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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 10-K
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
__________________
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to __________
Commission file number 1-11916
WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2582295
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
East 64 Midland Avenue,
Paramus, New Jersey 07652
________________________________________ ___________
(Address of principal executive offices) (Zip Code)
(201) 261-8797
_______________________________________________________________
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
___________________ _______________________
Common Stock, $.01 par value per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
_____________________________________________________________________
(Title of Class)
Indicate by check whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
____ ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [X]
The aggregate market value of Wireless Telecom Group, Inc. Common
Stock, $.01 par value, held by non-affiliates computed by reference to the
closing price as reported by AMEX on February 3, 1997: $183,400,851.
Number of shares of Wireless Telecom Group, Inc. Common Stock,
$.01 par value, outstanding as of February 3, 1997: 17,415,298.
________________________________________________________________________________
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PART 1
ITEM 1. BUSINESS
Wireless Telecom Group, Inc., formerly Noise Com, Inc. (the
"Company"), develops, manufactures and markets a wide variety of electronic
noise sources and test instruments for wireless telecommunications. The
Company's products are used to test the performance and capability of satellite,
cellular and personal (PCS) communications, radio, radar, wireless local area
network (WLAN), high-definition television (HDTV) and other communications
systems. To further address the needs of the ever-evolving wireless
telecommunications industry, the Company has been developing and marketing test
instruments designed to fulfill the requirements of such customers. The Company
is expanding its product offerings to these customers as this emerging industry
is expected to provide an opportunity for substantial growth.
MARKET
Since the Company's incorporation in the State of New Jersey in
1985, it has been primarily engaged in supplying noise source products to
various customers. This customer base has been continuously enhanced with the
advent of new products designed specifically for use by commercial customers in
wireless communications. Through the constant introduction of new instruments,
as well as the increased demand by commercial users for pre-existing products,
approximately 96% of the Company's sales in fiscal 1996 were derived from
commercial applications. The remaining sales (approximately 4%) were comprised
of sales made to the United States government (particularly the armed forces)
and prime defense contractors.
The emergence of the wireless telecommunications field continues
to provide the Company with many opportunities. Frost and Sullivan, in a July
1994 report, projected that the US communications test equipment market would
reach $1.3 billion by the year 2000. In 1996, the Company increased its sales by
40% due to continued expansion into the wireless industry. The Company has
combined its expertise in noise generation with sophisticated hardware and
software to provide versatile and powerful test equipment solutions for a myriad
of applications. The Company's commitment to educating its market as to the
advantages of its products continues to be paramount in achieving growth. All of
the Company's products are considered test devices; therefore management
considers the Company to operate within a single segment.
PRODUCTS
Since 1993, the Company has introduced 17 test instruments
specifically designed to serve the wireless telecommunications market. These
products perform a variety of tests which are required for performance
verification during the development of wireless communication equipment. They
are also used to monitor the performance of installed equipment. These
state-of-the-art instruments simplify complex measurements and perform analysis
of the devices being tested. Innovative and user-friendly software combined with
powerful hardware are used to create highly accurate, versatile products. In
1996, the Company capitalized on the synergy of its product line by introducing
a complete test station for wireless communications. This test station, the
first of its kind, bundles several of the Company's instruments with
specifically designed software to provide a complete testing solution for
certain wireless testing applications.
The Company's products can perform many different testing
functions. For example, one test is the emulation of multipath fading effects on
a wireless communication link. This test mimics the real world condition of a
temporary fading and/or loss of signals as a mobile receiver (i.e. car phone)
moves through the environment. The user can create multiple scenarios depending
on geographical conditions (i.e. city vs. rural landscape) and determine how the
device under test will perform.
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In digital communications systems, bit error rate testing is
another common application of the Company's technology. Noise is added to a
receiver (i.e. modem) and the performance of the receiver is then analyzed. The
noise added by the Company's instrument is measurable and repeatable which
allows the user to determine the performance of the device or devices being
tested. The user also has the ability to compare similar devices to determine
which product is better suited to a particular application. Other tests that can
be performed are distortion measurements of transmitters and receivers which
operate in high density signal environments, noise figure measurements, and
generation of precision carrier to noise ratios. The selling prices for
individual products range from $18,000 to over $100,000 per unit with most sales
occurring between $25,000 to $70,000 per unit. Selling prices for complete test
stations begin at approximately $200,000.
Noise source products are primarily used as a method of testing
to determine if sophisticated communications systems are capable of receiving
the information being transmitted. The widest application for the Company's
noise source products are as a reference standard in test instruments which
measure unwanted noise. This is accomplished by comparing a noise source with
known characteristics to the unwanted noise found in the communications system
being tested. By generating a random noise signal, in combination with a live
transmission signal, a noise generator simulates real world signals and allows
the manufacturer to determine if its product is performing to specifications.
Noise source testing is often more cost-efficient, faster and more accurate than
alternative conventional methods using signal generators.
The Company's noise source products are widely used in radar
systems as part of built-in test equipment to continuously monitor the radar
receiver. The Company has also continually experienced sales growth in the area
of satellite communications where the use of back-up receivers are becoming more
common as the demand for communication availability and reliability is
increasing. Testing by the Company's noise source products assures that the
back-up receiver is always functional and ready should the communication using
the first receiver fail. The Company's noise source products can test satellite
communication receivers for video, telephone and data communications.
The Company's products come in various sizes, styles and models
with varying degrees of capabilities and can be customized to meet particular
customer requirements. They may be incorporated directly into the electronic
equipment concerned or may be stand alone components or devices that are
connected to, or used in conjunction with, such equipment operating from an
external site, in the factory or in the field. The Company's noise source
products range from relatively simple items with no control mechanisms or
auxiliary components to complex, automated components containing computerized or
microprocessor based controls. Prices of noise source devices range from
approximately $200 to $50,000 per unit, with most sales occurring between $700
and $2,500 per unit.
The Company's products have extended useful lives but are
generally recalibrated every year to ensure their accuracy. The Company provides
recalibration services for a fee to its domestic and international customers and
also calibrates test equipment manufactured by others. Although such services
accounted for less than 2% of fiscal 1996 sales, the Company feels this area
will continue to grow as more products are sold into the global marketplace.
The Company has also previously manufactured and marketed
telemetry products developed for applications in the commercial and military
markets. The Company sold substantially all of its assets used or useful in the
telemetry business in September 1992.
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MARKETING AND SALES
The Company's in-house marketing and sales force currently
consists of 5 individuals, including the Company's Chairman. The Company
attempts to promote the sale of its products to customers and manufacturers'
representatives through its product literature, publication of articles,
presentations at technical conferences, direct mailings, trade advertisements
and trade show exhibitions. The Company believes that extensive advertising is a
major factor in generating in-house sales.
The Company's products are sold globally through its in-house
sales people and by over thirty non-exclusive manufacturers' representatives.
Generally, representatives do not stock inventories of the Company's products.
Manufacturers' representatives accounted for an aggregate of 42% of the
Company's sales for the years ended December 31, 1996 and 1995, respectively.
