer of GMC. In
addition, Herley has sole voting and dispositive power over 240,000 Shares which
it acquired in open market transactions subsequent to the public announcement of
the Merger. Except for the grant of voting power over their Shares to GMCAC and
a restriction on dispositive power for the life of the proxies, and with the
exception of the proxy granted by Mr. Zissu which does not contain any such
restriction on disposition, the remaining eleven reporting persons have sole
power to vote or direct the vote of issued or outstanding Shares as follows:
Sherman A. Rinkel, 85,047 Shares; Moe Wind, 33,645 Shares; Stanley Simon, 1,330
Shares; Mitchell Tuckman, 1,836 Shares; Edmond D. Franco, 1,200 Shares; Michael
I. Stolzar, 200 Shares; Michael D. Magidson, 551 Shares; Arnold H. Levine, no
Shares; Rozalie Schachter, 5,062 Shares; Robert DeBrecht, no Shares; and Howard
Cohen, 13,790 Shares.
During the past sixty (60) days, the following transactions in the Shares
were consummated by the persons filing this report:
Herley purchased Shares on the open market in the amounts, at the prices and
on the dates set forth below:
<TABLE>
<CAPTION>
Date No. of Shares Price Per Share Aggregate Price
- ---- ------------- --------------- ---------------
<S> <C> <C> <C>
8/25/98 180,000 $17.37 $3,126,600.00
8/27/98 50,000 16.87 843,768.00
8/31/98 10,000 16.625 166,250.00
------- -------------
240,000 $4,136,618.00
</TABLE>
Item 6: Contracts, Arrangements, Understandings or Relationship with Respect to
Securities of the Issuer.
This Agreement contemplates the merger of GMC into GMCAC a wholly-owned
subsidiary of Herley for $18.00 per issued and outstanding Share of stock of GMC
in cash and a three year warrant to purchase one Share of common stock of Herley
for each outstanding Share of GMC stock. The warrants will be exercisable at
$14.40 per share through January 1, 1999, and thereafter at $15.60 per share
until expiration. In accordance with the Agreement, holders of outstanding
options to purchase GMC stock will receive the difference between the exercise
price per share of GMC stock and the warrant described above for one Share of
common stock of Herley for each Share subject to a stock option.
The transaction is subject to the approval of the stockholders of GMC and
Herley and customary closing conditions.
Exhibits (1) and (2) to this Statement on Form 13D are hereby incorporated by
reference into this Item 6.
The twelve (12) individuals named in Item 2 have all executed and delivered
irrevocable proxies to GMCAC with respect to the voting of all Shares owned by
such persons in connection with all maters covered by the Agreement. In
addition, all of such persons, with the exception of Frederick Zissu, are
signatories to the Agreement and are barred from alienating any Shares subject
to the proxies.
<PAGE>
Item 7: Exhibits
(1) Agreement and Plan of Merger, dated as of August 21, 1998, by and among
General Microwave Corporation eleven General Microwave Corporation Shareholders,
GMC Acquisition Corporation and Herley Industries, Inc., including the form of
irrevocable proxy executed by eleven reporting persons as grantors to GMC
Acquisition Corporation.
(2) Form of proxy, dated as of August 21, 1998, granted by Frederick Zissu
to GMC Acquisition Corporation.
(3) Letter, dated July 8, 1998 from Dauphin Deposit Bank and Trust Company
("Dauphin") to Herley Industries, Inc. with respect to modification of Herley's
existing credit facility. Herley hereby undertakes to file the definitive form
of agreement with Dauphin promptly upon its availability.
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- ---------------------
Date
/s/ Myron Levy
- --------------------
Signature
Myron Levy/Vice President
- ----------------------------------
Name/Title GMC Acquisition Corp.
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Myron Levy
- --------------------
Signature
Myron Levy/President
- --------------------------------------
Name/Title Herley Industries, Inc.
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Howard Cohen
- --------------------
Signature
Howard Cohen, V.P. Administration
- ---------------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Robert E. DeBrecht
- ----------------------
Signature
Robert E. DeBrecht, V.P. Engineering
- ------------------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Frederick Zissu
- --------------------
Signature
Frederick Zissu
- --------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Sherman A. Rinkel
- ---------------------
Signature
Sherman A. Rinkel/Chairman
- --------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Moe Wind
- --------------------
Signature
Moe Wind
- --------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Stanley Simon
- --------------------
Signature
Stanley Simon
- --------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Mitchell Tuckman
- --------------------
Signature
Mitchell Tuckman, Pres., CEO GMC
- --------------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Edmond D. Franco
- --------------------
Signature
Edmond D. Franco
- --------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Michael I. Stolzar
- ----------------------
Signature
Michael I. Stolzar
- --------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/ Michael D. Magidson
- -----------------------
Signature
Michael D. Magidson Director
- ------------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/Arnold H. Levine
- --------------------
Signature
Arnold H. Levine/V.P. Fin.
- -------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true complete and
correct.
August 28, 1998
- --------------------
Date
/s/Rozalie Schachter
- --------------------
Signature
Rozalie Schachter, V.P. Business Development
- --------------------------------------------
Name/Title
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
Execution Copy
AGREEMENT AND PLAN OF MERGER
----------------------------
Dated as of August 21, 1998
---------------------------
Among
-----
GENERAL MICROWAVE CORP.
-----------------------
ELEVEN GENERAL MICROWAVE CORP. SHAREHOLDERS
-------------------------------------------
GMC ACQUISITION CORPORATION
---------------------------
and
---
HERLEY INDUSTRIES, INC.
-----------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Article I. Principal Terms of Merger . . . . . . . . . . . . . . . . . . 1
Section 1.1 Surviving Corporation . . . . . . . . . . . . . . . . 1
Section 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Effective Time. . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Certificate of Incorporation . . . . . . . . . . . . 2
Section 1.5 Meetings of Herley and GMC Shareholders . . . . . . . 2
Article II. Status and Conversion of Securities. . . . . . . . . . . . . 2
Section 2.1 Status and Conversion of GMC Shares . . . . . . . . . 2
Section 2.2 GMC Stock Options and Warrants . . . . . . . . . . . 3
Section 2.3 Acquisition to Make Cash and Warrants Available . . . 3
Article III. Certain Effects of Merger . . . . . . . . . . . . . . . . . 5
Section 3.1 Effect of Merger. . . . . . . . . . . . . . . . . . . 5
Section 3.2 Further Assurances. . . . . . . . . . . . . . . . . . 5
Article IV Representations and Warranties . . . . . . . . . . . . . . . . 5
Section 4.1 Representations and Warranties by GMC . . . . . . . . 5
4.1(a) Organization of GMC . . . . . . . . . . . . . . . . . 5
4.1(b) Authority of GMC. . . . . . . . . . . . . . . . . . . 6
4.1(c) Capitalization. . . . . . . . . . . . . . . . . . . . 6
4.1(d) Consents, etc . . . . . . . . . . . . . . . . . . . . 7
4.1(e) Financial Statements. . . . . . . . . . . . . . . . . 7
4.1(f) Absence of Certain Changes or Events. . . . . . . . . 7
4.1(g) Governmental Authorization and Compliance with Laws 8
4.1(h) Tax Matters . . . . . . . . . . . . . . . . . . . . . 8
4.1(i) Title to Properties; Absence of Liens and Encumbrances,
etc. . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1(j) Contracts, etc. . . . . . . . . . . . . . . . . . . . 9
4.1(k) Litigation. . . . . . . . . . . . . . . . . . . . . . 10
4.1(l) Patents, Copyrights, Trademarks, etc. . . . . . . . . 10
4.1(m) Employee Benefit Plans .. . . . . . . . . . . . . . . 10
4.1(n) Finder's Fee. . . . . . . . . . . . . . . . . . . . . 12
4.1(o) No Failure to Disclose. . . . . . . . . . . . . . . . 12
4.1(p) Proxy Statement . . . . . . . . . . . . . . . . . . . 12
4.1(q) Insider Interests . . . . . . . . . . . . . . . . . . 12
<PAGE>
4.1(r) Labor Controversies . . . . . . . . . . . . . . . . . 12
4.1(s) Use of Real Property. . . . . . . . . . . . . . . . . 13
4.1(t) Accounts Receivable . . . . . . . . . . . . . . . . . 13
4.1(u) Compliance with Environmental Laws. . . . . . . . . . 13
Section 4.2 Representations and Warranties by Acquisition and Herley 15
4.2(a) Organization of Acquisition and Herley. . . . . . . . 15
4.2(b) Authority of Acquisition and Herley . . . . . . . . . 15
4.2(c) Consents, etc . . . . . . . . . . . . . . . . . . . . 15
4.2(d) Finder's Fee. . . . . . . . . . . . . . . . . . . . . 15
4.2(e) Registration Statement, Proxy Statement . . . . . . . 16
4.2(f) Reports . . . . . . . . . . . . . . . . . . . . . . . 16
4.2(g) Capitalization. . . . . . . . . . . . . . . . . . . . 16
4.2(h) Validity. . . . . . . . . . . . . . . . . . . . . . . 16
Article V. Covenants and Agreements. . . . . . . . . . . . . . . . . . . 16
Section 5.1 Covenants and Agreements of GMC . . . . . . . . . . . 16
5.1(a) Registration Statement. . . . . . . . . . . . . . . . 17
5.1(b) Proxy Statement . . . . . . . . . . . . . . . . . . . 17
5.1(c) Submission to Shareholders. . . . . . . . . . . . . . 17
5.1(d) Conduct of Business . . . . . . . . . . . . . . . . . 17
5.1(e) Stock Options . . . . . . . . . . . . . . . . . . . . 19
5.1(f) No Other Negotiations . . . . . . . . . . . . . . . . 19
5.1(g) Financial Statements. . . . . . . . . . . . . . . . . 19
5.1(h) Certification of Shareholder Vote . . . . . . . . . . 19
5.1(i) Completion and Delivery of Schedule . . . . . . . . . 19
Section 5.2 Other Covenants and Agreements. . . . . . . . . . . . 19
5.2(a) Cooperation of Acquisition and GMC. . . . . . . . . . 19
5.2(b) Efforts to Consummate Transactions. . . . . . . . . . 19
5.2(c) Vote by the Participating Shareholders. . . . . . . . 20
5.2(d) Other Agreements. . . . . . . . . . . . . . . . . . . 20
5.2(e) Covenant of Herley. . . . . . . . . . . . . . . . . . 20
5.2(f) Permits, Orders and Consents. . . . . . . . . . . . . 20
5.2(g) Officers and Directors Insurance and Indemnification. 20
5.2(h) Exchange Act Filings. . . . . . . . . . . . . . . . . 20
Article VI. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.1 Mutual Conditions . . . . . . . . . . . . . . . . . . 21
6.1(a) Registration Statement. . . . . . . . . . . . . . . . 21
6.1(b) Shareholder Approval . . . . . . . . . . . . . . . . 21
<PAGE>
6.1(c) Absence of Restraint. . . . . . . . . . . . . . . . . 21
6.1(d) Blue Sky Compliance . . . . . . . . . . . . . . . . . 21
6.1(e) Filings and Approvals . . . . . . . . . . . . . . . . 21
Section 6.2 Conditions to Obligations of Acquisition. . . . . . . 21
6.2(a) Compliance with Representations, Warranties, Covenants
and Agreements . . . . . . . . . . . . . . . . . . . 21
6.2(b) Opinion of Counsel. . . . . . . . . . . . . . . . . . 22
6.2(c) Dissenting Shareholders . . . . . . . . . . . . . . . 23
6.2(d) Options . . . . . . . . . . . . . . . . . . . . . . . 23
6.2(e) No Material Adverse Change. . . . . . . . . . . . . . 24
6.2(f) Other Agreements. . . . . . . . . . . . . . . . . . . 24
6.2(g) Cutoff Date . . . . . . . . . . . . . . . . . . . . . 24
6.2(h) Fairness Opinion. . . . . . . . . . . . . . . . . . . 24
6.2(i) Due Diligence . . . . . . . . . . . . . . . . . . . . 24
Section 6.3 Conditions to Obligations of GMC. . . . . . . . . . . 24
6.3(a) Compliance with Representations, Warranties, Covenants
and Agreements . . . . . . . . . . . . . . . . . . . 24
6.3(b) Opinion of Counsel. . . . . . . . . . . . . . . . . . 24
6.3(c) Adequacy of Funds . . . . . . . . . . . . . . . . . . 25
Article VII. Termination . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . 25
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . 26
Article VIII. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.1 Extension of Time; Waivers. . . . . . . . . . . . . . 26
8.1(a) By Acquisition. . . . . . . . . . . . . . . . . . . . 26
8.1(b) By GMC. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.2 Costs and Expenses. . . . . . . . . . . . . . . . . . 27
Section 8.3 Amendments. . . . . . . . . . . . . . . . . . . . . . 27
Section 8.4 Assignability . . . . . . . . . . . . . . . . . . . . 27
Section 8.5 Reliance by Counsel . . . . . . . . . . . . . . . . . 27
Section 8.6 Notices . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.7 Entire Agreement; Law Governing . . . . . . . . . . . 28
Section 8.8 Publicity and Disclosures . . . . . . . . . . . . . . 28
Section 8.9 Headings. . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.10 Survival. . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.11 Counterparts. . . . . . . . . . . . . . . . . . . . . 28
Section 8.11 Zissu Proxy . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
Agreement
Page and Section
Exhibit Description Reference
- ------- ----------- ---------
A List of Participating Shareholders 1
B Certificate of Incorporation of Surviving Corporation 2 [1.4]
C Form of Warrant 3 [2.1]
D Form of Irrevocable Proxy 20 [5.2(c)]
E Form of Consulting Agreement 20 [5.2(d)]
F Form of Employment Agreement 20 [5.2(d)]
Agreement
The Page and Section
Schedule Description Reference
- -------- ----------- ---------
Part A Qualifications to do business 5 [4.1(a)]
Part B Violation of Agreements, Etc. 6 [4.1(b)]
Part E Undisclosed Liabilities 7 [4.1(e)]
Part F Certain Changes or Events 7 [4.1(f)]
Part G Permits, Licenses, Etc. 8 [4.1(g)]
Part I Title Exceptions 9 [4.1(i)]
Part J Contracts 10 [4.1(j)]
Part K Pending Litigation 10 [4.1(k)]
Part KK Threatened Litigation 10 [4.1(k)]
Part L Patents, Copyrights, Trademarks, Etc. 10 [4.1(l)]
Part M Employee Benefit Plans 10 [4.1(m)]
<PAGE>
Part Q Insider Interests 12 [4.1(q)]
Part R Labor Controversies 12 [4.1(r)]
Part T Accounts Receivable Matters 13 [4.1(t)]
Part V Environmental Matters 14 [4.1(u)]
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (herein "this Agreement") dated as of August
21, 1998 by and among General Microwave Corp., a New York corporation ("GMC"),
eleven GMC shareholders identified on Exhibit "A" hereto (the "Participating
Shareholders"), GMC Acquisition Corporation, a New York corporation
("Acquisition") and Herley Industries, Inc. ("Herley"), a Delaware Corporation.
W I T N E S S E T H :
WHEREAS, Acquisition (which is a wholly-owned subsidiary of Herley) desires
to merge with GMC and be the surviving corporation after such merger and GMC and
the Participating Shareholders (being among the principal shareholders of GMC)
also desire that Acquisition merge with GMC upon the terms and conditions set
forth herein and in accordance with the Business Corporation Law of the State of
New York (the "BCL"), and that the outstanding shares of Common Stock, par value
$.01 per share, of GMC (referred to collectively as the "GMC Shares" and
individually as a "GMC Share") be converted upon such merger (the "Merger") into
the right to receive a warrant to purchase Herley Common Stock and cash in the
amount set forth in Section 2.1 hereof (Acquisition and GMC sometimes being
hereinafter referred to as the "Constituent Corporations" and Acquisition,
following the effectiveness of the Merger, as the "Surviving Corporation"); and
WHEREAS, the respective Boards of Directors of Acquisition and GMC have
approved this Agreement and the Merger;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and conditions contained herein, and in order to set forth
the terms and conditions of the Merger and the mode of carrying the same into
effect, the parties hereto agree as follows:
ARTICLE I
PRINCIPAL TERMS OF MERGER
1.1 Surviving Corporation. At the Effective Time (as defined in Section 1.3
hereof), GMC shall be merged with and into Acquisition upon the terms and
conditions hereinafter set forth as permitted by and in accordance with the BCL.
At the Effective Time, the identity and separate existence of GMC shall cease,
and Acquisition shall succeed to all rights, privileges, powers, franchises,
properties, assets, debts, liabilities and obligations of GMC in accordance with
BCL.
1.2 Closing. (a) Subject to the provisions of Article VI hereof, the
closing of the transactions provided for in this Agreement (the "Closing") shall
take place in the offices of Blau, Kramer, Wactlar & Lieberman, P.C., or such
other place as the parties may agree, as soon as practicable (and in any event
<PAGE>
not later than three business days) following the meeting of the shareholders of
GMC referred to in Section 1.5 hereof, subject to adjournment in the event a
condition set forth in Article VI hereof shall not have been fulfilled at such
time notwithstanding the best efforts of the parties hereto, and shall not have
been waived, in which event the Closing shall take place as soon as practicable
(and in any event not later than three business days) following the satisfaction
or waiver of all of such conditions, or at such other time and place or on such
other date as GMC and Acquisition may mutually agree upon (the date and time of
such Closing being herein referred to as the "Closing Date").
(b) Subject to the provisions of Article VI hereof, the Surviving
Corporation shall execute a certificate of merger (the "Certificate of Merger")
and cause such Certificate to be filed with the New York Secretary of State (the
"Secretary") and recorded in accordance with the applicable provisions of
Section 904 of the BCL.
1.3 Effective Time. The Merger shall become effective when the Certificate
of Merger is filed by the Secretary in accordance with the applicable provisions
of the BCL (or at such later time specified as the effective time in the
Certificate of Merger), which Certificate shall be submitted for filing as soon
as practicable after all of the conditions set forth in Article VI are fulfilled
or waived, provided that this Agreement has not been previously terminated
pursuant to Section 7.1 hereof. The date and time when the Merger shall become
effective are herein referred to as the "Effective Time."
1.4 Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corporation from and after the Effective Time shall be as set forth in
Exhibit B to this Agreement, until thereafter further amended as provided by
law.
1.5 Meetings of Herley and GMC Shareholders. Herley and GMC shall take all
action necessary in accordance with their appropriate state law and their
respective Certificates of Incorporation and By-laws and the Securities Exchange
Act of 1934 and the rules and regulations of the applicable exchange to each
hold a meeting of its shareholders as soon as reasonably possible to consider
and vote upon the adoption of this Agreement and the authorization of the
Merger. In no event shall such meeting be held earlier than 20 business days
following the date on which proxy or information statements (the "Proxy
Statements") are sent to the stockholders of Herley and GMC.
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
2.1 Status and Conversion of GMC shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof:
(a) Any GMC Shares held by GMC as treasury shares shall be cancelled
and retired.
(b) Each then outstanding GMC Share remaining (other than GMC Shares
to be cancelled in accordance with Section 2.1(a) hereof and other than GMC
Shares held by shareholders of GMC who properly exercise dissenters' rights
<PAGE>
available under the BCL ("Dissenting Shares")) shall be converted into the right
to receive $18.00 in cash, without interest and a warrant to receive one share
of Herley's Common Stock, $.10 par value, in accordance with the terms and
conditions contained in the form of warrant attached hereto as Exhibit C, which
warrant shall lapse, if not earlier exercised, three (3) years from the date of
issuance.
(c) If, between the date of this Agreement and the Effective Time, the
outstanding GMC Shares shall have been changed into a different number of shares
or a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period, the merger
price per share set forth in Section 2.1(b) hereof shall be correspondingly
adjusted. GMC covenants and agrees not to take any action referred to in the
preceding sentence.
(d) Each Dissenting Share as to which a written objection to the
Merger is filed in accordance with Section 623 of the BCL at or prior to the
vote of GMC shareholders on the Merger taken at the meeting of such shareholders
referred to in Section 1.7 hereof and not withdrawn at or prior to the time of
such vote and which is not voted in favor of the Merger shall not be converted
into a right to receive cash and warrants hereunder unless and until the holder
shall have effectively withdrawn or lost his right to payment for his GMC Shares
under such Section 623, at which time his GMC Shares shall be converted into a
right to receive cash and warrants in accordance with Section 2.1(b).
2.2 GMC Stock Options and Warrants. All outstanding options or warrants or
other rights (referred to collectively as the "Options" and individually as an
"Option") to purchase GMC Shares shall, whether or not exercisable or vested,
become fully exercisable and vested, and each holder of an Option shall be
entitled to receive from Acquisition, at the Effective Time, for each Share of
GMC subject to an Option, an amount in cash in cancellation of such Option equal
to $18.00 less the per share exercise price of such Option, as such amount shall
be reduced by any amount required for withholding in accordance with applicable
federal and state tax laws and a warrant to receive one share of Herley's Common
Stock in the form of Exhibit D hereto. GMC's Board of Directors will adopt
resolutions terminating GMC's 1990 Stock Option Plan, 1997 Non-Employee
Directors Stock Option Plan and Employee Stock Purchase Plan (the "Option
Plans") effective as of the Effective Date.
2.3 Acquisition to Make Cash and Warrants Available. At or before the
Effective Time, Acquisition shall make available to American Stock Transfer &
Trust Company, or such other entity as Acquisition shall designate to act as
paying agent (the "Paying Agent"), such funds (the "Payment Fund") as are
required for the conversion of GMC Shares and Options into the right to receive
cash pursuant to Section 2.1 hereof and Herley shall deliver to the Paying Agent
a global warrant with respect to such number of shares of its Common Stock as
would be delivered if all of GMC's Shares and Options were converted pursuant
thereto. The Payment Fund may be invested from time to time by the Paying Agent,
as directed by the Surviving Corporation, in (i) obligations of or guaranteed by
the United States of America or any State, (ii) commercial paper rated A-1 or
A-2, and/or (iii) time deposits with, including certificates of deposit issued
by, any office located in the United States of any bank or trust company that
has capital, surplus and undivided profits of at least $50,000,000, and any net
earnings with respect thereto shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
<PAGE>
Prior to the Effective Time, GMC shall furnish to the Paying Agent a list
certified by an officer of GMC setting forth the names and addresses of all
persons entitled to receive funds and warrants with respect to Options under
Section 2.2 hereof, the number of Options held by each person and the exercise
prices thereof.
Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of GMC Shares a form of letter of transmittal and instructions for
use in surrendering certificates representing such shares and receiving payment
therefor.
Each holder of GMC Shares or Options to be converted into the right to
receive consideration pursuant to this Article II shall be entitled to receive,
upon surrender to the Paying Agent of one or more certificates for such GMC
Shares for cancellation or the delivery of such documents of cancellation as may
be prescribed with respect to Options, a bank check made payable to such holder
for the amount of cash, without interest, into which the GMC Shares previously
represented by such certificates or Options are convertible (under Sections 2.1
or 2.2, as the case may be) in the Merger and shall deliver to the transfer
agent for Herley's Common Stock such documentation as shall be required to cause
such transfer agent to deliver to such holder the warrants with respect to the
GMC Shares or Options. If a check and/or warrant is to be sent to a person other
than the person in whose name the certificates for the GMC Shares surrendered
for conversion are registered, it shall be a condition of payment that the
certificates so surrendered shall be properly endorsed and the signatures
thereon properly guaranteed and otherwise in proper form for transfer and that
the person requesting such payment shall pay to the Surviving Corporation any
transfer or other taxes required by reason of the delivery of such check and
related warrant to a person other than the registered holder of the certificates
surrendered, or shall establish to the satisfaction of the Surviving Corporation
that such taxes have been paid or are not applicable. Until so presented and
surrendered in exchange, each certificate representing GMC Shares held by GMC
shareholders (other than Dissenting Shares) shall be deemed for all purposes to
evidence only the right to receive the cash and warrants to which such GMC
Shares are entitled in accordance with Section 2.1 hereof.
Any portion of the Payment Fund not paid to holders of GMC Shares or Option
holders pursuant to this Agreement within twelve months after the Effective Time
shall be paid over by the Paying Agent to the Surviving Corporation together
with a list of holders of GMC Shares who have not yet surrendered certificates
for GMC Shares to the Paying Agent and such holders of GMC Shares shall
thereafter look only to the Surviving Corporation for payment, but shall have no
greater rights against the Surviving Corporation than may be accorded to general
creditors under applicable law. Notwithstanding the foregoing, neither the
Paying Agent, the Surviving Corporation nor any party hereto shall be liable to
a holder of GMC Shares for any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
<PAGE>
ARTICLE III
CERTAIN EFFECTS OF MERGER
3.1 Effect of Merger. At and after the Effective Time, the separate
existence of GMC shall cease, the GMC Shares shall cease to exist (except as
evidence of the right of the holder thereof to receive cash and warrants
therefor in accordance with the terms hereof), subject to the rights of holders
of Dissenting Shares referred to in Section 2.1(b) hereof, and all rights,
privileges, powers and franchises, and all property, tangible and intangible, of
Acquisition and of GMC shall transfer to, vest in and devolve on the Surviving
Corporation without further act or deed. Confirmatory deeds, assignments, or
similar instruments to evidence such transfer may be executed and delivered at
any time in the name of GMC or Acquisition by GMC's last acting officers or by
the appropriate officers of the Surviving Corporation. The Surviving Corporation
shall be liable for all of the debts and obligations of Acquisition and GMC. Any
existing claim, action or proceeding pending by or against Acquisition or GMC
may be prosecuted to judgment as if the Merger had not taken place or, on motion
of the Surviving Corporation, the Surviving Corporation may be substituted as a
party, and any judgment against Acquisition or GMC shall constitute a lien on
the property of the Surviving Corporation. The Merger shall not impair the
rights of creditors or any liens on the property of either of the Constituent
Corporations.
3.2 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, the title to any property or right of the Constituent Corporations
acquired or to be acquired by reason of, or as a result of, the Merger, or (b)
otherwise to carry out the purposes of this Agreement, the Constituent
Corporations agree that the Surviving Corporation and its proper officers and
directors shall and will execute and deliver all such property, deeds,
assignments and assurances in law and do all acts necessary, desirable or proper
to vest, perfect or confirm title to such property or right in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and that
the proper officers and directors of the Constituent Corporations and the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of the Constituent Corporations or otherwise to take any and all such
action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties by GMC. GMC represents and warrants to,
and agrees with, Acquisition and Herley, subject to the exceptions set forth in
the disclosure schedule (the "Schedule") attached hereto, as follows:
(a) Organization of GMC. GMC is duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of New
York with full corporate power and authority to own its properties and to
conduct its business as now conducted. GMC is duly qualified to do business as a
<PAGE>
foreign corporation in good standing in all jurisdictions where the nature of
its assets or business requires such qualification and such jurisdictions are
listed in Part A of the Schedule except where the failure to be so qualified or
in good standing would not have a material adverse effect on the business,
properties, assets, results of operations or condition (financial or otherwise)
of GMC. GMC owns, directly or indirectly, all of the outstanding capital stock
of General Microwave Foreign Sales Corporation, GMC Associates, Inc., Micro-EL
Patent Corporation, General Microwave Israel (1987) Ltd. and General Microwave
Israel Corp. and 97% of the outstanding Common Stock and all of the outstanding
preferred stock of General Microcircuits Corporation (collectively the
"Subsidiaries"). GMC does not own, directly or indirectly, shares of capital
stock in any corporation other than the Subsidiaries. The Subsidiaries are duly
incorporated and validly existing as corporations in good standing under the
laws of the jurisdiction of their respective organization with full corporate
power and authority to own their properties and to conduct their businesses as
now conducted. The Subsidiaries are duly qualified to do business as a foreign
corporation in good standing in all jurisdictions where the nature of their
assets or business requires such qualification and such jurisdictions are listed
in Part A of the Schedule except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business, properties,
assets, results of operations or condition (financial or otherwise) of any such
Subsidiary. The Certificate of Incorporation and the By-laws of GMC and of each
of the Subsidiaries, heretofore delivered by GMC to Acquisition, are complete
and correct and contain all amendments thereto.
(b) Authority of GMC. GMC has the corporate power to enter into this
Agreement and, subject to the approval of the Merger by its shareholders, to
carry out the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Merger and the transactions
contemplated hereby have been duly approved and authorized by the Board of
Directors of GMC and the Board of Directors of GMC has recommended that holders
of GMC Shares adopt this Agreement and approve the Merger; except for the
adoption of this Agreement and approval of the Merger by its shareholders, no
other corporate acts or proceedings on the part of GMC are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby. Subject to the approval of the Merger by its shareholders, this
Agreement constitutes the valid and legally binding obligation of GMC
enforceable against GMC in accordance with its terms. Except as set forth in
Part B of the Schedule, the execution and delivery of this Agreement by GMC does
not, and the consummation of the transactions contemplated hereby will not,
violate or constitute a default under (i) any provision of the Certificate of
Incorporation or By-laws of GMC, (ii) any provision of (or result in
acceleration of any obligation under) any mortgage, note, lien, lease,
agreement, instrument, arbitration award, judgment or decree to which GMC or any
of the Subsidiaries is a party or by which GMC or any of the Subsidiaries is
bound or to which any property of GMC or any of the Subsidiaries is subject or
(iii) any laws of the United States or any state or jurisdiction in which GMC or
any of the Subsidiaries conducts business.
(c) Capitalization. The authorized capital stock of GMC consists of
5,000,000 shares of Common Stock. As of the date hereof, 1,678,011shares of
Common Stock of GMC are validly issued and outstanding, fully paid and
nonassessable, and 476,108 GMC Shares are held in the treasury of GMC. As of the
<PAGE>
date hereof, 88,000 GMC shares are subject to outstanding Options under the 1990
Stock Option Plan and 30,000 GMC Shares are reserved under the 1997 Non-Employee
Director Stock Option Plan for issuance pursuant to options heretofore granted
thereunder and 3,372 Shares are reserved for issuance pursuant to the Employee
Stock Purchase Plan. As of the date hereof, GMC has no commitments to issue or
sell any Shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire from GMC any shares of capital stock of GMC and no
securities or obligations evidencing any such rights are outstanding, except
pursuant to the outstanding options and warrants described above.
(d) Consents, etc. No consent, authorization, order or approval of, or
filing or recording with, any governmental commission, board or other regulatory
body is required for or in connection with the execution and delivery of this
Agreement by GMC and the consummation by GMC of the transactions contemplated
hereby, except for (i) the filing of a Form S-4 Registration Statement (the
"Registration Statement") with respect to the warrants and shares of Herley
Common Stock underlying the warrants with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Act of 1933, as amended (the
"Securities Act"), (ii) the filing of the Certificate of Merger with the
Secretary, (iii) the filing of a joint proxy statement (the "Proxy Statement")
with Herley with the SEC in accordance with the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (iv) the filing of a Current Report on Form 8-K
with the SEC, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country and (vi)
such filings as may be required to be made with respect to the transfer of title
to real property owned by GMC.
(e) Financial Statements. GMC has previously furnished Acquisition
with a true and complete copy of the audited consolidated balance sheet of GMC
as of February 28, 1997 and 1998 and the related audited statements of
consolidated income and retained earnings and of consolidated changes in
financial position for the fiscal years then ended including the notes thereto,
all reported on by KPMG Peat Marwick LLP, independent certified public
accountants, and the unaudited consolidated balance sheet of GMC as of May 30,
1998 and the related unaudited statements of consolidated income and retained
earnings and of consolidated changes in financial position for the three months
then ended (collectively the "GMC Financial Statements"). The GMC Financial
Statements present fairly the consolidated revenues of GMC and its subsidiaries
for the periods then ended in conformity with generally accepted accounting
principles applied on a consistent basis.
GMC and the Subsidiaries have no material liabilities, contingent or
otherwise, (including liabilities for taxes) other than (i) liabilities which
will be shown or reflected in the unaudited financial statements referred to in
Section 5.1(e) hereof (the "August Financials"), (ii) liabilities incurred in
the ordinary course of business since February 28, 1998, and (iii) those
liabilities described in part E of the Schedule.