For the years ended December 31, 1996 and 1995, one of the Company's
representatives accounted for approximately 15% and 10% of sales, respectively.
The Company does not believe that, although there can be no assurance, the loss
of any or all of its representatives would have a material adverse affect on its
business.
The Company's relationship with its representatives is usually
governed by written contracts that run for one year renewable periods terminable
by either party on 60 days prior notice. The contracts generally provide for
exclusive territorial and product representation, and prohibit the handling of
competing products. One of its representatives oversees and supervises its
international sales through foreign representatives. The Company continually
reviews and assesses the performance of its representatives and makes changes
from time to time based on such assessments.
The Company believes that educating its existing and potential
customers as to the advantages and applications of its products is a vital
factor in its continued success as is its commitment to rapid product
introductions and timely revisions to existing products. Management believes
that its products offer state-of-the-art performance combined with outstanding
customer and technical support. The Company has always placed great emphasis on
designing its products to be user-friendly. Furthermore, it has attempted to
impart to potential customers the Company's willingness to tailor its products
to meet their specific needs. To this end, the Company manufactures both
standard and customized products.
CUSTOMERS
Since its inception, the Company has sold its products to more
than 1,000 customers. The Company has experienced continued growth in its
commercial business, and will continue to offer additional products to this
market. The Company currently sells the majority of its products to various
commercial users in the wireless field. Other sales are made to large defense
contractors which incorporate them into their products for sale to the U.S. and
foreign governments, multi-national concerns and Fortune 500 companies. In
fiscal 1996, approximately 96% of sales were derived from commercial
applications. The remaining sales were comprised of government and military
applications.
For fiscal 1996, no one customer accounted for more than 10% of
total sales. The Company's largest customers vary from year to year.
Accordingly, while the complete loss of any large customer or substantial
reduction of sales to such customers could have a material adverse effect on the
Company, the Company has experienced shifts in sales patterns with such large
companies in the past without any material adverse effect.
Export sales for Fiscal 1996, were $7,841,000 or approximately
35% of total sales. These sales were made predominantly to customers in Asia
($4,312,000 or 19%) and Europe ($2,677,000 or 12%). In February 1996, the
Company established a Foreign Sales Corporation (FSC). The Company receives a
federal tax deduction for a portion of its export profits. See Note 4 of Notes
to the Financial Statements.
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RESEARCH AND DEVELOPMENT
The Company maintains an engineering staff (22 individuals as of
February 3, 1997) whose duties include the improvement of existing products,
modification of products to meet customer needs and the engineering, research
and development of new products and applications. Expenses for research and
development involve engineering for improvements and development of new products
for commercial markets. Such expenditures include the cost of engineering
services and engineering-support personnel and were $1,653,000 for the year
ended December 31, 1996. See Note 1 of Notes to the Financial Statements.
The Company intends to continue and increase its research and
development activities and considers these efforts to be vital to its future
business expansion and success.
COMPETITION
With regard to its products, the Company competes against many
companies which utilize similar technology. Some of them are larger and have
substantially greater resources in financial, technical and marketing areas than
the Company. The Company's competitors include Hewlett Packard, Telecom Analysis
Systems, English Electric Valve, and MDF Products. Companies tend to specialize
in niches in the noise source area and generally do not produce equipment across
the full range of products.
The Company designs its products with special attention to making
them user-friendly and constantly re-evaluates its products for the purpose of
enhancing and improving them. The Company believes that these efforts, along
with its willingness to adapt its products to the particular needs of its
customers and its intensive efforts in customer and technical support, are
factors that add to the competitiveness of its products.
BACKLOG
The Company's backlog of firm orders was approximately $5,400,000
at December 31, 1996 and $2,000,000 at December 31, 1995. It is anticipated that
all of the backlog orders will be filled during the current year. The stated
backlog is not necessarily indicative of Company sales for any future period nor
is a backlog any assurance that the company will realize a profit from the
orders.
INVENTORY, SUPPLIES AND MANUFACTURING
The Company purchases components, devices and subassemblies from
a wide variety of sources. For example, its noise source diodes, a key component
in all of its noise source products, are made by third parties in accordance
with the Company's designs and specifications. To date, because of its multiple
sources of supply, the Company has experienced only minimal difficulties in
obtaining components and materials for its manufacturing and assembly process.
The Company's inventory policy stresses maintaining substantial raw materials in
order to lessen its dependency on third party suppliers and to improve its
capacity to facilitate production. However, shortages or delays of supplies may,
in the future, have a material adverse impact on the Company's operations. No
third party supplier accounted for more than 10% of the Company's total
inventory purchases for Fiscal 1996.
The Company is not party to any formal written contract regarding
the deliveries of its supplies and components. It generally purchases such items
pursuant to written purchase orders of both the individual and blanket variety.
Blanket purchase orders usually cover the purchase of a larger amount of items
at fixed prices for delivery and payment on specific dates.
The Company does not manufacture nor assemble its products on a
continuous mass-production basis. Instead, small lot production techniques are
used. The Company also uses external contract manufacturers for routine tasks
such as printed circuit board assembly
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and chassis assembly. The Company anticipates that its use of contract
manufacturers will continue to increase. Testing of products is generally
accomplished at the end of the manufacturing process and is performed in-house
as are all quality control procedures. The Company utilizes modern equipment for
the design, engineering, manufacture, assembly and testing of its products.
WARRANTY AND SERVICE
The Company provides one-year warranties on all of its products
covering both parts and labor. The Company, at its option, repairs or replaces
products that are defective during the warranty period if the proper preventive
maintenance procedures have been followed by its customers. Repairs that are
necessitated by misuse of such products or are required outside the warranty
period are not covered by the Company's warranty.
In cases of defective products, the customer typically returns
them to the Company's facility. The Company's service personnel replace or
repair the defective items and ship them back to the customer. Generally, all
servicing is done at the Company's plant, and it charges its customers a fee for
those service items that are not covered by warranty. The Company usually does
not offer its customers any formal written service contracts.
PRODUCT LIABILITY COVERAGE
The testing of electronic communications equipment and the
accurate transmission of information entail a risk of product liability by
customers and others. Claims may be asserted against the Company by end-users of
any of the Company's products. Since April 1996, the Company has maintained
product liability insurance coverage with an aggregate annual liability coverage
limit, regardless of the number of occurrences, of $5,000,000. From August 1991
to April 1996, the Company has maintained product liability insurance coverage
with an aggregate annual liability coverage limit, regardless of the number of
occurrences, of $4,000,000. Prior thereto, the Company had minimal product
liability insurance coverage.
The Company's insurance policy will not cover liability caused by
events occurring prior to the time such policy was purchased by it. There is no
assurance that such insurance will continue to be available at a reasonable cost
or sufficient to cover all possible liabilities. In the event of a successful
suit against the Company, lack or insufficiency of insurance coverage could have
a material adverse effect on it. Further, certain government contractors and
others may require minimum product liability insurance coverage as a condition
precedent to purchasing products. Failure to satisfy such insurance requirements
could impede the ability of the Company to achieve broad sales of its products.