(f) Absence of Certain Changes or Events. Except as set forth in part
<PAGE>
F of the Schedule, since February 28, 1998, there has not been any material
adverse change in the financial condition, properties, business or results of
operations of GMC and the Subsidiaries and since May 30, 1998 there has not been
(i) any change in the authorized, issued or outstanding capital stock or
material change in the funded debt of GMC and the Subsidiaries on a consolidated
basis, other than changes in the outstanding capital stock due to exercise of
options under the Option Plans and outstanding warrants and other than changes
due to payments in a accordance with the terms of such debt; (ii) any
declaration, setting aside or payment of any dividend on, or distribution in
respect of, any shares of the capital stock of GMC or the acquisition for value
by GMC or any of the Subsidiaries of any shares of capital stock of GMC; or
(iii) any grant by GMC of any warrant, option or right to acquire any GMC Shares
or other securities whatsoever. Neither GMC nor the Subsidiaries is currently in
default on any installment or installments on indebtedness for borrowed money,
or on any rental on any long-term lease.
(g) Governmental Authorization and Compliance with Laws. The
businesses of GMC and the Subsidiaries have been operated in compliance in all
material respects with all laws, ordinances, regulations and orders of all
governmental entities. GMC and the Subsidiaries have all material permits,
certificates, licenses, approvals and other authorizations required in
connection with the operation of their businesses, a complete list of which are
set forth in Part G of the Schedule.
(h) Tax Matters.
(A) Except as disclosed in Part E of the Schedule: The amounts shown
as tax liabilities on the consolidated balance sheet of GMC as of May 30, 1998
included in the GMC Financial Statements will be sufficient for the payment of
all federal, state, county, local and foreign Taxes (as hereinafter defined) of
GMC and the Subsidiaries, whether or not disputed, which were properly accruable
at that date. There are no agreements by GMC or any of the Subsidiaries for the
extension of the time for assessment of any Taxes. Neither the Internal Revenue
Service (the "IRS") nor any other taxing authority is now asserting, or to the
knowledge of GMC threatening to assert, against GMC or any of the Subsidiaries
any claim for additional Taxes, nor to GMC's knowledge is the IRS or any other
taxing authority auditing any tax return filed by GMC or any of the
Subsidiaries.
(B) Each of GMC and the Subsidiaries has timely filed (and until the
Closing will timely file) all returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be filed or sent by
or with respect to them in respect of any Taxes;
(C) As of the time of filing, such Returns were (and, as to Returns
not filed as of the date hereof, will be) true, complete and correct in all
material respects;
(D) GMC and the Subsidiaries have timely paid or provided for (and
until the Closing will timely pay or in good faith contest) all Taxes that are
due and payable;
(E) GMC and the Subsidiaries have complied in all material respects
<PAGE>
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and have timely withheld from employee wages and paid over
to the proper governmental authorities all amounts required to be so withheld
and paid over under all applicable laws;
(F) None of GMC or the Subsidiaries has filed a consent pursuant to
Section 341(f) of the Internal Revenue Code of 1986 (the "Code") or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(f)(4) of the Code) owned by GMC or
any of the Subsidiaries;
(G) No property used by GMC or the Subsidiaries is property that GMC
or any such Subsidiary is or will be required to treat as being owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954 as it existed prior to the enactment of the Tax Reform Act of 1986
or is "tax-exempt use property" within the meaning of Section 168 (h) or the
Code; and
(H) None of GMC or the Subsidiaries is required to include in income
any adjustment pursuant to Section 481(a) of the Code by reason of voluntary
change in accounting method initiated by GMC, or for any other reason, nor does
GMC have any knowledge that the Internal Revenue Service has proposed any such
adjustment or change in accounting method.
For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, property or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any tax
authority (domestic or foreign) upon GMC or any of the Subsidiaries.
(i) Title to Properties; Absence of Liens and Encumbrances, etc.
Except for leased properties, GMC and the Subsidiaries have good and marketable
title to all of their tangible properties and assets, real, personal and mixed,
used in their business, including without limitation those referred to in the
balance sheet as of May 30, 1998 referred to in paragraph (e) of this Section
4.1 (other than properties or assets disposed of in the ordinary course of
business since the date of such balance sheet), free and clear of all liens,
charges, pledges, security interests or other encumbrances, except as reflected
in the GMC Financial Statements or in Part I of the Schedule.
(j) Contracts, etc. GMC shall as soon as practicable after execution
of this Agreement and prior to Closing, furnish Acquisition and its counsel with
a complete and accurate list, together with true and complete copies if
requested by Acquisition, of:
(i) all sales contracts of GMC or any of the Subsidiaries having
a sales price of $50,000 or more or not to be performed within one
year regardless of amount and all purchase orders having a purchase
price of $25,000 or more;
<PAGE>
(ii) all other contracts of GMC or any of the Subsidiaries (other
than sales contracts and purchase orders), leases, mortgages,
indentures, promissory notes, deeds, loan or credit agreements, or
similar instruments involving amounts in excess of $25,000 or more or
not to be performed within one year regardless of amount;
(iii) all pension, profit-sharing or employee benefit plans,
employment contracts, contracts with unions and other agreements
relating to employees of GMC or any of the Subsidiaries;
(iv) all GMC and the Subsidiaries' policies of insurance issued
during the past five years; and
(v) all deeds to real property owned by GMC or any of the
Subsidiaries.
Part J of the Schedule, when furnished to Acquisition and Herley, will
contain a true and complete list of all of the above described contracts and
leases. Except as set forth in Part J of the Schedule, none of GMC or the
Subsidiaries is or will be in default, and no event has occurred or will have
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default under any of the
above described contracts and leases, and all such contracts and leases are
valid and legally binding.
(k) Litigation. Except as set forth in Part K of the Schedule, when
delivered to Acquisition and Herley, there is and will be no claim, action, suit
or proceeding in or before any court or administrative or regulatory agency
pending, or to the knowledge of GMC except as set forth in Part KK of the
Schedule contemplated or threatened, against GMC or any of the Subsidiaries or
any of their properties.
(l) Patents, Copyrights, Trademarks, etc. GMC and the Subsidiaries
have good and marketable title to all patents, patent applications, copyrights,
trademarks and trade names, brand names, proprietary and other technical
information, technology, inventions, discoveries, improvements, processes,
know-how, formulae, drawings, specifications, production data, trade secrets and
computer software and programs, and licenses thereof, which are necessary for
the operation of their businesses as presently conducted and as proposed to be
conducted, a true and complete list of which will be included in Part L of the
Schedule. Except as set forth in Part L of the Schedule, there are and will be
no claims or proceedings threatened or pending against GMC or any of the
Subsidiaries asserting that GMC or any of the Subsidiaries is infringing any
such intellectual property rights of any other person.
(m) Employee Benefit Plans. Other than those set forth in Part M of
the Schedule, GMC and the Subsidiaries do not maintain, administer or contribute
to any bonus, profitsharing, pension, retirement, stock purchase, stock option,
deferred compensation, hospitalization, medical, life insurance, disability,
severance pay or other benefit plan arrangement or program, including, but not
limited to, any employee benefit plan within the meaning of Section 3(3) of the
<PAGE>
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), covering
any of GMC's or the Subsidiaries' employees (the "Plans").
GMC has furnished or will furnish Acquisition with (i) complete and
accurate copies of all documents comprising or pertaining to each Plan,
including each amendment and any trust agreement, insurance contract, or other
arrangement for the funding of benefits under such Plan, (ii) copies of all
determination letters or private rulings issued by the IRS with respect to each
Plan and copies of all applications and requests filed with the IRS for such
determinations or rulings, (iii) a copy of the three (3) most recent annual
reports (Form 5500) for each Plan and (iv) a copy of the most recent summary
plan description ("SPD"), and all summaries of material modifications to such
SPD, for each Plan.
Each Plan is, and at all times since its inception has been, in compliance
in all material respects with all the provisions of ERISA applicable to such
Plan, and with all other laws, rules and regulations applicable to such Plan.
Each Plan that is intended to meet the requirements for qualification under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code") or
that is intended to qualify for special tax treatment under any other provision
of the Code, is, and at all times since its inception has been, in compliance
with all conditions necessary for such Plan to so qualify. GMC is not aware of
any fact that might cause any such Plan to lose its qualified status.
No prohibited transaction within the meaning of the applicable provisions
to ERISA and the Code have occurred with respect to any Plan. No transaction has
occurred with respect to any Plan that has resulted in, or could result in,
liability for GMC or any of the Subsidiaries (or for any successor to GMC or any
of the Subsidiaries) under Title IV of ERISA.
GMC, the Subsidiaries and each fiduciary for each of the Plans is in
compliance with the terms of each Plan, and with the requirements and duties of
any and all laws, statutes, orders, decrees, rules and regulations, including
but not limited to ERISA and the Code, applicable to each Plan. All
contributions and other payments required to be made by GMC or any of the
Subsidiaries under or with respect to each Plan under the terms of such Plan,
ERISA (including Part 3 of Subtitle B of Title I of ERISA), the Code (including
Code Section 412), or otherwise have been made or accruals adequate for such
purposes as of the date of the most recent financial statements of GMC have been
provided therefor and reflected in said financial statements in accordance with
GAAP.
There is no pending, or to the best of the knowledge of GMC, threatened,
legal action, proceedings or investigations against GMC, the Subsidiaries or any
Plan, other than routine claims for benefits, which could result in liability
being imposed upon any of the Plans or upon GMC or any of the Subsidiaries with
respect to any of the Plans and there is no basis for any such legal action or
proceeding.
The actuarial present value of accrued benefits (both vested and unvested)
<PAGE>
of each of the Plans does not exceed the assets of such Plans based upon
actuarial assumptions which are reasonable in light of the experience of each
such Plan.
Except as set forth in Part M of the Schedule, there are no agreements
between GMC or any of the Subsidiaries and any labor union and GMC and the
Subsidiaries are not, and have never been a participating employer in any
multiemployer plan, as such term is defined in Section 3(37) of ERISA, or in any
multiple employer plan described in Section 413(c) of the Code. To the extent
that GMC or either of the Subsidiaries is or has been a participating employer
in any multiemployer plan (as so defined), none of GMC or the Subsidiaries is
now, or would upon withdrawal therefrom become, liable for any withdrawal
liability to or in respect of such multiemployer plan.
The execution and delivery of this Agreement and Plan of Merger and the
consummation of the transactions contemplated hereby will not result in any
payment (whether of severance pay or otherwise) becoming due from any of the
Plans, or from GMC or any of the Subsidiaries with respect to any of the Plans,
to any individual, or result in the vesting, acceleration or payment or
increases in the amount of any benefit payable under any of the Plans to any
individual.
(n) Finder's Fee. No brokers or finders were employed by GMC or any of
the Subsidiaries in connection with any of the transactions contemplated by this
Agreement and no fee will be payable by GMC, Herley or Acquisition with respect
to the transactions contemplated hereby by reason of any agreement between GMC
or any of the Subsidiaries with any finder, including Franco, Lewis & Company,
Inc.
(o) No Failure to Disclose. GMC has not failed to disclose to
Acquisition any agreement, arrangement, event or occurrence, or threatened or
anticipated event or occurrence known to GMC, which would or might reasonably be
deemed to have a material and adverse effect on the financial condition, the
business or the operations of GMC or any of the Subsidiaries.
(p) Proxy Statement. The information concerning GMC and the
Subsidiaries and the Merger contained in the Proxy Statement (i) will include
all statements of material facts which are required to be stated therein, and
(ii) will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(q) Insider Interests. No officer or director of GMC or any of the
Subsidiaries has any agreement with GMC or any of the Subsidiaries or any
interest in any property, real, personal or mixed, tangible or intangible
(including, without limitation, patents, patent applications, trademarks, trade
names or other intellectual property), used in or pertaining to the business of
GMC or the Subsidiaries except as a shareholder or employee and except as set
forth in Part Q of the Schedule.
(r) Labor Controversies. Except as set forth in Part R of the
Schedule, there are no controversies between GMC or any of the Subsidiaries and
<PAGE>
any employees of GMC or the Subsidiaries or any unresolved labor union
grievances or unfair labor practices or labor arbitration proceedings pending or
threatened relating to GMC or the Subsidiaries and there are not any
organizational efforts presently being made or threatened involving any of GMC's
or any of the Subsidiaries' employees. None of GMC or the subsidiaries has
received notice of any claim that it has not complied with any laws relating to
the employment of labor, including any provisions thereof relating to wages,
hours, collective bargaining, the payment of social security and similar taxes,
equal employment opportunity, employment discrimination or employment safety, or
that it is liable for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing.
(s) Use of Real Property. The real properties owned and leased by GMC
and the Subsidiaries are used and operated in compliance and conformity in all
material respects with all applicable leases, contracts, commitments, licenses
and permits. None of GMC or the Subsidiaries has received notice of violation of
any applicable zoning or building regulation, ordinance or other law, order,
regulation or requirement relating to the operations of GMC or the Subsidiaries
and to GMC's knowledge there is no such violation. All plants and other
buildings which are owned or leased by GMC or any of the Subsidiaries conform in
all material respects with all applicable ordinances, codes, regulations and
requirements, and no law or regulation presently in effect or condition
precludes or restricts continuation of the present use of such properties.
(t) Accounts Receivable. The accounts receivable which will be
reflected on the unaudited consolidated balance sheet of GMC included in the
August Financials, and all accounts receivable of GMC and the Subsidiaries
arising since the date of such balance sheet arose from bona fide transactions
in the ordinary course of business, and the materials or services involved have
been provided to the account obligor, and, except as contemplated by the
relevant contract, no further materials or services are required to be provided
in order to complete the sales and to entitle GMC or the Subsidiaries, or their
assignees, to collect the accounts receivable in full. Except as set forth in
Part T of the Schedule, no such account receivable has been assigned or pledged
to any other person, firm or corporation, and no defense or setoff to any such
account has been asserted by the obligor.
(u) Compliance with Environmental Laws. Except as set forth in Part V
of the Schedule:
(i) GMC and the Subsidiaries are in compliance with all
environmental laws, regulations, permits and orders applicable to
them, and with all laws, regulations, permits and orders governing or
relating to asbestos removal or abatement.
(ii) Except for temporary storage on premises pending arrangement
for removal, none of GMC or the Subsidiaries has transported, stored,
treated or disposed of, nor has it allowed or arranged for any third
parties to transport, store, treat or dispose of, hazardous substances
or other waste to or at any location other than a site lawfully
permitted to receive such hazardous substances or other waste for such
purposes; and GMC and the Subsidiaries have not performed, arranged
for or allowed by any method or procedure such transportation,
storage, treatment or disposal in contravention of any laws or
<PAGE>
regulations. None of GMC or the Subsidiaries has disposed, or allowed
or arranged for any third parties to dispose, of hazardous substances
or other waste upon property owned or leased by it.
(iii) There has not occurred, nor is there presently occurring, a
Release of any hazardous substance on, into or beneath the surface of
any parcel of real property in which GMC or any of the Subsidiaries
has or has had an ownership interest or any leasehold interest. For
purposes of this Section the term "Release" shall mean releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping.
(iv) None of GMC or the Subsidiaries has transported or disposed
of, nor have they allowed or arranged for any third parties to
transport or dispose of, any hazardous substance or other waste to or
at a site which, pursuant to the U.S. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or any similar state law, (A) has been placed on the
National Priorities List or its state equivalent, or (B) the
Environmental Protection Agency or the relevant state agency has
proposed or is proposing to place on the National Priorities List or
its state equivalent. None of GMC or the Subsidiaries has received
notice, or has knowledge, of any facts which could give rise to any
notice that GMC or any of the Subsidiaries is a potentially
responsible party for a federal or state environmental cleanup site or
for corrective action under CERCLA or any other applicable law or
regulation. None of GMC or the Subsidiaries has submitted nor was
required to submit any notice pursuant to Section 103(c) of CERCLA.
None of GMC or the Subsidiaries has received any written or oral
request for information in connection with any federal or state
environmental cleanup site or has undertaken (or been requested to
undertake) any response or remedial actions or cleanup actions of any
kind at the request of any federal, state or local governmental
entity, or at the request of any other person or entity.
(v) There are no laws, regulations, ordinances, licenses, permits
or orders relating to environmental or worker safety matters requiring
any work, repairs, construction or capital expenditures with respect
to the assets or properties of GMC or any of the Subsidiaries.
(vi) Part V of the Schedule identifies (A) all environmental
audits, assessments or occupational health studies undertaken by GMC
or any of the Subsidiaries or agents of any of them or by any
governmental agencies with respect to the operations or properties of
GMC or any of the Subsidiaries; (B) the results of any groundwater,
soil, air or asbestos monitoring undertaken with respect to any real
property owned or leased by GMC or any of the Subsidiaries; (C) all
written communications of GMC or any of the Subsidiaries with
environmental agencies; and (D) all citations issued with respect to
GMC or any of the Subsidiaries under the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.).
<PAGE>
4.2 Representations and Warranties by Acquisition and Herley. Each of
Acquisition and Herley jointly and severally represents and warrants to, and
agrees with GMC as follows:
(a) Organization of Acquisition and Herley. Acquisition and Herley are
corporations duly organized, validly existing and in good standing under the
laws of the States of New York and Delaware, respectively and Acquisition and
Herley and each of its subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which the character of its properties
owned or leased, or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not have a material adverse effect on the business, properties, assets, results
of operations or condition (financial or otherwise) of Herley and its
subsidiaries taken as a whole.
(b) Authority of Acquisition and Herley. Acquisition and Herley have
the corporate power to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the Merger and the transactions contemplated hereby have
been duly authorized by the Board of Directors and the sole shareholder of
Acquisition and by the Board of Directors of Herley; and (i) no other corporate
acts or proceedings on the part of Acquisition or Herley are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby other than the receipt of shareholder approval by Herley of the
shareholders of Herley, and (ii) this Agreement constitutes the valid and
legally binding obligation of Acquisition and Herley enforceable against
Acquisition and Herley in accordance with its terms. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate or constitute a default under any
provision of the Certificate of Incorporation or By-laws of Acquisition or
Herley or any provision of (or result in the acceleration of any obligation
under) any mortgage, note, lien, lease, agreement, instrument, arbitration
award, judgment or decree to which either of Acquisition or Herley is a party or
by which they are bound or to which any of their property is subject, or any
laws of the United States or any state or jurisdiction in which Acquisition or
Herley conducts business.
(c) Consents, etc. No consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body is required for or in connection with the execution and delivery
of this Agreement by Acquisition and Herley and the consummation by Acquisition
and Herley of the transactions contemplated hereby, except for (i) the filing of
the Registration Statement with the SEC in accordance with the Securities Act,
(ii) the filing of the Certificate of Merger with the Secretary, (iii) the
filing of the Proxy Statement with the SEC, (iv) the filing of a Current Report
on Form 8-K with the SEC, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country and (vi)
such filings as may be required to be made with respect to the transfer of title
to real property owned by GMC.
(d) Finder's Fee. No brokers or finders were employed by Acquisition
or Herley in connection with any of the transactions contemplated by this
Agreement.
<PAGE>
(e) Registration Statement, Proxy Statement. All information
concerning Acquisition and Herley furnished or to be furnished by Acquisition or
Herley for inclusion in the Registration Statement and Proxy Statement is and
will be true and correct in all material respects; the information concerning
Acquisition and Herley contained in the Proxy Statement furnished by Acquisition
or Herley (i) will include all statements of material facts which are required
to be stated therein, and (ii) will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) Reports. Herley has filed all forms, reports and documents
required to be filed by it with the SEC since filing its Annual Report on Form
10-K for the fiscal year ended August 3, 1997 and has made available to GMC such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports and documents (including those which Herley may file subsequent
to the date hereof) are designated as the "SEC Reports." As of their respective
dates, the SEC Reports (i) were prepared in accordance with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to the SEC Reports, and (ii) did
not at the time they were filed (or amended or superseded) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) Capitalization. The authorized capital stock of Herley consists of
20,000,000 shares of its Common Stock, $.10 par value. As of the date hereof,
5,266,159 shares of Common Stock of Herley are validly issued and outstanding
(8,371 of which are held for delivery to former shareholders of an acquired
corporation) fully paid and non-assessable, and no Herley shares are in the
treasury of Herley. As of the date hereof 1,765,000 Herley shares are reserved
for issuance pursuant to outstanding warrants and 3,274,868 Herley shares are
reserved for issuance under various stock option plans.
(h) Validity. The Warrants, when issued and delivered by Acquisition
and Herley in accordance with the terms hereof, will be the validly issued and
binding obligations of Herley, each enforceable in accordance with its terms,
and the shares of Herley Common Stock deliverable thereunder, when delivered
upon the proper exercise of any such Warrant in exchange for the required
consideration therefor, shall be duly and validly issued, fully paid and
non-assessable.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Covenants and Agreements of GMC. GMC covenants and agrees with
Acquisition as follows:
<PAGE>
(a) Registration Statement. GMC will cooperate fully with Herley in
the preparation and filing of the Registration Statement and take all such
actions as Herley may reasonably request to cause the Registration Statement to
become effective.
(b) Proxy Statement. GMC shall cooperate fully with Herley in the
preparation of filing of the Proxy Statement.
(c) Submission to Shareholders. GMC will promptly call a meeting of
its shareholders to consider and vote upon approval of this Agreement and the
Merger and the Board of Directors of GMC will recommend to such shareholders
approval thereof. GMC shall use its best efforts to solicit and secure from the
shareholders of GMC such approval.
(d) Conduct of Business. Without the prior written consent of
Acquisition, between the date of this Agreement and the Effective Time:
(i) GMC will not, and will not cause or permit any of the
Subsidiaries to, engage in any activities or transactions which will
be outside the ordinary course of their respective businesses
consistent with past practices, except as shall be provided for or
specifically contemplated by this Agreement, and GMC and the
Subsidiaries will consult with Acquisition prior to making any
significant business decisions;
(ii) GMC will not subdivide or reclassify the GMC Shares, issue
any shares of its capital stock, except upon the exercise of
outstanding Options under the Option Plans or amend its Certificate of
Incorporation or By-laws;
(iii) GMC will not declare or pay any dividend or other
distribution in respect of its shares of capital stock or acquire for
value, or permit any Subsidiary to acquire for value, any shares of
capital stock of GMC;
(iv) GMC will afford to the officers, attorneys, accountants and
other authorized representatives of Acquisition reasonable access to
its and the Subsidiaries' plants, properties, books, tax returns and
minute books and other corporate records during normal business hours
in order that Acquisition may have full opportunity to make such
investigation as Acquisition shall desire of the affairs of GMC and
the Subsidiaries. If for any reason the Merger is not consummated,
Acquisition will cause all non-public information obtained in
connection with such investigation to be treated as confidential, and
to be returned to GMC if in tangible form, and not use or disclose
same without the consent of GMC, except where required to disclose
such information pursuant to law;
(v) GMC will comply with all applicable securities laws and will
obtain such governmental permits, orders or consents, if any, as may
be required of it in connection with the transactions contemplated by
this Agreement;
<PAGE>
(vi) GMC will not, and will not cause or permit the Subsidiaries
to, take any action to institute any new severance or termination pay
practices with respect to any directors, officers, or employees of GMC
or any of the Subsidiaries or to increase the benefits payable under
its severance or termination pay practices in effect on the date
hereof;
(vii) GMC will not, and will not cause or permit the Subsidiaries
to, adopt or amend, in any material respect, except as may be required
by applicable law or regulation, any collective bargaining, bonus,
profit sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund, plan or arrangement for the
benefit or welfare of any directors, officers or employees of GMC or
any of the Subsidiaries;
(viii) GMC and the Subsidiaries will use their best efforts to
maintain their relationships with their suppliers and customers, and
if and as requested by Acquisition, (i) GMC and the Subsidiaries shall
make reasonable arrangements for representatives of Acquisition to
meet with suppliers and customers of GMC and the Subsidiaries, and
(ii) GMC and the Subsidiaries shall schedule, and the management of
GMC and the Subsidiaries shall participate in, meetings of
representatives of Acquisition with employees of GMC and the
Subsidiaries or their union representatives;
(ix) GMC will, and will cause the Subsidiaries to, maintain all
of its and their respective properties in customary repair, order and
condition, reasonable wear and tear excepted, and will maintain, and
will cause the Subsidiaries to maintain, insurance upon all of its and
their properties and with respect to the conduct of its and their
businesses in such amounts and of such kinds comparable to that in
effect on the date of this Agreement;
(x) GMC and the Subsidiaries will maintain their books, accounts
and records in the usual, regular and ordinary manner, on a basis
consistent with prior years;
(xi) GMC and the Subsidiaries will duly comply with all laws
applicable to each of them and to the conduct of their respective
businesses;
(xii) no change shall be made in the banking and safe deposit
arrangements of GMC or the Subsidiaries existing on the date hereof
without the prior written consent of Acquisition and no powers of
attorney shall be granted by GMC or any of the Subsidiaries;
(xiii) except as contemplated by this Agreement, GMC will not,
and will not permit any of the Subsidiaries to, acquire or agree to
acquire by merging or consolidating with, purchasing substantially all
of the assets of or otherwise, any business or any corporation,
partnership, association, or other business organization or division
thereof; and
(xiv) GMC will promptly advise Acquisition in writing of any
<PAGE>
material adverse change in the financial condition, business or
operations of GMC or any of the Subsidiaries and of any breach of its
representations or warranties contained herein.
(e) Stock Options. After the date hereof, GMC will not issue any stock
options under any Option Plan.
(f) No Other Negotiations. Except as contemplated hereunder, prior to
the earlier of the Closing or the termination of this Agreement, neither GMC nor
any of the Participating Shareholders shall directly or indirectly solicit,
initiate or encourage inquiries or proposals with respect to, furnish any
information relating to, or participate in, continue or enter into any
negotiations or discussions concerning, any merger, consolidation or other
business combination with or the purchase of all or a portion of the assets of,
or any equity interest in GMC or any of the Subsidiaries; and GMC shall instruct
each officer, director, affiliate and advisor of GMC and the Subsidiaries to
refrain from doing any of the above. GMC and the Participating Shareholders
agree to advise Acquisition immediately in writing of, and to communicate
therein the terms of, any such inquiry of proposal which any of them shall
receive.
(g) Financial Statements. GMC will deliver to Acquisition all
regularly prepared audited and unaudited financial statements of GMC or of any
of the Subsidiaries prepared after the date hereof in the format historically
used internally, as soon as available, and will deliver to Acquisition the
unaudited consolidated financial statements of GMC for the quarter ended August
31, 1998, as soon as available which financial statements shall indicate that
there has been no material adverse change in GMC's financial condition since
February 28, 1998..
(h) Certification of Shareholder Vote. On or prior to the Closing
Date, GMC shall deliver to Acquisition a certificate of its secretary setting
forth (i) the number of GMC Shares outstanding and entitled to vote on the
adoption of this Agreement and approval of the Merger, the number of GMC Shares
voted in favor of adoption of this Agreement and approval of the Merger, and the
number of GMC Shares voted against adoption of this Agreement and approval of
the Merger; and (ii) the names of all holders of Dissenting Shares and the
number of Dissenting Shares held by each such holder.
(i) Completion and Delivery of Schedule. GMC shall use utmost
diligence in completing and delivering the Schedule in a form acceptable to
Acquisition and Herley.
5.2 Other Covenants and Agreements.
(a) Cooperation of Acquisition and GMC. Acquisition and GMC will fully
cooperate with each other in the preparation of the Registration Statement and
the Proxy Statement.
(b) Efforts to Consummate Transactions. Acquisition, Herley, GMC and
the Participating Shareholders will each use their best efforts to consummate
the Merger and to cause to be satisfied each of the conditions of Closing
contained in Section 6.1 and each of the conditions contained in Section 6.2 (to
be satisfied by GMC and Section 6.3 (to be satisfied by Acquisition).
<PAGE>
(c) Vote by Participating Shareholders, etc. The Participating
Shareholders each hereby covenants and agrees that until the earlier of the
Closing Date or the termination of this Agreement, he will (i) continue to hold
all GMC Shares now held by him, and (ii) vote at the meeting of the shareholders
of GMC referred to in Section 1.7 hereof all such GMC Shares in favor of
adoption of this Agreement and authorization of the Merger. Simultaneously with
the execution of this Agreement, the Participating Shareholders each has
executed and delivered or will execute and deliver to Acquisition irrevocable
proxies to vote their GMC Shares at such meeting in the form of Exhibit D
hereto.
(d) Other Agreements. Concurrently with the Closing of this Agreement,
(i) Sherman A. Rinkel, a Participating Shareholder, agrees to execute and
deliver the Consulting Agreement in the form of Exhibit E hereto; and (ii)
Acquisition shall execute and deliver to Mitchell Tuckman, Arnold H. Levine,
Rozalie Schachter and Howard Cohen employment agreements in the forms set forth
in Exhibit F at annual salaries of $160,000.00, $118,000.00, $120,000.00 and
$118,000.00, respectively.
(e) Covenant of Herley. Herley hereby covenants and agrees with GMC
and the Participating Shareholders that Herley shall, except as otherwise stated
in Section 5.2(g) hereof, cause Acquisition to perform and comply with all of
its covenants and agreements contained in this Agreement.
(f) Permits, Orders and Consents. Between the date of this Agreement
and the Closing Date, GMC, Herley and Acquisition shall in connection herewith
comply with all applicable securities laws and will cooperate in the timely
filing or submission of information with governmental authorities, including any
required by the Hart-Scott-Rodino Act, and will obtain such governmental
permits, orders or consents, if any, as may be required in connection with the
transactions contemplated by this Agreement.
(g) Officers and Directors Insurance and Indemnification. It is agreed
that on and after the Closing Date, the Surviving Corporation shall, to the
extent permitted by applicable law, continue unamended the current provisions of
Acquisition's Certificate of Incorporation and By-laws concerning the
indemnification of officers and directors. The directors of GMC by their
approval of this Agreement agree that they waive, and will not assert, any
claims for indemnification which they may have against the Surviving Corporation
to the extent of any increase after the Closing Date in the market value of the
business of the Surviving Corporation. Notwithstanding the foregoing, nothing
herein shall constitute or be deemed a waiver of any claims of such directors
for indemnification to the extent that such claims are covered by GMC's
directors' and officers' liability insurance.
(h) Exchange Act Filings. For so long as any Warrant remains
outstanding and unexercised, Herley shall use its reasonable efforts to comply
with the filing and reporting requirements of the Exchange Act.
<PAGE>
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. Neither Acquisition nor GMC shall be obligated to
complete or cause to be completed the transactions contemplated by this
Agreement unless:
(a) Registration Statement. The Registration Statement shall have become
effective.
(b) Shareholder Approval. Adoption of this Agreement and approval of the
Merger by the shareholders of GMC and Herley as may be required by law and by
any applicable provisions of their respective Certificates of Incorporation or
By-laws or the rules or regulations of any applicable stock exchange or trading
system shall have been obtained.
(c) Absence of Restraint. No order to restrain, enjoin or otherwise prevent
the consummation of this Agreement or the Merger shall have been entered by any
court or administrative body and shall then remain effective.
(d) Blue Sky Compliance. There shall have been obtained any and all
permits, approvals and consents of securities or "blue sky" commissions of any
jurisdiction and of any other governmental body or agency, which counsel for
Acquisition or for GMC may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement and the Merger
will be in compliance with applicable laws.
(e) Filings and Approvals. All applicable filings and regulatory approvals
necessary to consummation of the Merger except for the requisite filing of the
Certificate of Merger as contemplated herein, shall have been made or obtained.
6.2 Conditions to Obligations of Acquisition. Consummation of the
transactions contemplated by this Agreement is subject to the fulfillment to the
reasonable satisfaction of Acquisition of each of the following conditions:
(a) Compliance with Representations, Warranties, Covenants and Agreements.
All of the representations and warranties of GMC contained in this Agreement
shall be true and correct in all material respects at and as of the Closing Date
with the same force and effect as if they had been made at and as of such date;
GMC shall have complied with and performed in all material respects all of the
covenants and agreements contained in this Agreement to be performed by it at or
prior to the Closing Date; and on the Closing Date, Acquisition shall have
<PAGE>
received from GMC a certificate dated that day, signed by the Chairman and by
the Chief Financial Officer of GMC, certifying the foregoing. Until the Closing,
GMC agrees to give Acquisition prompt written notice of any matter or matters
which come to GMC's attention which would constitute a breach of the condition
contained in this Section 6.2(a), together with reasonably complete details of
such matter or matters. Within 20 days after receipt of any such notice from GMC
related to the litigation warranty contained in Section 4.1(k) or within 10 days
after receipt of any such notice from GMC related to any other matter (or such
longer period as GMC shall agree), Acquisition shall by written notice to GMC
state whether it would upon Closing be willing to waive such condition despite
the matters described in such notice from GMC and in all other such notices
previously received from GMC or, if it would not be willing to so waive without
the imposition of further agreements or conditions upon GMC or the Participating
Shareholders stating the further agreements or conditions it would seek in
connection with such waiver.