To date, the Company has not become aware of any situations where
it has been rejected as a product supplier based on lack of adequate insurance
coverage. The Company has not received or encountered any formal claims for
liability due to a defective or malfunctioning device made by it. However, it is
possible that the Company may be subject to such claims in the future and
corresponding litigation should one or more of its products fail to perform or
to meet certain minimum specifications.
INTELLECTUAL PROPERTY
Proprietary information and know-how are important to the
Company's commercial success. The Company holds no patents nor owns any
trademarks. There can be no assurance that others will not either develop
independently the same or similar information or obtain and use proprietary
information of the Company. In addition, none of the Company's employees have
signed confidentiality agreements regarding its proprietary information, nor
have any employees signed any non-competition agreements other than Messrs.
Simonyan and Sydnor.
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The Company believes that its products do not infringe the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not assert infringement claims in the future.
EMPLOYEES
On February 3, 1997 the Company had 65 full-time employees,
including its officers, of whom 30 were engaged in manufacturing and repair
services, 8 in administration and financial control, 22 in engineering and
research and development, and 5 in marketing and sales.
None of its employees are covered by a collective bargaining
agreement or are represented by a labor union. The Company considers its
relationship with its employees to be satisfactory.
The design and manufacture of the Company's products require
substantial technical capabilities in many disparate disciplines, from mechanics
and computer science to electronics and mathematics. While the Company believes
that the capability and experience of its technical employees compares favorably
with other similar manufacturers, there can be no assurance that it can retain
existing employees or attract and hire the highly capable technical employees it
may need in the future on terms deemed favorable to the Company.
ITEM 2. PROPERTIES
The Company leases a 25,000 square foot facility in Paramus, New
Jersey which is used as its principal corporate headquarters and manufacturing
plant. See Note 8 of Notes to the Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The Company knows of no material litigation or proceeding,
pending or threatened, to which the Company is or may become a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Company has traded on the American Stock
Exchange under the name Wireless Telecom Group, Inc. (Symbol: WTT) since
September 12, 1994. From May 26, 1993 to September 9, 1994, the Company traded
on the American Stock Exchange as Noise Com, Inc. under the Symbol NOI. From
October 21, 1991 through May 25, 1993, the Company's Common Stock had traded on
the over-the-counter market and had been quoted through the National Association
of Securities Dealers National Quotation System ("NASDAQ") under the symbol
NCIS. The following table sets forth the high and low sales prices of the
Company's Common Stock for the periods indicated as reported on the American
Stock Exchange. This table has been adjusted to give retroactive effect for the
2-for-1 stock split paid on May 28, 1996 and the 3-for-2 stock split paid on
July 18, 1995 .
<TABLE>
<CAPTION>
High Low
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<S> <C> <C>
1996 Fiscal Year
1st Quarter $ 8.75 $ 6.19
2nd Quarter 16.75 6.44
3rd Quarter 14.38 7.75
4th Quarter 12.63 9.06
1995 Fiscal Year
1st Quarter $ 6.00 $ 2.54
2nd Quarter 9.25 5.33
3rd Quarter 10.81 7.88
4th Quarter 9.75 6.81
</TABLE>
On February 3, 1997, the closing price of the Common Stock of the
Company as reported was $12.25. On February 3, 1997 the Company had 461
stockholders of record.
Quarterly dividends on the Company's Common Stock have been declared
since June 1993. The table below details quarterly dividends declared for the
past two years. This table has been adjusted to give retroactive effect for the
2-for-1 stock split paid on May 28, 1996 and the 3-for-2 stock split paid on
July 18, 1995 .
<TABLE>
<CAPTION>
Quarterly Dividends Per Share
------------------------------
1st 2nd 3rd 4th
--- --- --- ---
<S> <C> <C> <C> <C>
1996 $.0300 $.0400 $.0400 $.0400
1995 $.0133 $.0200 $.0200 $.0300
</TABLE>
It is the Company's present intention to maintain a quarterly dividend
policy.
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below as of December 31,
1996, 1995, 1994, 1993 and 1992 were derived from the Company's financial
statements. On September 15, 1992, the Company completed the sale of its
telemetry product line and prior periods have been restated to reflect this
product line separately (NCI Division) as discontinued operations. The
information set forth below is qualified in its entirety by reference to, and
should be read in conjunction with, the financial statements and related notes
contained elsewhere in this Form 10-K.
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<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Selected Statement of Operations Data:
Net sales $22,463,029 $16,040,537 $8,589,872 $5,022,702 $4,024,926
Income from continuing
operations before income taxes 11,621,211 8,116,535 3,639,962 1,450,252 1,345,424
Provision for income taxes 4,170,754 3,065,827 1,418,856 564,184 540,702
Net income from continuing operations 7,450,457 5,050,708 2,221,106 886,068 804,722
Selected Per Share Data (1):
Net income from continuing
operations per common share $.42 $.29 $.13 $.06 $.05
Shares used in computation of
earnings per share - Primary 17,735,007 17,510,538 16,672,614 15,898,788 16,040,040
Cash dividends per common share $.15 $.08 $.04 $.06 $.03
Selected Balance Sheet Data:
Working capital $16,183,137 $11,650,974 $7,162,455 $5,046,007 $5,251,479
Total assets 19,044,242 13,402,353 8,117,150 5,780,399 5,823,718
Total liabilities 1,444,716 953,938 467,551 411,110 402,888
Shareholders' equity 17,599,526 12,448,415 7,649,599 5,369,289 5,420,830
</TABLE>
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(1) Common share data has been adjusted to reflect the 2-for-1, 3-for-2 and
2-for-1 stock splits paid on May 28, 1996, July 18, 1995 and November
28, 1994, respectively. Dividends paid in 1993 include a special
dividend of $.03 per share paid in February, 1993.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which
the Company's management believes is relevant to an assessment and understanding
of the Company's results of operations and financial condition. This discussion
should be read in conjunction with the financial statements and notes thereto
included elsewhere herein.
This report contains forward-looking statements and information
that is based on management's beliefs and assumptions, as well as information
currently available to management. When used in this document, the words
"anticipate," "estimate," "expect," "intend," and similar expressions are
intended to identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or expected. Among the key factors
that may have a direct bearing on the Company's operating results are
fluctuations in the economy, the degree and nature of competition, the risk of
delay in product development and release dates and acceptance of, and demand
for, the Company's products.
RESULTS OF CONTINUING OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED TO 1995
Net sales for the year ended December 31, 1996 were $22,463,029
as compared to $16,040,537 for 1995, an increase of $6,422,492 or 40.0%. This
volume increase is the result of the continued growth of commercial applications
of the Company's products of which the most notable are the sales of the
Company's wireless telecommunications instruments. Approximately 96% of the
Company's revenues are derived from commercial applications of its products. The
remaining 4% of sales consist of products sold for government and military
applications.
The Company's gross profit on net sales for the year ended
December 31, 1996 was $16,624,799 or 74.0% as compared to $11,797,603 or 73.5%
as reported in the previous year. The Company rigidly monitors costs associated
with material acquisition, manufacturing and production. Gross profit margins
can vary based upon the mix of product sales.