(b) Opinion of Counsel. Acquisition shall have received an opinion
dated the Closing Date from Zissu Gumbinger & Stolzar LLP, counsel for GMC,
that:
(i) GMC and each of the Subsidiaries is a corporation duly and validly
organized, legally existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority to own
its properties and to conduct its business as then being conducted;
(ii) Neither GMC nor any of the Subsidiaries is required to be
qualified to do business as a foreign corporation in any jurisdiction where
they are not so qualified and where failure to so qualify will have a
material adverse effect on the financial condition or operations thereof;
(iii) The authorized, issued and outstanding capital stock of GMC is
as stated in such opinion, the outstanding shares have been duly and
validly authorized and issued and are fully paid and nonassessable; and
there are no preemptive or similar rights on the part of the holders of any
class of securities of GMC (other than holders of options);
(iv) GMC is the record owner, and (to the best of such counsel's
knowledge) the beneficial owner, of all outstanding capital stock of each
of the Subsidiaries except General Microcircuit Corporation, of which it
owns 97% of the outstanding capital stock as stated in such opinion; and
the outstanding stock of each of the Subsidiaries has been duly and validly
authorized and issued and is fully paid and nonassessable;
(v) GMC has full corporate power to carry out the transactions
contemplated by this Agreement; this Agreement has been duly executed and
delivered by GMC; all necessary corporate action has been taken by GMC and
its Board of Directors and shareholders to authorize GMC to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby; upon the effectiveness of the Certificate filed with the Secretary,
the Merger will be validly consummated under New York law, the outstanding
<PAGE>
GMC Shares will have been validly converted into rights to receive cash and
warrants pursuant to the Merger and the rights of all outstanding Options
(except as otherwise specified in such opinion) shall have been terminated;
and this Agreement is a valid and legally binding obligation of GMC,
enforceable against GMC in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, moratorium or other similar
laws affecting creditors' rights generally or by general principles of
equity;
(vi) The execution, delivery and performance by GMC of this Agreement
and the consummation of the transactions contemplated by this Agreement
will not constitute a violation of any provision of the Certificate of
Incorporation or By-laws of GMC or any of the Subsidiaries or, giving
effect to any consents which may have been obtained, of any material
agreement, instrument or other document known to such counsel after
reasonable investigation, to or by which GMC or any of the Subsidiaries is
a party or is bound, or any judgment, decree or order known to such counsel
after reasonable investigation, of any court or other governmental
authority which is binding on GMC or any of the Subsidiaries or any of its
or their property;
(vii) To the best knowledge and information of such counsel, there is
no material litigation or governmental proceeding pending or threatened
against GMC or any of the Subsidiaries which has not been disclosed in the
Proxy Statement or in this Agreement;
(viii) No consent or approval by any governmental authority which has
not been obtained is required in connection with the consummation by GMC of
the transactions contemplated by this Agreement; and
(ix) The Proxy Statement complies as to form in all material respects
with the applicable requirements of New York and Federal law and the rules
and regulations of the American Stock Exchange, except that such counsel
need not express any opinion or belief as to the financial statements or
other financial or statistical data contained in the Proxy Statement or the
information which relates to Acquisition and its affiliates or to the
financing of the transactions contemplated by this Agreement.
(c) Dissenting Stockholders. The holders of not more than 15% in the
aggregate of the outstanding GMC Shares shall have filed with GMC notices of
election to dissent pursuant to Section 623 of the BCL. If such holders of more
than 15% of the outstanding GMC Shares have filed such notices, Acquisition
shall have the right to (i) waive this condition and close, (ii) terminate this
Agreement, or (iii) adjourn the Closing to any date not later than the cutoff
date referred to in Section 6.1(g) hereof to determine whether such percentage
is reduced to 10% or less by holders who abandon or lose their right to
appraisal pursuant to the procedures of said Section 623. At such time as such
percentage is thus reduced to 10% or less, this condition shall be deemed
satisfied.
(d) Options. GMC's Board of Directors shall have adopted resolutions
terminating the Option Plans as of the Effective Date.
<PAGE>
(e) No Material Adverse Change. Except as otherwise set forth herein
or in the Schedule, since February 28, 1998, no event shall have occurred, and
no condition shall exist, which has a material adverse effect on the condition
(financial or otherwise) or the business or prospects of GMC or any Subsidiary
or their respective assets; and none of the threatened litigation referred to in
Part KK of the Schedule shall have been commenced against GMC or any of the
Subsidiaries.
(f) Other Agreements. The Consulting Agreement and Employment
Agreements shall have been executed and delivered by the respective parties
thereto.
(g) Cutoff Date. The Merger shall in any event have been completed no
later than December 31, 1998. This condition shall be a mutual condition.
(h) Fairness Opinion. GMC shall have received a Fairness Opinion,
prepared by an investment banking or other concern which opinion states
unequivocally that the consideration to be paid by Acquisition hereunder with
respect to GMC Shares is fair and adequate to GMC's shareholders.
(i) Due Diligence. Acquisition shall have completed its due diligence
with respect to GMC and determined, in its sole discretion, that GMC's
representations, warranties and covenants contained herein are true and correct
in all material respects; provided that such due diligence must be completed by
no later than thirty (30) days after the delivery to Acquisition and Herley of
the completed Schedule. Absent notification by Acquisition and Herley, within
the three (3) days immediately after the end of such thirty (30) day period,
this condition shall be deemed waived by Acquisition and Herley.
6.3 Conditions to Obligations of GMC. Consummation of the transactions
contemplated by this Agreement is subject to the fulfillment to the reasonable
satisfaction of GMC of each of the following conditions:
(a) Compliance with Representations, Warranties, Covenants and
Agreements. All of the representations and warranties of Acquisition and Herley
contained in this Agreement shall be true and correct at and as of the Closing
Date with the same force and effect as if they had been made at and as of such
date (except for changes contemplated or permitted by this Agreement or
otherwise approved in writing by GMC); Acquisition and Herley shall have
performed all of the covenants and agreements contained in this Agreement to be
performed by them at or prior to the Closing Date; and on the Closing Date, GMC
shall have received from Acquisition and Herley a certificate dated that day,
signed by the President of Acquisition and by the President of Herley,
certifying the foregoing.
(b) Opinion of Counsel. GMC shall have received an opinion dated the
Closing Date from Blau, Kramer, Wactlar & Lieberman, P.C., of Jericho, New York,
counsel for Acquisition, that:
<PAGE>
(i) Each of Herley and Acquisition is a corporation validly organized,
legally existing and in good standing under the laws of its respective
jurisdiction of incorporation with full corporate power and authority to
own their properties and to conduct their businesses as they are then being
conducted;
(ii) The authorized, issued and outstanding capital stock of
Acquisition is as stated in such opinion; all the outstanding shares of
capital stock of Acquisition are owned of record and (to the best of
counsel's knowledge) beneficially by Herley;
(iii) Each of Herley and Acquisition has full corporate power to carry
out the transactions contemplated by this Agreement; this Agreement has
been duly executed and delivered by each of Herley and Acquisition and all
necessary corporate action has been taken by each of Herley and
Acquisition, their Boards of Directors and Shareholders in order to
consummate the transactions contemplated by this Agreement, to execute and
deliver this Agreement and to make this Agreement the valid and legally
binding obligation of each of Herley and Acquisition enforceable against
Herley and Acquisition in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, moratorium or other similar
laws affecting creditors' rights generally or by general principles of
equity;
(iv) The execution, delivery and performance of this Agreement by
Herley and Acquisition and the consummation of the transactions
contemplated by this Agreement will not constitute a violation, breach or
default under the Certificate of Incorporation of Herley or Acquisition or
either of their By-laws or, to such counsel's knowledge, under any
agreement or other document to or by which Herley or Acquisition is a party
or is bound or any judgment, decree, or order of any court or other
governmental authority which is binding on Herley or Acquisition or any of
their properties; and
(v) No consent or approval by any governmental authority which has not
been obtained is required in connection with the consummation by Herley and
Acquisition of the transactions contemplated by this Agreement.
(c) Adequacy of Funds. Simultaneously with the consummation of the
transactions contemplated hereby, Acquisition shall have caused to be deposited
with the Paying Agent funds and warrants in amounts sufficient to permit
consummation of the Merger in accordance with the terms hereof and GMC shall
have received evidence reasonably satisfactory to it and its counsel that such
funds and warrants have been received by the Paying Agent.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and cancelled, and the
transactions contemplated hereby may be abandoned, notwithstanding shareholder
<PAGE>
authorization, at any time prior to the filing of the Certificate with the
Secretary (a) by mutual consent of Acquisition and GMC, (b) by any party not in
material breach hereof, in the event that any of the conditions specified in
Section 6.1 shall not have been satisfied within the time contemplated by this
Agreement, (c) by Acquisition if not in material breach hereof, if any of the
conditions specified in Section 6.2 shall not have been satisfied within the
time contemplated by this Agreement and (d) by GMC, if not in material breach
hereof, if any of the conditions specified in Section 6.3 shall not have been
satisfied within the time contemplated by this Agreement or if Acquisition has
delivered to GMC notice pursuant to Section 6.2(a) that it is not willing to
waive a conditions.
Any party intending to terminate this Agreement pursuant to Clause (b), (c)
or (d) hereof shall give notice of intention to terminate to the other parties,
specifying the breach of condition giving rise thereto, which termination shall
become effective (1) upon receipt thereof if the condition shall then be
impossible of performance, or (ii) on the tenth day after receipt thereof if the
breach is susceptible of cure and the condition is not satisfied within such
period.
7.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1, this Agreement, except as to the second sentence of Section 5.1(b)
(iv), shall no longer be of any force or effect and there shall be no liability
on the part of any party or its respective directors, officers or shareholders;
provided, however, that in the case of a termination pursuant to Section 7.1(b),
(c) or (d) where the nonfulfillment of the condition giving rise to termination
resulted from a breach of this Agreement by another party, the damages which the
aggrieved party or parties may recover from the defaulting party shall be as
determined by law.
ARTICLE VIII
MISCELLANEOUS
8.1 Extension of time; Waivers. At any time prior to the filing of the
Certificate with the Secretary:
(a) By Acquisition. Acquisition and Herley may (i) extend the time for
the performance of any of the obligations or other acts of GMC, (ii) waive any
inaccuracies in the representations and warranties of GMC contained herein or in
any document delivered pursuant hereto by GMC and (iii) waive compliance with
any of the agreements or conditions contained herein to be performed by GMC. Any
agreement on the part of Acquisition to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
Acquisition.
(b) By GMC. GMC may (i) extend the time for the performance of any of
the obligations or other acts of Acquisition, (ii) waive any inaccuracies in the
representations and warranties of Acquisition contained herein or in any
document delivered pursuant hereto by Acquisition and (iii) waive compliance
with any of the agreements or conditions contained herein to be performed by
Acquisition. any agreement on the part of GMC to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
GMC.
<PAGE>
8.2 Costs and Expenses. Except as hereinafter provided, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such expenses. GMC shall
use its best efforts to secure bi-weekly billing with respect to legal and
accounting costs associated with the transactions contemplated hereby and
promptly furnish copies of such billings to Acquisition and Herley.
8.3 Amendments. This Agreement may be amended with the approval of
Acquisition and GMC at any time before or after approval thereof by the
shareholders of GMC, but after any such shareholder approval, no amendment shall
be made which reduces the amount or changes the form of the consideration
distributable to the shareholders of GMC without the further approval of the
shareholders of GMC. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
8.4 Assignability. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that this Agreement may not be assigned by any party without the prior
written consent of the other parties.
8.5 Reliance by Counsel. In rendering any opinion referred to herein,
counsel may rely, as to any factual matters involved in their opinion, on
certificates of public officials and of corporate officers, opinions of
corporate general counsel, and such other evidence as such counsel may
reasonably deem appropriate and, as to matters governed by the BCL or the laws
of jurisdictions other than the United States or the State of New York, an
opinion of local counsel in such jurisdictions, which counsel shall be
satisfactory to the other parties in the exercise of their reasonable judgment.
8.6 Notices. Any notice to a party hereto pursuant to this Agreement shall
be in writing, shall be deemed given when received, and shall be delivered
personally or sent by certified or registered mail or by telecopier addressed as
follows:
To Acquisition and Herley:
Herley Industries, Inc.
10 Industry Drive
Lancaster, PA 17603
Attn: Lee N. Blatt
Fax No.: (717) 397-9503
with a copy to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attn: David H. Lieberman, Esq.
Fax No.: (516) 822-4824
<PAGE>
To GMC and the Participating Shareholders:
General Microwave Corp.
5500 New Horizons Blvd.
Amityville, New York 11701
Attn: Mitchell Tuckman
Fax No.: (516) 276-6089
with a copy to:
Zissu Gumbinger & Stolzar LLP
950 Third Avenue
New York, NY 10022
Attn: Michael I. Stolzar
Fax No.: (212) 888-3182
8.7 Entire Agreement; Law Governing. This Agreement together with all other
agreements contemplated hereby (a) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which will be deemed an original and all of which
shall constitute one and the same instrument, and (c) except as otherwise stated
in any other agreement, shall be governed in all respects, including validity,
interpretation and effect, by the internal substantive laws of the State of New
York.
8.8 Publicity and Disclosures. No press releases or public disclosures of
the transactions contemplated by this Agreement, either oral or written, shall
be made without the prior written consent of all the parties hereto, provided,
however, that no such consent shall be unreasonably withheld or delayed and
provided further that no such consent shall be required if (a) in the opinion of
counsel for the party proposing to make such press release or public disclosure,
such press release and/or public disclosure is required by applicable law, rules
or regulations or by stock exchange requirement, and (b) time does not permit
the obtaining of approval by the other parties.
8.9 Headings. The headings and captions of the sections and subsections of
this Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.
8.10 Survival. The representations and warranties contained in Article IV
hereof shall not survive the Closing.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and such counterparts together will constitute one instrument.
<PAGE>
8.12. Zissu Proxy. All of Acquisition and Herley's obligations hereunder
are expressly conditioned upon the delivery to Acquisition and Herley, on or
before August 24, 1998, of an irrevocable proxy, in form and substance
acceptable to Acquisition and Herley, executed by Frederick Zissu with respect
to all GMC Shares beneficially owned by him.
<PAGE>
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GENERAL MICROWAVE CORP.:
By: /s/ Sherman A. Rinkel
---------------------------------------------
Sherman A. Rinkel
Chairman, Board of Directors
PARTICIPATING SHAREHOLDERS:
/s/ Sherman A. Rinkel
----------------------------------------------
Sherman A. Rinkel
/s/ Moe Wind
----------------------------------------------
Moe Wind
/s/ Stanley Simon
----------------------------------------------
Stanley Simon
/s/ Mitchell Tuckman
----------------------------------------------
Mitchell Tuckman
/s/ Edmond D. Franco
----------------------------------------------
Edmond D. Franco
/s/ Michael I. Stolzar
----------------------------------------------
Michael I. Stolzar
/s/ Michael D. Magidson
----------------------------------------------
Michael D. Magidson
/s/ Arnold H. Levine
----------------------------------------------
Arnold H. Levine
/s/ Rozalie Schachter
----------------------------------------------
Rozalie Schachter
/s/ Howard Cohen
----------------------------------------------
Howard Cohen
/s/ Robert DeBrecht
----------------------------------------------
Robert DeBrecht
GMC ACQUISITION CORP.:
By: /s/ Lee N. Blatt, President
----------------------------------------------
Lee N. Blatt, President
HERLEY INDUSTRIES, INC.:
By: /s/ Myron Levy, President
----------------------------------------------
Myron Levy, President
<PAGE>
EXHIBIT A
---------
PARTICIPATING SHAREHOLDERS
--------------------------
Sherman A. Rinkel
Moe Wind
Stanley Simon
Mitchell Tuckman
Edmond D. Franco
Michael I. Stolzar
Michael D. Magidson
Arnold H. Levine
Rozalie Schachter
Howard Cohen
Robert DeBrecht
<PAGE>
EXHIBIT B
---------
CERTIFICATE OF INCORPORATION
----------------------------
OF GMC ACQUISITION CORPORATION
------------------------------
<PAGE>
CERTIFICATE OF INCORPORATION
of
GMC ACQUISITION CORPORATION
---------------------------
(a New York Corporation)
Under Section 402 of the Business Corporation Law
* * * * * *
THE UNDERSIGNED, a natural person, being of the age of eighteen or
over, for the purpose of organizing a corporation pursuant to Section 402 of the
Business Corporation Law of the State of New York, hereby certifies that:
FIRST: The name of the corporation is:
GMC ACQUISITION CORPORATION
SECOND: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the Business
Corporation Law provided that the corporation is not formed to engage in any act
or activity which requires the consent or approval of any state official,
department, board, agency or other body.