Operating expenses for the year ended December 31, 1996 were
$5,356,260 or 23.8% of net sales as compared to $4,074,619 or 25.4% of net sales
for the year ended December 31, 1995. For the year ended December 31, 1996 as
compared to prior year, operating expenses increased in dollars by $1,281,641.
Approximately 34% of this increase is attributable to greater advertising,
promotional and selling expenses incurred to generate sales and to expand
customer awareness of the Company's wireless telecommunications instruments. An
additional 32% of this increase is due to increased expenditures for research
and development of new products. Bonuses, increased salaries and additional
personnel accounted for 19% of the increase in dollars for 1996. Operating
expenses when viewed as a percentage of net sales have declined by 1.6% due to
the fixed nature of many of these costs and the economies of scale resulting
from the increase in sales volume.
Interest, dividend and other income decreased by $40,879 for the
year ended December 31, 1996. The decrease was due to the recognition in 1995 of
a gain of $101,298 on the sale of the Company's available-for-sale holdings in a
highly liquid mutual fund. The Company's overall investment balance increased in
1996 and an additional $60,419 in interest income was generated in 1996,
excluding the effect of the $101,298 gain mentioned above. The increase in the
Company's investment balance is due to additional cash generated by the
business.
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Net income increased to $7,450,457 or $.42 per share, for the
year ended December 31, 1996 as compared to $5,050,708 or $.29 per share on a
primary basis, for the year ended December 31, 1995. The explanation of this
increase can be derived from the operational analysis provided above.
RESULTS OF CONTINUING OPERATIONS
YEAR ENDED DECEMBER 31, 1995 COMPARED TO 1994
Net sales for the year ended December 31, 1995 were $16,040,537
as compared to $8,589,872 for 1994, an increase of $7,450,665 or 86.7%. This
volume increase is the result of the continued growth of commercial applications
of the Company's products of which the most notable are the sales of the
Company's wireless telecommunications instruments. Approximately 92% of the
Company's revenues are derived from commercial applications of its products. The
remaining 8% of sales consist of products sold for government and military
applications.
The Company's gross profit on net sales for the year ended
December 31, 1995 was $11,797,603 or 73.5% as compared to $5,808,058 or 67.6%
as reported in the previous year. The Company attributes the increase in gross
profit margins to the increased volume and profitability of sales made to the
commercial market and the constant cost control over all aspects of material
acquisition, manufacturing and production. Margins have increased due to the
economies of scale experienced with the increase in volume. The Company has also
increased its efforts in material control by seeking multiple sources of supply
which has allowed for the negotiation of better prices with vendors.
Additionally, the Company has been using small lot production techniques which
has allowed for greater efficiencies in manufacturing.
Operating expenses for the year ended December 31, 1995 were
$4,074,619 or 25.4% of net sales as compared to $2,357,509 or 27.4% of net sales
for the year ended December 31, 1994. For the year ended December 31, 1995 as
compared to prior year, operating expenses increased in dollars by $1,717,110.
Approximately 46% of this increase is due to increased expenditures for research
and development of new products. An additional 24% of this increase is
attributable to greater advertising, promotional and selling expenses incurred
to generate sales and to expand customer awareness of the Company's wireless
telecommunications instruments. Bonuses, increased salaries and additional
personnel accounted for 17% of the increase in dollars for 1995. Operating
expenses when viewed as a percentage of net sales have declined by 2.0% due to
the fixed nature of many of these costs and the economies of scale resulting
from the increase in sales volume.
Interest, dividend and other income increased by $202,628 for the
year ended December 31, 1995. Of this increase, $101,298 was due to a gain on
the sale of the Company's mutual fund investment. The remaining gain was due to
a rise in interest rates and an increase in the Company's investment balance due
to additional cash generated by the business.
Net income increased to $5,050,708 or $.29 per share, for the
year ended December 31, 1995 as compared to $2,221,106 or $.13 per share on a
primary basis, for the year ended December 31, 1994. The explanation of this
increase can be derived from the operational analysis provided above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital has increased by $4,532,163 to
$16,183,137 at December 31, 1996, from $11,650,974 at December 31, 1995. At
December 31, 1996 the Company had a current ratio of 12.7 to 1, and a ratio of
debt to net worth of less than .1 to 1. At December 31, 1995 the Company had a
current ratio of 13.9 to 1, and a ratio of debt to net worth of less than .1 to
1.
-11-
<PAGE>
<PAGE>
Net cash provided from operations has allowed the Company to meet
its liquidity requirements, research and development activities and capital
expenditures. The principal source of cash has been from net income. To maximize
the use of funds, management has been closely monitoring accounts receivable and
inventory.
Management believes that accounts receivable have been increasing
commensurate with the increase in sales. The Company has historically been able
to turn over its accounts receivable approximately every two months. This
average collection period has been sufficient to provide the working capital and
liquidity necessary to operate the Company.
Due to the Company's expanding product line, the volume of items
and accordingly, the total dollar value of inventory has increased. As the
Company plans to further expand its product line, inventory is being monitored
closely to balance production requirements while maintaining manageable levels
of goods on hand.
The Company entered into an agreement with its bank which
provides for an unsecured line of credit in the amount of $5,000,000 at the
bank's prime lending rate. As of December 31, 1996 the Company had no debt
outstanding under this line of credit. The line of credit agreement, which was
renewed, expires on June 30, 1997.
For details of dividends paid in the years ended December 31,
1996 and 1995 refer to Item 5. It is the Company's present intention to maintain
a quarterly dividend policy.
On January 27, 1997, the Company announced the declaration of a
quarterly cash dividend of $.05 per share to shareholders of record on March 24,
1997. This cash dividend will be paid on April 1, 1997.
The Company believes that its financial resources from working
capital provided by operations, the proceeds it received from its initial public
offering and its bank line of credit are adequate to meet its current needs.
INFLATION AND SEASONALITY
The Company does not anticipate that inflation will significantly
impact its business nor does it believe that its business is seasonal.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
-12-
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The current directors and executive officers of the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- ---------
<S> <C> <C>
Karabet ('Gary') Simonyan(1)(2)......... 61 Chairman of the Board
Dale Sydnor............................. 40 Chief Executive Officer, President
and Director
Seymour Kramer(1)(2)(3)................. 73 Treasurer, Secretary and Director
Edward Garcia .......................... 32 Executive Vice President, Chief Operating
Officer
Eugene Ferrara.......................... 31 Executive Vice President, Chief
Financial Officer
Bent Hessen-Schmidt..................... 35 Vice President, Sales and Marketing
Saul Panken(1).......................... 74 Director
Dominick Scaringella.................... 58 Director
John Wilchek(3)......................... 56 Director
Demir Richard Eden(3)................... 57 Director
Franklin H. Blecher .................... 68 Director
</TABLE>
- --------------------
(1) Member of Stock Option Committee
(2) Trustee for Profit Sharing Plan
(3) Member of Audit Committee
All directors hold office until the next annual meeting of
shareholders or until their successors are elected and qualify. Executive
officers hold office until their successors are chosen and qualify, subject to
earlier removal by the Board of Directors.
Set forth below is a biographical description of each director
and executive officer of the Company based on information supplied by each of
them.
Gary Simonyan is and has been since its founding in 1985, the
Company's Chairman. From 1978 until he joined the Company, he worked for
Micronetics, Inc., a manufacturer of electronic products, in several capacities,
including President. From 1977 through 1978, he served as President of Laser
Management Associates, an electronics consulting firm, which he founded. Mr.
Simonyan has a BS in Applied Physics and has undertaken graduate studies in
electrical engineering and in business administration.
-13-
<PAGE>
<PAGE>
Dale Sydnor was elected Chief Executive Officer and to the Board
of Directors in May 1996. He had served as the Company's President since July
1995 and from April 1991 as the Company's Chief Operating Officer, acting
director of engineering and Executive Vice President. Mr. Sydnor was also
Project Manager from 1988 through 1989. During 1990, he served as a Project
Engineer at ITT Aerospace Communications division. From 1986 to 1988, Mr. Sydnor
served as a private consultant. Mr. Sydnor has a bachelor's degree in Electrical
Engineering.
Seymour Kramer, a certified public accountant, has been a
Director and the Treasurer of the Company since 1991 and financial consultant to
the Company since 1988. He retired from active and full business employment in
1984. From 1973 through 1984 he served as a Director, Treasurer and Chief
Financial Officer of several electronic manufacturing, merchandising and service
companies including Micronetics, Inc. Mr. Kramer was elected Secretary of the
Company in January 1997. He has a bachelor's degree in Business Administration.
Mr. Kramer is not a full -time employee of the Company.
Edward Garcia joined the Company in 1990 and has served in
various positions including Chief Engineer since 1992. Prior to joining the
Company Mr. Garcia worked for Triangle Microwave. Mr. Garcia was elevated to
Vice President of Operations in October 1995 and elected Executive Vice
President and Chief Operating Officer in August 1996. He has a bachelor's degree
in Electrical Engineering.
Eugene Ferrara, a certified public accountant, has been the Chief
Financial Officer of the Company since August 1994 and was given the additional
title of Executive Vice President in October 1996. He joined the Company as
Controller in October 1993. From April 1991 to September 1993 he worked for
Witco Corporation. From 1987 through March 1991 he worked for Coopers & Lybrand
as a senior associate. He has a bachelor's degree in Accounting.
Bent Hessen-Schmidt joined the Company in 1988 as the Company's
sales and marketing manager. Prior to joining the Company, Mr. Hessen-Schmidt
worked in various capacities for Crimp A.S., a manufacturer of digital and
microwave electronic systems. Mr. Hessen-Schmidt, was elected to the office of
Vice President of Sales and Marketing in May 1996. He has a master's degree in
Electrical Engineering.
Saul Panken, a certified public accountant, has been a Director
of the Company since 1985. He was the Company's Treasurer from 1985 until 1991.
He was a partner in the accounting firm of Lawson, Holland and Co. from 1964
until 1987.
Dominick Scaringella became a Director of the Company in August
1991. From 1988 to date, he has served as President of Precision Electronics,
Inc., a manufacturer of electronics products. From 1963 to 1986, he was employed
by MSI Electronics, a manufacturer of semiconductors, as Director and Vice
President. From 1986 to 1988 he was an independent consultant to the electronics
industry.
John Wilchek became a director of the Company in May 1993. He was
the founder, President, CEO and Chairman of Zenith Knitting Mills until his
retirement in 1991.
Demir Richard Eden is and has been since its founding in 1979,
the President, CEO and the Chairman of Intra Computer, Inc., a manufacturing and
engineering consulting company. Mr. Eden has a Master of Science degree in
Electronics and Business Administration from Istanbul Technical University as
well as an MS in Computer Science from New York Polytechnic University. Mr. Eden
became a director of the Company in May 1993.
-14-
<PAGE>
<PAGE>
Franklin H. Blecher, Ph.D. became a director of the Company in
November 1994. In a distinguished thirty-seven year career with AT&T Bell
Laboratories, Dr. Blecher held several significant positions including Executive
Director of the Technical Information Systems Division from 1987 to 1989 and
Executive Director of the Integrated Circuit Design Division from 1982 to 1987
and previously Director of the Mobile Communications Laboratory.
Dr. Blecher has made significant contributions in the area of
transistor design for computer applications. He has also developed widely used
telephone and cellular transmission systems. His laboratory's work in the
cellular field was used by the FCC to establish standards for commercial
cellular systems. Dr. Blecher received his Ph.D. from New York Polytechnic
University where he is presently a member of the Corporate Board and is Past
Chairman of the Engineering Foundation.
The information relating to compliance with Section 16(a) of the
Exchange Act will be set forth in the Company's proxy statement to be filed with
the Securities and Exchange Commission within 120 days of the Company's 1996
year end and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this item will be set forth in the
Company's proxy statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 1996 year end and is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required under this item will be set forth in the
Company's proxy statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 1996 year end and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
-15-
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------
<TABLE>
<S> <C> <C>
(a) (1) Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the Three Years in the
Period ended December 31, 1996
Consolidated Statements of Changes in Shareholders' Equity for
the Three Years in the Period ended December 31, 1996
Consolidated Statements of Cash Flows for the Three Years in the
Period ended December 31, 1996
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
All schedules have been omitted because the required information
is included in the financial statements or notes thereto or because
they are not required.
(3) Exhibits
3.1 -- Certificate of Incorporation, as amended*
3.2 -- Amended and Restated By-laws*
3.3 -- Amendment to the Certificate of Incorporation***
3.4 -- Amendment to the Certificate of Incorporation****
4.2 -- Form of Stock Certificate*
10.1 -- Lease between the Registrant and Junto Investments*
10.2 -- Amendment to the lease between the Registrant and
Junto Investments****
10.3 -- Summary Plan Description of Profit Sharing Plan of the
Registrant*
10.4 -- Incentive Stock Option Plan of the Registrant and related
agreement*
10.4a -- Amendment to Registrant's Incentive Stock Option Plan and
related agreement****
10.5 -- Employment Agreement between the Registrant and Karabet
Simonyan*
10.6 -- 1994 Employment Agreement between the Registrant and Dale
Sydnor***
10.7 -- Form of Manufacturers Representative Agreement*
10.9 -- Amendment to Employment Agreement between the Registrant and
Karabet Simonyan*
10.10 -- Amendment No. 2 to Employment Agreement between the
Registrant and Karabet Simonyan made as of August 1,
1992**
10.11 -- Credit Agreement with Chemical Bank dated August 10,
1992**
10.11a -- Amendment to Credit Agreement with Chemical Bank****
10.11b -- Amendment to Credit Agreement with Chase Manhattan Bank
10.12 -- Lease between the Registrant and Paramus Parkway Building
Associates
11.1 -- Computation of Per Share Earnings
23.0 -- Consent of Independent Auditors (Lazar, Levine and Company
LLP)
27.0 -- Financial Data Schedule (EDGAR version only)
</TABLE>
- --------------------
* These exhibits were filed as exhibits to the Company's registration
statement on Form S-18 (File No. 33-42468-NY) and are incorporated
herein by reference.