The corporation, in addition to and in furtherance of the corporate
purposes above set forth, shall have the powers enumerated in Section 202 of the
Business Corporation Law or any statute of the State of New York.
THIRD: The office of the Corporation is to be located in the County of
Suffolk, State of New York.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is TWO HUNDRED (200) shares, without par value.
FIFTH: The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is:
<PAGE>
c/o Blau, Kramer, Wactlar & Lieberman, P.C., 100 Jericho Quadrangle, Jericho,
New York 11753.
SIXTH: The Board of Directors of the Corporation shall expressly have
the power and authorization to make, alter and repeal the By-Laws of the
corporation, subject to the reserved power of the shareholders to make, alter
and repeal any By-Laws adopted by the Board of Directors. Unless and except to
the extent required by the By-Laws of the Corporation, elections of directors
need not be by written ballot.
SEVENTH: Each person who at any time is or shall have been a director
or officer of the Corporation and is threatened to be or is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is, or
he or his testator or intestate was, a director, officer, employee or agent of
the Corporation, or served at the request of the Corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint,
venture, trust or other enterprise, shall be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any such threatened,
pending or completed action, suit or proceeding to the full extent authorized
under Section 722 of the Business Corporation Law of the State of New York. The
foregoing right of indemnification shall in no way be exclusive of any other
rights of indemnification to which such director, officer, employee or agent may
be entitled under any By-Law, agreement, vote of shareholders or disinterested
directors, or otherwise.
EIGHTH: Any and all right, title, interest and claim in or to any
dividends declared by the Corporation, whether in cash, stock, or otherwise,
which are unclaimed by the shareholder entitled thereto for a period of six (6)
years after the close of business on the payment date shall be and be deemed to
be extinguished and abandoned; such unclaimed dividends in the possession of the
Corporation, its transfer agents, or other agents or depositaries, shall at such
time become the absolute property of the Corporation, free and clear of any and
all claims for any person whatsoever.
NINTH: Any and all directors of the Corporation shall not be liable to
the Corporation or any shareholder thereof for monetary damages for breach of
fiduciary duty as director except as otherwise required by law. No amendment to
or repeal of this Article NINTH shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any act or omission of such director occurring prior to such
amendment or repeal.
TENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of New York at the time in force may be
<PAGE>
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the shareholders of the Corporation by the
Certificate of Incorporation are granted subject to the provisions of this
Article TENTH.
THE UNDERSIGNED, for the purposes of forming a Corporation under the
laws of the State of New York, does hereby make and execute this Certificate and
affirm and acknowledge, under the penalties of perjury, that this Certificate is
my act and deed and that the facts herein stated are true, and I have
accordingly set my hand hereto this 19th day of August, 1998.
Melinda O'Donnell
Sole Incorporator
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, NY 11753
<PAGE>
CERTIFICATE OF INCORPORATION
of
GMC ACQUISITION CORPORATION
---------------------------
(a New York Corporation)
Under Section 402 of the Business Corporation Law
BLAU, KRAMER, WACTLAR & LIEBERMAN, P. C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11753
<PAGE>
EXHIBIT C
---------
FORM OF WARRANT
---------------
<PAGE>
W A R R A N T
- - - - - - -
For the Purchase of Common Stock, Par Value $.10 per Share of
HERLEY INDUSTRIES, INC.
(Incorporated under the Laws of the State of Delaware)
VOID AFTER 5 P.M. _________, 2001
No. __
Warrant to Purchase
_____ Shares
THIS IS TO CERTIFY that, for value received, ___________ is entitled,
subject to the terms and conditions set forth, at or before 5 P.M., New York
City Time, on ________, 2001, but not thereafter, to purchase the number of
shares set forth above of Common Stock, par value $.10 per shares (the "Common
Stock"), of HERLEY INDUSTRIES, INC., a Delaware corporation (the "Corporation"),
from the Corporation at a purchase price per share of (i) $14.40 if and to the
extent this Warrant is exercised, in whole or in part on or before January 11,
1999, or (ii) $15.60 if and to the extent this Warrant is exercised, in whole or
in part after January 11, 1999 but during the period this Warrant remains in
force, subject in all cases to adjustment as provided in Section 3 hereof, and
to receive a certificate or certificates representing the shares of Common Stock
so purchased, upon presentation and surrender to the Corporation of this
Warrant, with the form of subscription attached hereto duly executed, and
accompanied by payment of the purchase price of each share purchased either in
cash or by certified or bank cashier's check payable to the order of the
Corporation.
1. The Corporation covenants and agrees that all shares may be
delivered upon the exercise of this Warrant and will, upon delivery, be fully
paid and non-assessable, and, without limiting the generality of the foregoing,
the Corporation covenants and agrees that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the then current Warrant
purchase price per share of the Common Stock issuable upon exercise of this
Warrant.
2. The rights represented by this Warrant are exercisable at the
<PAGE>
option of the holder hereof in whole at any time, or in part from time to time,
within the period above specified at the prices specified in Section 1 hereof .
In case of the purchase of less than all the shares as to which this Warrant is
exercisable, the Corporation shall cancel this Warrant upon the surrender hereof
and shall execute and deliver a new Warrant of like tenor for the balance of the
shares purchasable hereunder.
3. The price per share at which shares of Common Stock may be
purchased hereunder, and the number of such shares to be purchased upon exercise
hereof, are subject to change or adjustment as follows:
(A) In case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force, effect a
recapitalization of such character that the shares of Common Stock
purchasable hereunder shall be changed into or become exchangeable for
a larger or smaller number of shares, then, after the date of record
for effecting such recapitalization, the number of shares of Common
Stock which the holder hereof shall be entitled to purchase hereunder
shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of shares of
Common Stock by reason of such recapitalization, and the purchase
price hereunder per share of such recapitalized Common Stock shall, in
the case of an increase in the number of such shares, be
proportionately reduced, and in the case of a decrease in the number
of such shares, shall be proportionately increased. For the purpose of
this subsection (A), a stock dividend, stock split-up or reverse split
shall be considered as a recapitalization and as an exchange for a
larger or smaller number of shares, as the case may be.
(B) In the case of any consolidation of the Corporation with, or
merger of the Corporation into, any other corporation, or in case of
any sale or conveyance of all or substantially all of the assets of
the Corporation in connection with a plan of complete liquidation of
the Corporation, then, as a condition of such consolidation, merger or
sale or conveyance, adequate provision shall be made whereby the
holder hereof shall thereafter have the right to purchase and receive,
upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of shares of Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby, such shares of stock or securities as may be issued in
connection with such consolidation, merger or sale or conveyance with
respect to or in exchange for the number of outstanding shares of
Common Stock immediately therefore purchasable and receivable upon the
exercise of the rights represented hereby had such consolidation,
merger or sale or conveyance not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions
hereof shall be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliver- able upon the
exercise hereof.
<PAGE>
(C) In case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force, issue (otherwise than
by stock dividend or stock split-up or reverse split) or sell shares
of its Common Stock (hereinafter referred to as "Additional Shares")
for a consideration per share (before deduction of expenses or
commissions or underwriting discounts or allowances in connection
therewith) less than the current market price per share of Common
Stock on the record date of issuance or grant, then, after the date of
such issuance or sale, the purchase price hereunder per share shall be
reduced to a price determined by dividing (1) an amount equal to (a)
the total number of shares of Common Stock outstanding immediately
prior to the time of such issuance or sale multiplied by such purchase
price hereunder per share, plus (b) the consideration (before
deduction of expenses or commissions or underwriting discounts or
allowances in connection therewith), if any, received by the
Corporation upon such issuance or sale, by (2) the total number of
shares of Common Stock outstanding after the date of the issuance or
sale of such Additional Shares, and the number of shares of Common
Stock which the holder hereof shall be entitled to purchase hereunder
at each such adjusted purchase price per share, at the time such
adjusted purchase price per shall be in effect, shall be the number of
whole shares of Common Stock obtained by multiplying such purchase
price hereunder per share before such adjustment, by the number of
shares of Common Stock purchasable upon the exercise of this Warrant
immediately before such adjustment, and dividing the product so
obtained by such adjusted purchase price per share; provided, however,
that no such adjustment of the purchase price hereunder per share or
the number of shares for which this Warrant may be exercised shall be
made upon the issuance or sale by the Corporation of not more than
5,039,868 Additional Shares reserved for issuance upon exercise of
stock options or warrants.
(D) In case the Corporation shall, while this Warrant remains
unexercised in whole or in part, and in force, issue or grant any
rights to subscribe for or to purchase, or any option (other than the
employee stock options referred to in subsection (C) above) for the
purchase of (i) Common Stock or (ii) any indebtedness or shares of
stock convertible into or exchangeable for Common Stock (indebtedness
or shares of stock convertible into or exchangeable for Common Stock
being hereinafter referred to as "Convertible Securities"), or issue
or sell Convertible Securities and the price per share for which
Common Stock is issuable upon the exercise of such rights or options
or upon conversion or exchange of such Convertible Securities at the
time such Convertible Securities first become convertible or
exchangeable (determined by dividing (1) in the case of an issuance or
grant of any such rights or options, the total amount, if any,
received or receivable by the Corporation as consideration for the
issuance or grant of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the
<PAGE>
Corporation upon exercise of such rights or options, plus, in the case
of such Convertible Securities, in the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable, or
(2) in the case of an issuance or sale of Convertible Securities other
than where the same or issuable upon the exercise of any such rights
or options, the total amount, if any, received or receivable by the
Corporation as consideration for the issuance or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable, by,
in either such case, (3) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or upon the
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable) shall
be less than the current market price per share of Common Stock on the
record date of grant, , then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the total maximum amount of such
Convertible Securities at the time such Convertible Securities first
become convertible or exchangeable, shall (as of the date of the
issuance or grant of such rights or options or, in the case of the
issuance or sale of Convertible Securities other than where the same
are issuable upon the exercise of rights or options, as of the date of
such issuance or sale) be deemed to be outstanding and to have been
issued for said price per share; provided that (i) no further
adjustment of the purchase price shall be made upon the actual
issuance of such Common Stock upon the exercise of such rights or
options or upon the conversion or exchange of such Convertible
Securities or upon the actual issuance of Convertible Securities where
the same are issuable upon the exercise of such rights or options, and
(ii) rights or options issued or granted pro rata to shareholders
without consideration and Convertible Securities issuable by way of
dividend or other distribution to shareholders shall be deemed to have
been issued or granted at the close of business on the date fixed for
the determination of shareholders entitled to such rights, options or
Convertible Securities and shall be deemed to have been issued without
consideration; and (iii) if, in any case, the total maximum number of
shares of Common Stock issued upon exercise of such rights or options
or upon conversion or exchange of such Convertible Securities is not,
in fact, issued and the right to exercise such right or option or to
convert or exchange such Convertible Securities shall have expired or
terminated, then, and in any such event, the purchase price, as
adjusted, shall be appropriately readjusted at the time of such
expiration or termination. In such case, each purchase price hereunder
per share which is greater than the price per share for which Common
Stock is issuable upon conversion or exchange of such rights or
options or upon conversion or exchange of such Convertible Securities
at the time such Convertible Securities first become convertible or
exchangeable, as determined above in this subsection (D), shall
thereupon be reduced to a price determined by dividing (1) an amount
equal to (a) the total number of shares of Common Stock outstanding
immediately prior to the time of the issuance or grant of such rights
or options or the issuance or sale of such Convertible Securities
multiplied by such purchase price hereunder per share, plus (b) the
total amount, if any, received or receivable by the Corporation as
consideration for such issuance or grant or such issuance or sale,
plus the additional amounts referred to and more fully set forth in
<PAGE>
clauses (1) and (2) of the parenthetical material above in this
subsection (D), whichever clause and whichever additional amounts may
be applicable, by (2) the total number of shares of Common Stock
outstanding after the date of such issuance or grant or such issuance
or sale, and the number of shares of Common Stock which the holder
hereof shall be entitled to purchase hereunder at such adjusted
purchase price per share, at the time such adjusted purchase price per
shall be in effect, shall be the number of whole shares of Common
Stock obtained by multiplying such purchase price hereunder, per
share, before such adjustment, by the number of shares of Common Stock
purchasable upon the exercise of this Warrant immediately before such
adjustment and dividing the product so obtained by such adjusted
purchase price per share.
(E) For the purpose of subsections (C) and (D) above, in case the
Corporation shall issue or sell Additional Shares, issue or grant any
rights to subscribe for or to purchase, or any options for the
purchase of (i) Common Stock or (ii) Convertible Securities, or issue
or sell Convertible Securities for a consideration part of which shall
be other than cash, the amount of the consideration received by the
Corporation therefor shall be deemed to be the cash proceeds, if any,
received by the Corporation plus the fair value of the consideration
other than cash as determined by the Board of Directors of the
Corporation in good faith, before deduction of commissions,
underwriting discounts or allowances or other expenses paid or
incurred by the Corporation for any underwriting of, or otherwise in
connection with, such issuance, grant or sale.
(F) Subject to the provisions of subsection (G) below, in case
the Corporation shall, while this Warrant remains unexercised, in
whole or in part, and in force, make any distribution of its assets to
holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise, then, after the date of record for
determining shareholders entitled to such distribution, the holder
hereof shall be entitled, upon exercise of this Warrant and purchase
of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or at the option of the Corporation, a sum
equal to the value thereof at the time of such distribution to holders
of Common Stock as such value is determined by the Board of Directors
of the Corporation in good faith) which would have been payable to
such holder had he been the holder of record of such shares of Common
Stock on the record date for the determination of shareholders
entitled to such distribution.
(G) Except as otherwise provided in subsection (B) above, in the
case of any sales or conveyance of all or substantially all of the
assets of the Corporation in connection with a plan of complete
liquidation of the Corporation, in the case of the dissolution,
<PAGE>
liquidation or winding up of the Corporation, all rights under this
Warrant shall terminate on a date fixed by the Corporation, such date
so fixed to be not earlier than the date of the commencement of the
proceedings for such dissolution, liquidation or winding-up and not
later than thirty (30) days after such commencement date. Notice of
such termination of purchase rights shall be given to the registered
holder hereof, as the same shall appear on the books of the
Corporation, at least thirty (30) days prior to such termination date.
(H) In case the Corporation shall, while this Warrant remains
unexercised in whole or in part, and in force, offer to the holders of
Common Stock any rights to subscribe for additional shares of stock of
the Corporation, then the Corporation shall given written notice
thereof to the registered holder hereof not less than thirty (30) days
prior to the date on which the books of the Corporation are closed or
a record date fixed for the determination of shareholders entitled to
such subscription rights. Such notice shall specify the date as to
which the books shall be closed or the record date fixed with respect
to such offer or subscription, and the right of the holder hereof to
participate in such offer or subscription shall terminate if this
Warrant shall not be exercised on or before the date of such closing
of the books or such record date.
(I) Any adjustment pursuant to the foregoing provisions shall be
made on the basis of the number of shares of Common Stock which the
holder hereof would have been entitled to acquire by exercise of this
Warrant immediately prior to the event giving rise to such adjustment
and, as to the purchase price hereunder per share, whether or not in
effect immediately prior to the time of such adjustment, on the basis
of such purchase price immediately prior to the event giving rise to
such adjustment. Whenever any such adjustment is required to be made,
the Corporation shall forthwith determine the new number of shares of
Common Stock which the holder shall be entitled to purchase hereunder
and/or such new purchase price per share, and shall prepare, retain on
file and transmit to the holder hereof within ten (10) days after such
preparation a statement describing in reasonable detail the method
used in calculating such adjustment(s).