** Filed as Exhibits to the Company's Annual Report on Form 10-K for the
year ended December 1992.
*** Filed as Exhibits to the Company's Annual Report on Form 10-K for the
year ended December 1994.
**** Filed as Exhibits to the Company's Annual Report on Form 10-K for the
year ended December 1995.
(b) Reports on Form 8-K -- None
(c) See Item 14(a)(3), above.
(d) See Item 14(a)(2), above.
-16-
<PAGE>
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
WIRELESS TELECOM GROUP, INC.
Date: February 12, 1997 By: /s/ KARABET SIMONYAN
-----------------------------------
Karabet Simonyan,
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ KARABET SIMONYAN February 12, 1997
_________________________________________
Karabet Simonyan, Chairman of the Board
/s/ DALE SYDNOR February 12, 1997
_________________________________________
Dale Sydnor, Chief Executive Officer and
President, Director
/s/ SEYMOUR KRAMER February 12, 1997
_________________________________________
Seymour Kramer, Treasurer, Secretary and
Director (Principal Accounting Officer)
/s/ EUGENE FERRARA February 12, 1997
_________________________________________
Eugene Ferrara, Chief Financial Officer
(Principal Financial Officer)
_________________________________________
Saul Panken, Director
/s/ DOMINICK SCARINGELLA February 12, 1997
_________________________________________
Dominick Scaringella, Director
/s/ JOHN WILCHEK February 12, 1997
_________________________________________
John Wilchek, Director
/s/ Demir Richard Eden February 12, 1997
________________________________________
Demir Richard Eden, Director
/s/ FRANKLIN H. BLECHER February 12, 1997
________________________________________
Franklin H. Blecher, Director
-17-
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F - 1
Consolidated Financial Statements:
Balance Sheets as of December 31, 1996 and 1995 F - 2
Statements of Operations for the Three Years in the Period
Ended December 31, 1996 F - 3
Statements of Changes in Shareholders' Equity for the Three
Years in the Period Ended December 31, 1996 F - 4
Statements of Cash Flows for the Three Years in the Period
Ended December 31, 1996 F - 5
Notes to Consolidated Financial Statements F - 6
</TABLE>
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Wireless Telecom Group, Inc.
Paramus, New Jersey
We have audited the accompanying consolidated financial statements of Wireless
Telecom Group, Inc. as listed in the Index under Item 14 in this Form 10-K.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wireless Telecom
Group, Inc. as of December 31, 1996 and 1995 and the results of its operations
and its cash flows for the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ LAZAR, LEVINE & COMPANY LLP
-------------------------------
LAZAR, LEVINE & COMPANY LLP
New York, New York
January 30, 1997
F-1
<PAGE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
- ASSETS -
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
-------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $8,039,128 $5,839,865
Accounts receivable - net of allowance for doubtful accounts of $74,707
and $35,610 for December 31, 1996 and 1995, respectively 4,252,115 3,364,189
Inventories (Note 1) 4,998,575 2,773,925
Prepaid expenses and other current assets 272,960 576,237
------------ -----------
TOTAL CURRENT ASSETS 17,562,778 12,554,216
PROPERTY, PLANT AND EQUIPMENT - NET (NOTES 1 AND 2) 1,022,686 575,149
OTHER ASSETS 458,778 272,988
----------- -----------
$19,044,242 $13,402,353
=========== ===========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,379,641 $ 903,242
----------- ---------
TOTAL CURRENT LIABILITIES 1,379,641 903,242
----------- ---------
DEFERRED INCOME TAXES (NOTES 1 AND 6) 65,075 50,696
----------- ---------
COMMITMENTS AND CONTINGENCIES (NOTES 4, 5, 7 AND 8)
SHAREHOLDERS' EQUITY (NOTE 3):
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000 shares authorized, 17,502,898 and
8,713,749 shares issued for December 31, 1996 and 1995, respectively 175,029 87,138
Additional paid-in capital 6,044,782 5,833,138
Retained earnings 11,441,707 6,593,465
Treasury stock, at cost - 130,000 and 70,000 shares, respectively (61,992) (65,326)
----------- ---------
17,599,526 12,448,415
----------- ---------
$19,044,242 $13,402,353
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
<TABLE>
<CAPTION>
For The Year Ended December 31,
-------------------------------------
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
NET SALES (NOTE 4) $22,463,029 $16,040,537 $8,589,872
----------- ----------- ----------
COSTS AND EXPENSES:
Cost of sales 5,838,230 4,242,934 2,781,814
Operating expenses (Note 1) 5,356,260 4,074,619 2,357,509
Interest expense - - 1,510
Interest, dividend and other income (352,672) (393,551) (190,923)
----------- ----------- ----------
TOTAL COSTS AND EXPENSES 10,841,818 7,924,002 4,949,910
----------- ----------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES 11,621,211 8,116,535 3,639,962
Provision for income taxes (Notes 1 and 6) 4,170,754 3,065,827 1,418,856
----------- ----------- ------------
NET INCOME $7,450,457 $ 5,050,708 $ 2,221,106
========== =========== ===========
NET INCOME PER COMMON SHARE: PRIMARY (NOTE 1) $ 0.42 $ 0.29 $ 0.13
====== ======= =======
NET INCOME PER COMMON SHARE: FULLY DILUTED (NOTE 1) $ 0.42 $ 0.29 $ 0.13
====== ======= =======
CASH DIVIDENDS PER COMMON SHARE (NOTE 3) $ 0.15 $ 0.08 $ 0.04
====== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
Unrealized
Additional Gain (Loss) Treasury
Common Paid-in Retained on Equity Stock
Stock Capital Earnings Securities at Cost Total
------- ---------- --------- ----------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 26,500 $ 3,976,008 $ 1,435,440 - ($68,659) $ 5,369,289
Dividends - $.04 per share (Note 3) (683,034) (683,034)
Two for-one common stock split (Note 3) 26,500 (26,500) -
Exercise of stock options\warrants
(Note 3) 4,020 860,008 864,028
Unrealized loss - equity
securities (Note 1) ($ 121,790) (121,790)
Net income 2,221,106 2,221,106
-------- ----------- ----------- --------- ---------- ----------
Balance at December 31, 1994 57,020 4,809,516 2,973,512 (121,790) (68,659) 7,649,599
Dividends - $.08 per share (Note 3) (1,430,755) (1,430,755)
Three-for-two common stock split
(Note 3) 28,510 (28,899) (389)
Exercise of stock options (Note 3) 1,608 1,052,521 3,333 1,057,462
Reversal of unrealized loss (Note 3) 121,790 121,790
Net income 5,050,708 5,050,708
-------- ----------- ----------- --------- ---------- ----------
Balance at December 31, 1995 87,138 5,833,138 6,593,465 - (65,326) 12,448,415
Dividends - $.15 per share (Note 3) (2,602,215) (2,602,215)
Two-for-one common stock split
(Note 3) 87,137 (87,137) -
Exercise of stock options (Note 3) 754 298,781 3,334 302, 869
Net income 7,450,457 7,450,457
-------- ----------- ----------- --------- ---------- ----------
Balance at December 31, 1996 $175,029 $6,044,782 $11,441,707 - ($61,992) $17,599,526
======== =========== =========== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
<TABLE>
<CAPTION>
For The Year Ended December 31,
----------------------------------
1996 1995 1994
--------- ------------ ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,450,457 $ 5,050,708 $ 2,221,106
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 169,053 130,574 96,581
Deferred income taxes (benefit) 14,379 (9,985) (7,054)
Provision for losses on accounts receivable 39,097 13,571 14,166
Changes in assets and liabilities:
(Increase) in accounts receivable (927,023) (1,337,980) (1,259,882)
(Increase) in inventory (2,224,650) (1,226,780) (586,644)
(Increase) decrease in prepaid expenses and other current assets 257,332 (376,528) 57,038
Increase in accounts payable and accrued expenses 476,399 496,372 63,495
---------- --------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,255,044 2,739,952 598,806
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (616,590) (320,553) (143,916)
Officer's life insurance (139,845) (107,333) (109,473)
---------- --------- ----------
NET CASH USED FOR INVESTING ACTIVITIES (756,435) (427,886) (253,389)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options\warrants 302,869 1,057,073 864,028
Dividends paid (2,602,215) (1,430,755) (683,034)
Proceeds from line of credit - - 300,000
Payments against line of credit - - (300,000)
---------- --------- ----------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (2,299,346) (373,682) 180,994
---------- --------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,199,263 1,938,384 526,411
Cash and cash equivalents, at beginning of year 5,839,865 3,901,481 3,375,070
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $8,039,128 $5,839,865 $3,901,481
========== ========== ==========
SUPPLEMENTAL INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ 1,510
Taxes 3,807,000 2,748,000 1,214,700
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION:
Wireless Telecom Group, Inc. and Subsidiary (the Company),
manufactures a wide variety of test equipment for wireless
telecommunications which it sells to customers throughout the
United States and through its foreign sales corporation to
certain foreign customers. The consolidated financial statements
include the accounts of Wireless Telecom Group, Inc. and its
wholly-owned subsidiary, WTG Foreign Sales Corporation. All
intercompany balances and transactions have been eliminated. The
Company's accounting policies are in accordance with generally
accepted accounting principles. Outlined below are those
policies which are considered particularly significant.
REVENUE RECOGNITION:
The Company recognizes revenue from all product sales at the
time of shipment.
STATEMENTS OF CASH FLOWS:
For purposes of the statements of cash flows, the Company
considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE:
Financial instruments that potentially subject the Company to
Concentrations of Credit Risk consist principally of cash
investments and accounts receivable.
The Company maintains significant cash investments primarily
with one financial institution. The Company performs periodic
evaluations of the relative credit rating of this institution as
part of its investment strategy.
Concentrations of Credit Risk with respect to accounts
receivable are limited due to the Company's large customer base.
However, at December 31, 1996 primarily all of the Company's
receivables do pertain to the wireless telecommunications
industry.
The carrying amounts of cash and cash equivalents, trade
receivables, other current assets and accounts payable
approximate fair value.
INVESTMENTS IN EQUITY SECURITIES:
Effective January 1, 1994, the Company adopted the provisions of
SFAS 115 Accounting for Certain Investments in Debt and Equity
Securities which requires greater disclosure of these
instruments including the methods to be used in determining fair
value, and when to record unrealized holding gains and losses in
earnings or in a separate component of shareholders' equity.
In October 1995, the Company sold its entire available-for-sale
holdings which were invested in a highly liquid mutual fund. The
Company received proceeds in the amount of $2,519,973 and
realized a gain of $101,298.
F-6
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
INVENTORIES:
Raw material inventories are stated at the lower of cost
(first-in, first-out method) or market. Finished goods and
work-in-process are valued at average cost of production, which
includes material, labor and manufacturing expenses.
Inventories consist of:
<TABLE>
<CAPTION>
December 31,
----------------
1996 1995
---- ----
<S> <C> <C>
Raw materials $2,554,979 $1,184,591
Work-in-process 1,246,512 717,639
Finished goods 1,197,084 871,695
---------- ----------
$4,998,575 $2,773,925
========== ==========
</TABLE>
FIXED ASSETS AND DEPRECIATION:
Fixed assets are reflected at cost. Depreciation and
amortization are provided on a straight-line basis over the
following useful lives:
<TABLE>
<S> <C>
Machinery and equipment 8 years
Furniture and fixtures 5 years
Transportation equipment 5 years
</TABLE>
Leasehold improvements are amortized over the term of the lease.
Repairs and maintenance are charged to operations as incurred;
renewals and betterments are capitalized.
RESEARCH AND DEVELOPMENT COSTS:
Research and development costs are charged to operations when
incurred and are included in operating expenses. The amounts
charged for the years ended December 31, 1996, 1995 and 1994
were $1,653,224, $1,248,726, and $622,358, respectively.
INCOME TAXES:
The Company has adopted SFAS 109, Accounting for Income Taxes,
which requires use of the asset and liability approach of
providing for income taxes. This statement requires recognition
of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the
financial statements or tax returns. Under this method deferred
tax liabilities and assets are determined based on the
difference between the financial statement and tax basis of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. Under
Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period
that includes the enactment date.
F-7
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
INCOME PER COMMON SHARE:
On May 13, 1996, the Company announced the declaration of a
two-for-one common stock split. The split was effective for
shareholders of record on May 22, 1996 and was paid by May 28,
1996. All share and per share data, as appropriate, reflect the
effects of the split.
Income per common share is computed by dividing net income by
the weighted average number of common shares and common
equivalent shares outstanding during each period.
USE OF ESTIMATES:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain
estimates and assumptions, where applicable, that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results could
differ from those estimates, management does not expect such
variances, if any, to have a material effect on the financial
statements.
2. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following (see
also Note 1):
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
Machinery and equipment $1,332,795 $ 923,095
Furniture and fixtures 172,386 110,770
Transportation equipment 94,076 91,032
Leasehold improvements 163,680 47,875
---------- ----------
1,762,937 1,172,772
Less: accumulated depreciation and amortization 740,251 597,623
---------- ---------
$1,022,686 $ 575,149
========== =========
</TABLE>
3. SHAREHOLDERS' EQUITY:
On October 27, 1995, the shareholders approved a proposal to
amend the Company's Certificate of Incorporation to increase its
number of authorized Common Shares to 30,000,000.