(J) For the purposes of this Section 3, the term "Common Stock"
shall include all shares of capital stock authorized by the
Corporation's Certificate of Incorporation, as from time to time
amended, which are not limited to a fixed sum or percentage of par
value in respect of the right of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation.
(K) Whenever the price per share hereunder, initial or adjusted,
and the number of shares of Common Stock to be purchased upon exercise
hereof, initial or adjusted, shall be changed or adjusted pursuant to
the provisions of this Section 3, the Corporation shall forthwith
cause written notice setting forth the changed or adjusted price per
share hereunder and number of shares to be purchased upon exercise
hereof to be given to the holder of this Warrant.
<PAGE>
4. The Corporation agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of shares
issuable upon the exercise of this and all other Warrants of the same class.
5. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Corporation, or to any other
rights whatsoever except the rights herein expressed, and no dividends shall be
payable or accrue in respect of this Warrant or the interest represented hereby
or the shares purchasable hereunder until or unless, and except to the extent
that, this Warrant shall be exercised.
6. This Warrant is exchangeable upon the surrender hereof by the
holder hereof to the Corporation for new Warrants of like tenor representing in
the aggregate the right to purchase the number of shares purchasable hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the holder hereof at the time of such
surrender.
7. The Corporation will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to shareholders
of the Corporation concurrently with the distribution thereof to such
shareholders.
8. Notices to be given to the holder of this Warrant shall be deemed
to have been sufficiently given if delivered or mailed, addressed in the name
and at the address of such holder appearing in the records of the Corporation,
and if mailed, sent first class registered or certified mail, postage prepaid.
The address of the Corporation is 10 Industry Drive, Lancaster, Pennsylvania
17603, and the Corporation shall give written notice of any change of address to
the holder hereof.
9. The Corporation covenants and agrees that no later than ninety (90)
days after the issuance of this Warrant it will file a registration statement on
the appropriate form (the "Registration Statement") with the Securities and
Exchange Commission in accordance with the Securities Act of 1933, as amended,
and hereby agrees to include in the Registration Statement among the Securities
to be registered the Warrants and the shares of Common Stock into which the
Warrants are exercisable at the Corporation's sole cost and expense, and,
furthermore, to use best efforts to cause the Warrants to be listed for trading
on the NASDAQ National Market System, provided that all requirements with
respect to such listing can be satisfied by the Corporation without the
expenditure of unreasonable time or expense.
10. Anything to the contrary herein notwithstanding, this Warrant
shall be callable by the Corporation, in whole or in part, at any time after
twenty-one (21) months after the date of its issuance, at the price of $1.00 per
share of Common Stock subject hereto, on thirty (30) days written notice to the
holder hereof, if the average last reported sales price of the Common Stock
reported on the NASDAQ National Market System (or any successor or other
exchange upon which the Common Stock may be listed for trading) has been not
less than $17.60 per share for the fifteen (15) consecutive trading days
immediately preceding such call date This Warrant shall be exercisable by the
holder hereof during the aforementioned thirty (30) day notice period.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by the signature of its President and its seal affixed and attested by
its Secretary.
Dated: ________, 1998
HERLEY INDUSTRIES, INC.
By:
----------------------
Myron Levy, President
[Corporate Seal]
ATTEST:
- -----------------------------
David H. Lieberman, Secretary
<PAGE>
EXHIBIT D
---------
IRREVOCABLE PROXY
-----------------
THIS IRREVOCABLE PROXY (this "Agreement") is dated as of the ____ day of
August, 1998 by and between GMC Acquisition Corporation, a New York corporation
("GMCAC"), and _______________ (the "Shareholder").
WHEREAS, General Microwave Corp., a New York corporation ("GMC") Eleven
Participating Shareholders of GMC, GMCAC and Herley Industries, Inc., a Delaware
corporation ("Herley"), propose on the date hereof to enter into an Agreement
and Plan of Merger (the "Merger Agreement") pursuant to which GMC will be merged
with and into GMCAC on the terms and subject to the conditions contained in the
Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, GMCAC has requested that the Shareholder signatories thereto grant to
GMCAC irrevocable proxies with respect to all of the shares of Common Stock of
GMC owned by such Shareholders; and
WHEREAS, in order to induce GMCAC to enter into the Merger Agreement, the
execution and delivery of which will inure to the direct and material benefit of
the Shareholders, the Shareholders have agreed to execute and deliver this
Agreement in favor of GMCAC.
NOW, THEREFORE, in consideration of the execution and delivery of the
Merger Agreement by GMCAC and the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Grant of Irrevocable Proxy. The Shareholder hereby irrevocably appoints
and constitutes GMCAC or any designee of GMCAC, with full power of substitution,
the lawful agent, attorney and proxy of the Shareholder during the term of this
Agreement to vote in its sole discretion all of the shares of Common Stock of
GMC ("Common Stock") of which the Shareholder is the owner of record (the
"Shares") (including any and all Common Stock acquired by the Shareholder after
the date hereof or through the exercise or acceleration of options) in the
following manner for the following purposes: (i) to call one or more meetings of
the Shareholder of GMC in accordance with the By-Laws of GMC and applicable law
for the purpose of considering the transactions contemplated by the Merger
Agreement such that the Shareholder shall have the full opportunity to approve
the Merger Agreement and any and all amendments, modifications and waivers
thereof and the transactions contemplated thereby; (ii) in favor of the Merger
Agreement or any of the transactions contemplated by the Merger Agreement at any
Shareholders meetings of GMC held to consider the Merger Agreement (whether
annual or special and whether or not an adjourned meeting; (iii) against any
other proposal for any recapitalization, merger, sale of assets or other
business combination between GMC and any other person or entity other than GMCAC
or the taking of any action which would result in any of the conditions to
GMCAC's obligations under the Merger Agreement not being fulfilled; and (iv) as
otherwise necessary or appropriate to enable GMCAC to consummate the
<PAGE>
transactions contemplated by the Merger Agreement and, in connection with such
purposes, to otherwise Act with respect to the Shares which the Shareholder is
entitled to vote. THIS IRREVOCABLE PROXY HAS BEEN GIVEN IN CONSIDERATION OF THE
UNDERTAKINGS OF GMCAC IN THE MERGER AGREEMENT AND SHALL BE IRREVOCABLE AND
COUPLED WITH AN INTEREST UNTIL THE TERMINATION DATE AS DEFINED IN SECTION 2
HEREOF. This Agreement shall revoke all other proxies granted by the Shareholder
with respect to the Shares.
2. Termination Date. This Irrevocable Proxy shall expire on the earlier to
occur of the Closing under the Merger Agreement or the termination of the Merger
Agreement pursuant to its terms.
3. Representation and Warranty by the Shareholder. The Shareholder
represents and warrants to GMCAC that the Shareholder is on the date hereof the
owner of record of ________ shares of Common Stock of GMC.
4. Covenant of the Shareholder. The Shareholder covenants and agrees with
GMCAC that he will continue to hold, and will not sell, assign, transfer,
pledge, hypothecate or otherwise dispose of the Shares until the date of
termination of this Agreement pursuant to Section 2 hereof.
5. Specific Performance. The parties hereto agree that the Shares are
unique and that money damages are an inadequate remedy for breach of this
Agreement because of the difficulty of ascertaining the amount of damage that
will be suffered by GMCAC in the event that this Agreement is breached.
Therefore, the Shareholder agrees that in addition to and not in lieu of any
other remedies available in GMCAC at law or in equity, GMCAC may obtain specific
performance of this Agreement.
6. Assignment. This Agreement shall not be assigned by GMCAC to any person
other than Herley or any affiliate of Herley.
7. Amendments. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by both parties hereto.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of New York.
9. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, personal
representatives, executors, heirs and permitted assigns.
10. Headings. The Section headings herein are for convenience of reference
only and shall not affect the construction hereof.
<PAGE>
11. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF, GMCAC and the Shareholder have duly executed this
Agreement as of the date and year first above written.
GMC ACQUISITION CORPORATION
By:______________________________
------------------------------
[The Shareholder]
<PAGE>
EXHIBIT E
---------
CONSULTING AGREEMENT
--------------------
<PAGE>
CONSULTING AGREEMENT
--------------------
Agreement dated as of ______, 1998 between Herley Industries, Inc. and
Sherman Rinkel.
The parties agree as follows:
1. The Parties
-----------
(a) The parties to this Agreement are Herley Industries, Inc. and
Sherman Rinkel.
(b) Herley Industries, Inc. is a Delaware corporation. It has an
office at 10 Industry Drive, Lancaster, PA 17603. It is referred to below
as the "Corporation".
(c) Sherman Rinkel is an individual person. His address is 71
Northgate Circle, Melville, New York 11747. He is referred to below as "Mr.
Rinkel".
2. Mr. Rinkel's Position
---------------------
Before the effective date of this Agreement, Mr. Rinkel was the
non-executive Chairman of the Board of Directors of General Microwave
Corporation. Pursuant to this Agreement and as of the date hereof, Mr. Rinkel
shall be a part-time consultant to the Corporation; he shall also be made a
director on the Board of Directors of the Corporation to serve for so long as he
continues to be elected as a director of the Corporation by its shareholders and
is employed as a consultant by the Corporation.
3. The Engagement
--------------
(a) The Corporation hereby continues the engagement of Mr. Rinkel as a
part-time consultant to the Corporation, and Mr. Rinkel accepts the
engagement.
(b) During the term of this Agreement, Mr. Rinkel shall serve as a
part-time consultant to the Corporation on all matters pertaining to its
business. Mr. Rinkel shall make himself available for consultation with the
officers of the Corporation at times reasonably and mutually convenient to
the parties.
4. Compensation
------------
(a) As full compensation for his services under this Agreement
(whether or not he continues to be elected as a director of the
Corporation), the Corporation shall pay Mr. Rinkel during the term hereof
at the rate of Sixty Thousand ($60,000.00) Dollars per year. This
compensation shall be payable in equal monthly installments. So long as Mr.
Rinkel continues to be a director of the Corporation, the compensation
provided for hereunder shall be in lieu of fees paid to non-employee
directors of the Corporation.
<PAGE>
(b) In addition, the Corporation shall reimburse Mr. Rinkel for
authorized out-of- pocket expenses incurred by him in performing his duties
under this Agreement and provide him with an automobile comparable to the
one provided to him prior to the date hereof.
(c) This Agreement shall not entitle Mr. Rinkel to receive any
benefits made available by the Corporation to its employees or executives.
5. Covenant Not to Compete
-----------------------
(a) Mr. Rinkel acknowledges that during the course of his employment
with General Microwave Corporation and thereafter, he gained and continues
to gain extensive knowledge concerning several aspects of the Corporation's
business. In addition, Mr. Rinkel acknowledges that he gained and continues
to gain information of a confidential and proprietary nature relating to
the Corporation and its business.
(b) In consideration of the payments provided for herein, Mr. Rinkel
shall be bound by the covenants set forth herein.
(c) During the term of this Agreement, Mr. Rinkel shall not do any of
the following:
(i) Mr. Rinkel shall not conduct any business involving the
manufacture or sale of any product manufactured or sold by the Corporation
or any of its subsidiaries during his employment or engagement as a
consultant by the Corporation.
(ii) Mr. Rinkel shall not directly or indirectly render any services
of any nature, including advisory services, to any manufacturer or seller
of any product manufactured or sold by the Corporation or any of its
subsidiaries at any time during his employment or engagement as a
consultant by the Corporation.
(iii) Mr. Rinkel shall not invest in, solicit others to invest in or
otherwise render financial assistance to any manufacturer or seller of any
product manufactured or sold by the Corporation or any of its subsidiaries
during his employment or engagement as a consultant by the Corporation.
(d) During the term of this Agreement and for two years thereafter,
Mr. Rinkel shall not do any of the following:
(i) Mr. Rinkel shall not disclose any information reasonably known to
him to be proprietary or confidential information belonging to the
Corporation or any of its subsidiaries.
<PAGE>
(ii) Mr. Rinkel shall not hire or solicit the employment of any person
who was employed by the Corporation at any time during the calendar year
preceding the hiring or solicitation.
(e) The prohibitions set forth in subsections (c) and (d) shall apply
to the acts of Mr. Rinkel individually or the acts of Mr. Rinkel through
any corporation, partnership or other entity with which he may be
associated. Mr. Rinkel shall be deemed to be associated with any entity of
which he is an officer, director, consultant, agent, employee, stockholder
or partner.
(f) (i) The prohibitions set forth in subsections (c), (d) and (e)
shall not apply to actions taken at the request, or with the consent or for
the benefit of the Corporation.
(ii) The prohibitions set forth in subsections (c), (d) and (e) shall
not prohibit Mr. Rinkel from owning publicly traded investment securities
in any corporation if he owns no more than five (5%) percent of the total
outstanding securities of any class of that corporation or no more than
five (5%) percent of the total voting securities of that corporation.
(g) General Microwave Corporation and Mr. Rinkel are parties to an
Employee Patent Agreement dated February 4, 1963. The agreement is referred
to below as the "Patent Agreement". Although Mr. Rinkel is no longer an
employee of General Microwave Corporation or its successor corporation, his
obligations under the Patent Agreement shall continue as if he were an
employee of the Corporation during the term of this Agreement.
(h) Mr. Rinkel acknowledges that the rights of the Corporation under
this Agreement are of a specialized and unique character and that a breach,
or threatened breach of this Agreement by Mr. Rinkel, will cause the
Corporation irreparable injury and damage which cannot be reasonably or
adequately compensated in damages or in action at law. In the event of a
violation of the terms of this Agreement, the Corporation shall, in
addition to any other relief, be entitled to injunctive relief in any court
of competent jurisdiction.
(i) The failure of either party to require performance by the other
party of any provision of this Agreement shall in no way affect the right
of that party to enforce that provision of any other time, no shall it
affect the party's right to enforce any other provision of this Agreement.
The waiver by any party of a breach of any provision of this Agreement
shall not be taken or held to be a waiver of any subsequent breach of the
provision or as a waiver of the provision itself.
(j) If it is determined that any provision of this Agreement is too
broad or otherwise unenforceable for any reason, Mr. Rinkel expressly
agrees that any court of competent jurisdiction may narrow the terms of the
provision so as to render them enforceable according to their intent and
purpose.
<PAGE>
6. Term
----
(a) The term of this Agreement shall be for two years commencing on
the date GMC is merged into GMC Acquisition Corporation.
(b) This Agreement shall terminate automatically upon the death of Mr.
Rinkel, and the Corporation shall not be required to pay Mr. Rinkel or his
estate any amounts payable to him which accrue after that date.
(c) This Agreement shall also terminate if Mr. Rinkel is unable to
perform the services required of him by this Agreement for any period
exceeding or aggregating 40 days during any 160 day period for any reason
not caused by the Corporation.
7. Choice of Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
8. Notices
-------
Notices given under this Agreement shall be valid only if in writing and
properly mailed. A notice shall be properly mailed if postage is prepaid, and if
the notice is properly addressed. A notice to a party shall be properly
addressed only if addressed to the address of the party set forth on page 1 or
to any other address as the party may designate by giving notice to the other
party.
To signify his agreement to the foregoing, Sherman Rinkel has executed this
Agreement.
To signify its agreement to the foregoing, Herley Industries, Inc. has
caused this Agreement to be executed and attested to by its duly authorized
officers.
---------------------------------
Sherman Rinkel
HERLEY INDUSTRIES, INC.
By:_______________________________
Myron Levy, President
Attest:
- ------------------------------
<PAGE>
EXHIBIT F
---------
FORM OF EMPLOYMENT AGREEMENTS
-----------------------------
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of the __ day of ______, 1998 by and between Herley
Industries, Inc., a Delaware corporation (hereinafter the "Company") and
________________, residing at __________________________________________________
(hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire to enter into an Employment
Agreement relating to the Company's employment of the Employee; and
WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the
Employee, including any and all agreements with General Microwave Corp. ("GMC"),
relating to such employment.
NOW, THEREFORE, it is agreed as follows:
1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services in the New York
Metropolitan Area, upon the terms and conditions hereinafter set forth.
2. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be comprised of a two
(2) year period of employment commencing on the date on which GMC is merged into
GMC Acquisition Corporation and terminating two (2) years thereafter.
3. Duties and Extent of Services During Period of Employment. During the
term of employment, Employee shall be employed on a full-time basis as an
executive of the Company. In such capacity, Employee agrees that he shall serve
the Company under the direction of the Board of Directors and executive officers
of the Company to the best of his ability, shall perform all duties incident to
his offices on behalf of the Company and shall perform such other duties as may
from time to time be assigned to him by the Board of Directors and executive
officers of the Company. Employee shall also serve in similar capacities of such
of the subsidiary corporations of the Company as may be selected by the Board of
Directors.
<PAGE>
4. Remuneration. During the period of employment, Employee shall be
entitled to receive the following compensation for his services: A salary at the
rate of $_____ per annum, payable in equal bi-weekly installments, or in such
other manner as shall be agreeable to the Company and Employee.
5. Employee Benefits; Expenses.
(a) During the period of employment, the Employee shall be entitled to
participate in the Company's medical insurance, life insurance and pension plans
in the same manner as other of the Company's executives in positions of similar
authority and importance.
(b) For purposes of determining vacation and other payments or benefit
entitlements dependent, in whole or in part, on length of service, the
Employee's services to GMC Corp. shall be treated as if same had been performed
as an employee of the Company.
(c) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; and he shall be provided with the perquisites
customarily associated with the position of an executive of the Company.
(d) It is contemplated that during the period of employment, Employee may
be required to incur out-of-pocket expenses in connection with the performance
of his services hereunder, including expenses incurred for travel and business
entertainment. Accordingly, the Company shall reimburse Employee for all
reasonable out-of-pocket expenses incurred by Employee in the performance of his
duties hereunder upon submission of reasonable documentation therefore in
accordance with the Company's policies.
(e) During the period of his employment hereunder, Employee shall be
entitled to either (i) receive an allowance with respect to an automobile in the
same amount as he currently receives from GMC; or (ii) continue to use any
leased vehicle provided by GMC for the shorter of (x) the term of such lease or
(y) the term of his employment hereunder. If the lease with respect to any such
vehicle expires during the term of this Agreement or any extension hereof, the
Company shall have the option of either furnishing a replacement vehicle or a
cash vehicle allowance.
6. Disability. If Employee, during the period of employment, becomes unable
for three consecutive months or more, or any 180 days in any twelve-month
period, due to ill health or other physical or mental incapacity, to perform his
services hereunder, the Company may thereafter, upon at least 45 days' written
notice to Employee, place him on disability status. After such action by the
Company, Employee shall only be entitled to the disability benefits under his
insurance policy during the disability period.
<PAGE>
7. Confidential Information.
(a) In the course of Employee's employment by the Company, Employee will
have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret." Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need-to-know basis and shall comply
with any and all security systems and measures adopted from time to time by the
Company to protect the confidentiality of confidential or proprietary data or
information.
(b) The term "confidential or proprietary data or information" as used in
this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, bid preparation, computer and any other processed or
collated data, computer programs, pricing, marketing and advertising data.
(c) Employee will at all times promptly disclose to the Company in such
form and manner as the Company may reasonably require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trademarked, copyrighted or patented) conceived
or developed or created by Employee during or in connection with Employee's
employment hereunder and which relate to the business of the Company
("Intellectual Property"). Employee agrees that all such Intellectual Property
shall be "work-for-hire" and shall be the sole property of the Company. To the
extent any such Intellectual Property does not constitute a "work-for-hire"
under U.S. law, Employee hereby assigns to Company all right, title and interest
in such Intellectual Property. Employee further agrees that Employee will
execute such instruments and perform such acts as may reasonably be requested by
the Company to effectuate such assignment and otherwise to transfer to and
perfect in the Company all rights in such Intellectual Property.
(d) All written materials, records and documents made by Employee or coming
into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
<PAGE>
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
(e) The Employee shall immediately disclose to the Company any information
relating to business opportunities relating to the business of the Company,
and/or its subsidiaries which may be offered or communicated to the Employee.
(f) The provisions of this Section 7 shall survive the termination of this
Employment Agreement.
8. Termination.
(a) The Company recognizes that, for the period during which Employee has
been employed and/or associated with the Company, the Company has been
intimately familiar with the ability, competence and judgment of Employee, which
are acknowledged to be of the highest caliber. Accordingly, the Company and
Employee agree that Employee's services hereunder may be terminated for "cause"
by the Company only (i) for an act of fraud or embezzlement adversely affecting
the financial interest of the Company, (ii) in the event that the Company places
Employee on disability status pursuant to Section 6 hereof more than once during
the term hereof, (iii) in the event of a conviction of the Employee for any
felony, (iv) in the event of material breach by the Employee of the terms of
this Agreement, following the receipt by the Employee of ten (10) days notice of
such breach and the Employee's failure to cure such breach within such grace
period, (v) in the event of any willful breach by the Employee of this
Agreement, or (vi) in the event that the Employee materially breaches any of his
representations, warranties, covenants or agreements contained in the Agreement
and Plan of Merger of even date herewith to be executed by the Company. This
Agreement shall also terminate on the death of Employee.
(b) If the Company terminates Employee's employment hereunder for any
reason other than for "cause" as set forth in Section 8(a) hereof, Employee's
compensation shall be paid to him as provided hereunder for the remainder of the
term of this Agreement. If the Company terminates Employee's employment
hereunder for "cause" as set forth in Section 9(a) hereof, Employee shall not be
entitled to receive any further compensation hereunder which has not already
been earned pursuant to the terms hereof. Employee and the Company acknowledge
that the foregoing provisions of this paragraph 8(b) are reasonable and are
based upon the facts and circumstances of the parties at the time of entering
into this Agreement, and with due regard to future expectations.
9. Consolidation or Merger. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
<PAGE>
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
10. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at 10 Industry Drive, Lancaster,
PA 17603, or such other address as the Company may hereafter designate, with a
copy to David H. Lieberman, Esq., Blau, Kramer, Wactlar & Lieberman, P.C., 100
Jericho Quadrangle, Jericho, New York 11753. Any notice to be given to Employee
hereunder shall be delivered or mailed by certified or registered mail to him
at: ___________________ or such other address as he may hereafter designate.
11. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal representatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors of
the Company.
12. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
13. Prior Agreements Superseded. This Agreement supersedes any employment
or consulting agreements, oral or written, entered into between Employee and GMC
and the Company prior to the date of this Agreement.
14. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Delaware, without regard to
conflicts of laws.
15. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into and perform his obligations under this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HERLEY INDUSTRIES, INC.:
By:
-------------------------------------
Myron Levy
President
EMPLOYEE:
----------------------------------------
Name:
IRREVOCABLE PROXY
THIS IRREVOCABLE PROXY (this "Agreement") is dated as of the 21st day of
August, 1998 by and between GMC Acquisition Corporation, a New York corporation
("GMCAC"), and Frederick Zissu (the "Shareholder").
1. Grant of Irrevocable Proxy. In order to induce GMCAC to enter into an
Agreement and Plan of Merger (the "Agreement") with General Microwave Corp.
("GMC"), the Shareholder hereby irrevocably appoints and constitutes GMCAC or
any designee of GMCAC, with full power of substitution, the lawful agent,
attorney and proxy of the Shareholder during the term of the Agreement to vote
in its sole discretion all of the shares of Common Stock of GMC ("Common Stock")
of which the Shareholder is the owner of record or beneficially owns (the
"Shares") (including any and all Common Stock acquired by the Shareholder after
the date hereof or through the exercise or acceleration of options) in the
following manner for the following purposes: (i) to call one or more meetings of
the Shareholders of GMC in accordance with the By-Laws of GMC and applicable law
for the purpose of considering the transactions contemplated by the Agreement
such that the Shareholder shall have the full opportunity to approve the
Agreement and any and all amendments, modifications and waivers thereof and the
transactions contemplated thereby; (ii) in favor of the Agreement or any of the
transactions contemplated by the Agreement at any Shareholders meetings of GMC
held to consider the Agreement (whether annual or special and whether or not an
adjourned meeting; (iii) against any other proposal for any recapitalization,
merger, sale of assets or other business combination between GMC and any other
person or entity other than GMCAC or the taking of any action which would result
in any of the conditions to GMCAC's obligations under the Agreement not being
fulfilled; and (iv) as otherwise necessary or appropriate to enable GMCAC to
consummate the transactions contemplated by the Agreement and, in connection
with such purposes, to otherwise Act with respect to the Shares which the
Shareholder is entitled to vote. THIS IRREVOCABLE PROXY HAS BEEN GIVEN IN
CONSIDERATION OF THE UNDERTAKINGS OF GMCAC IN THE AGREEMENT AND SHALL BE
IRREVOCABLE AND COUPLED WITH AN INTEREST UNTIL THE TERMINATION DATE AS DEFINED
IN SECTION 2 HEREOF. This Agreement shall revoke all other proxies granted by
the Shareholder with respect to the Shares.
2. Termination Date. This Irrevocable Proxy shall expire on the earlier to
occur of the Closing under the Agreement or the termination of the Agreement
pursuant to its terms.
IN WITNESS WHEREOF, GMCAC and the Shareholder have duly executed this
Agreement as of the date and year first above written.
/s/ Frederick Zissu
-----------------------------------
Frederick Zissu
/s/ Lee N. Blatt
-----------------------------------
Lee N. Blatt
GMC ACQUISITION CORPORATION
Dauphin Deposit Bank and Trust Company
July 8, 1998
Herley Industries, Inc.
Attn: Lee N. Blatt, Chairman/Chief Executive Officer
Myron Levy, President
10 Industry Drive
Lancaster, PA 17603
Re: This letter will replace our original commitment letter dated June 24,
1998
Dear Gentlemen:
I am pleased to inform you that Dauphin Deposit Bank and Trust Company
(hereafter "Bank") has approved a $10 million increase to your unsecured line of
credit to Herley Industries, Inc. (hereafter "Borrower") as follows:
A. Principal Amount of Line: $21,000,000.00
------------------------
B. Expiration: January 31, 2000
----------
C. Interest Rate: Interest shall accrue at a rate per annum equal
------------- to the Federal Funds Target Rate, as established
by the Federal Open Market Committee of the
Federal Reserve Board, as in effect from time to
time, plus 1.65%. The interest rate shall change
effective with Bank's implementation of changes
in the Federal Funds Rate as publicly announced.
OR
Dauphin Deposit Base Rate, as in effect from
time.
D. Use of Proceeds: Working capital, general corporate purposes and
------------------ to issue standby letters of credit.
E. Repayment Schedule:
------------------
- Letters of Credit: To be negotiated if drawn upon.
- Line of Credit: Interest monthly, principal at expiration of
agreement.
<PAGE>
Herley Industries, Inc.
July 8, 1998
Page 2
F. Commitment Fee:
--------------
- Letters of Credit: 1.0% per annum
- Line of Credit: None
1. Borrowings may bear interest at an annual rate equal to the Dauphin Deposit
Base Rate or the Federal Funds Target Rate plus 1.65%, as applicable, as in
effect from time to time. This interest rate will change when and as
Dauphin Deposit Base Rate or the Federal Funds Target Rate changes.
Interest will be calculated on the basis of the actual number of days in
the current calendar year divided by 360. Interest will be payable monthly
upon submission of the Bank's statement therefrom.
2. The Bank's Base Rate is a reference rate which floats and is stated from
time to time by Dauphin Deposit Bank for the guidance of its officers. The
determination and statement of the Bank's Base Rate shall not in any way
preclude the Bank from making loans to other borrowers at differing rates.
3. The Bank shall have the right to review and approve any letter of credit
term exceeding two (2) years for issuance under the line of credit.
4. The line of credit shall be collateralized by the following:
a. A Corporate Suretyship Agreement of:
1. Microwave Holding Corporation
2. Stewart Warner Electronics Co.
3. Metraplex Corporation
4. Any future operating subsidiaries.
5. The Borrower shall provide the Bank with a Negative Pledge of all corporate
assets other than those pledged to Bank. The Negative Pledge shall be
subject to an existing mortgage with Dean Witter Inter Capital, Inc.
<PAGE>
Herley Industries, Inc.
July 8, 1998
Page 3
6. The Borrower shall maintain the Business Loan Agreement which contains
affirmative and negative covenants including, but not limited to the
following:
a. Minimum working capital requirement of $5,000,000 at all times.
Working capital shall be determined in accordance with generally
accepted accounting principles.
b. Minimum tangible Net Worth of $16,000,000 to be measured at fiscal
year end. Tangible net Worth shall be defined as total assets less
total liabilities, excluding all assets which would be classified as
intangible assets under generally accepted accounting principles.
c. Maximum Debt to Tangible Net Worth of 2.25 to 1.0 to be measured at
fiscal year end.
d. Adequate notification of anticipated acquisitions.
7. Approximately $7 million of seller financing debt involved in an upcoming
acquisition shall be subordinated to Bank debt.
8. Borrower shall maintain an insurance policy providing satisfactory coverage
on the buildings and their contents, including equipment, against the
perils of fire, extended coverage, vandalism and malicious mischief and
general liability insurance.
9. Borrower shall maintain its primary deposit relationship with Dauphin
Deposit Bank and Trust Company during the term of these loans.
10. On a monthly basis, when and if marketable securities are owned and
pledged, the Borrower shall furnish the Bank with a detailed listing,
including number of shares and where held, as well as, a current market
valuation on all marketable securities owned by Microwave Holding
Corporation.
11. On an annual basis, the Borrower shall furnish the bank with CPA-audited
consolidated financial statements and 10-K report on Herley Industries,
Inc.
12. On an annual basis, the Borrower shall furnish the Bank with
internally-prepared consolidating financial statements on Herley
Industries, Inc. and subsidiaries.
<PAGE>
Herley Industries, Inc.
July 8, 1998
Page 4
13. On a quarterly basis, the Borrower shall furnish Bank with consolidated
financial statements and a 10-Q report on Herley Industries, Inc.
14. Borrower shall maintain insurance coverage for Directors and Officers
liability in the minimum amount of $3,000,000 satisfactory to Bank.
The availability of the loan is contingent upon the Borrowers and the Bank
entering into mutually acceptable loan documentation setting forth the terms and
conditions stated herein and such other terms and conditions, covenants,
warranties and representations as may be required by the Bank and be mutually
acceptable to the Borrowers and the Bank. All terms and conditions contained
herein shall survive the execution of such loan documentation.
Any and all charges, expenses and costs incurred by the Bank related to the
preparation and completion of loan documents and/or the maintenance of the loan,
are the responsibility of the Borrower.
This commitment is contingent upon the right of the Bank at any time
hereafter and from time to time to review the commitment, to adjust terms and
conditions, or to discontinue the commitment should the Bank in the reasonable
exercise of its sole business discretion deem it necessary to do so.
Please acknowledge your concurrence with these terms and conditions by
signing, dating and returning the enclosed original of this letter to the Bank
on or before July 17, 1998, on which date this offer shall terminate and be of
no force and effect.
We thank you for your business and look forward to a mutually beneficial
relationship. If we can be of any further assistance, do not hesitate to call.
Sincerely,
/s/ Eric A. Rebert
Eric A. Rebert
Senior vice President
EAR/wjm
Enclosure
<PAGE>
Herley Industries, Inc.
July 8, 1998
Page 5
ACKNOWLEDGMENT:
The terms and conditions of this letter are hereby accepted in full this 10
day of July, 1998.
BORROWER: HERLEY INDUSTRIES, INC.
Attest:
/s/ M. Guzzetti /s/ Lee N. Blatt
- -------------------- -----------------------
M. Guzzetti Lee N. Blatt, Chairman,
Chief Executive Officer
/s/ A. C. Garefino /s/ Myron Levy
- -------------------- -----------------------
Myron Levy, President
SURETIES: MICROWAVE HOLDING CORPORATION
/s/ A. C. Garefino By:/s/ Myron Levy
- -------------------- ------------------------
STEWART WARNER ELECTRONICS
/s/ A. C. Garefino By:/s/ Myron Levy
- -------------------- ------------------------
METRAPLEX CORPORATION
/s/ A. C. Garefino By:/s/ Myron Levy
- -------------------- ------------------------