On May 13, 1996, the Company announced the declaration of a
two-for-one common stock split. The split was effective for
shareholders of record on May 22, 1996 and was paid by May 28,
1996. On June 12, 1995, the Company announced the declaration of
a three-for-two common stock split. The split was effective for
shareholders of record on July 5, 1995 and was paid by July 18,
1995. On November 4, 1994, the Company announced the declaration
of a two-for-one common stock split. The split was effective for
shareholders of record on November 15, 1994 and was paid by
November 28, 1994. All share and per share data, as appropriate,
reflect the effects of these splits.
F-8
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WIRELESS TELECOM GROUP, INC.
3. SHAREHOLDERS' EQUITY (CONTINUED):
The Company has paid quarterly cash dividends aggregating
$2,602,215, $1,430,755 and $683,034 for the years ending
December 31, 1996, 1995 and 1994, respectively.
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related Interpretations in accounting for its employee
stock options because, as discussed below, the alternative fair
value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation" requires use of option
valuation models that were not developed for use in valuing
employee stock options. Under APB 25, because the exercise price
of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation
expense is recognized.
The Company's 1995 Incentive Stock Option Plan (the "Plan") has
authorized the grant of options to purchase up to a maximum of
1,750,000 shares of common stock to be granted to officers and
other key employees. Prior to 1995, the Company had established
an Incentive Stock Option Plan under which options to purchase
up to 1,500,000 shares of common stock were available to be
granted to officers and other key employees. All options granted
have 10 year terms and vest and become fully exercisable after a
maximum of 5 years from the date of grant.
Pro forma information regarding net income and earnings per
share is required by Statement 123, and has been determined as
if the Company had accounted for its employee stock options
under the fair value method of that Statement. The fair value
for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following
weighted-average assumptions for 1996 and 1995, respectively:
risk-free interest rates of 6.8% and 8.4%; dividend yields of
1.8% and 1.8%; volatility factors of the expected market price
of the Company's common stock of 65% and 69%; and a
weighted-average expected life of the options of 7 years.
The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's employee stock options have
characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock
options.
F-9
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WIRELESS TELECOM GROUP, INC.
3. SHAREHOLDERS' EQUITY (CONTINUED):
For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options vesting
period. The Company's pro forma information follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income
As reported $ 7,450,457 $ 5,050,708
Pro forma $ 7,271,191 $ 4,932,034
Primary earnings per share
As reported $ .42 $ .29
Pro forma $ .41 $ .29
Fully diluted earnings per share
As reported $ .42 $.29
Pro forma $ .41 $.29
</TABLE>
A summary of stock activity, and related information for the
years ended December 31 follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
------- ----------------
<S> <C> <C>
Outstanding, December 31, 1993 678,000 $ .51
Granted 381,000 1.07
Exercised (606,000) .51
Canceled (21,000) .56
---------- -----
Outstanding, December 31, 1994 432,000 1.01
Granted 636,000 5.29
Exercised (321,540) .87
Canceled (9,000) .67
---------- -----
Outstanding, December 31, 1995 737,460 4.72
Weighted average fair value of options
granted during the year 4.10
Granted 296,000 7.02
Exercised (75,400) 4.02
Canceled (54,000) 6.93
----------- ------
Outstanding, December 31, 1996 904,060 $5.40
======= =====
Weighted average fair value of options
granted during the year $2.30
=====
Options exercisable:
December 31, 1994 51,000 $.53
December 31, 1995 110,460 $1.39
December 31, 1996 186,460 $3.17
</TABLE>
Exercise prices for options outstanding as of December 31, 1996
ranged from $.74 to $9.31. The weighted-average remaining
contractual life of these options is 9 years.
F-10
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
4. OPERATIONAL INFORMATION AND EXPORT SALES:
The Company's operations are in a single industry segment and
involve the manufacture of various types of test equipment. All
of the Company's assets are domestic.
For the years ended December 31, 1996, 1995 and 1994, no
customer accounted for more than 10% of total sales.
In addition to its in-house sales staff, the Company uses
various manufacturers representatives to sell its products. For
the years ended December 31, 1996, 1995 and 1994, one
representative accounted for 15%, 10% and 11% of sales,
respectively.
Export sales, which are all transacted in US dollars, were
approximately 35%, 28% and 19% of total sales for the years
ended December 31, 1996, 1995 and 1994, respectively. Export
sales by geographic location are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Asia $4,312,000 $2,383,000 $ 358,000
Europe 2,677,000 1,500,000 1,136,000
Other 852,000 633,000 172,000
---------- ---------- ----------
$7,841,000 $4,516,000 $1,666,000
========== ========== ==========
</TABLE>
5. 401 (k) PROFIT SHARING PLAN:
During the year ended December 31, 1990 the Company adopted a
resolution to institute a 401 (k) profit sharing plan effective
January 1, 1991, to cover all eligible employees. The Company's
contributions to the plan are discretionary but may not exceed
6% of participants' compensation. Contributions to the plan for
the years ended December 31, 1996, 1995 and 1994 aggregated
$42,013, $34,810, and $22,831, respectively.
6. INCOME TAXES:
The components of income tax expense are as follows (see Note
1):
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Current:
Federal $3,252,712 $2,426,309 $1,081,855
State 903,663 649,503 339,060
Deferred:
Federal 11,139 (7,735) (1,579)
State 3,240 (2,250) (480)
---------- ---------- ----------
$4,170,754 $3,065,827 $1,418,856
=========== ========== ==========
</TABLE>
F-11
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
6. INCOME TAXES (CONTINUED):
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
------- ------
<S> <C> <C>
Deferred tax assets:
Uniform capitalization of inventory
costs for tax purposes $ 5,100 $ 8,500
Allowances for doubtful accounts 25,400 12,107
Deferred tax liabilities:
Tax over book depreciation (75,126) (54,737)
Other (20,449) (16,566)
--------- -------
Net deferred tax liability ($65,075) ($50,696)
======= =======
</TABLE>
The following is a reconciliation of the maximum statutory
federal tax rate to the Company's effective tax rate:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1996 1995 1994
----- ---- ----
% of % of % of
Pre Tax Pre Tax Pre Tax
Earnings Earnings Earnings
-------- -------- --------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 34.0% 34.0%
State income tax 5.2 5.3 6.5
Foreign Sales Corporation (1.0) 0.0 0.0
Other (3.3) (1.5) (1.5)
----- ----- ------
35.9% 37.8% 39.0%
===== ==== =====
</TABLE>
7. REVOLVING CREDIT LINE:
The Company has renewed its agreement with its bank which
provides for an unsecured line of credit in the amount of
$5,000,000 with interest at the bank's prime rate. As of
December 31, 1996, there were no direct borrowings under this
agreement. This agreement currently expires on June 30, 1997.
8. COMMITMENTS AND CONTINGENCIES:
The Company provides one year warranties on all its products
covering both parts and labor. The Company, at its option,
repairs or replaces products that are defective during the
warranty period if the proper preventive maintenance procedures
have been followed by its customers. The costs related to these
warranties are not certain and cannot be reasonably estimated.
In addition, based upon past experience, these costs have been
minimal and therefore, no provision for these costs has been
made.
F-12
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
8. COMMITMENTS AND CONTINGENCIES (CONTINUED):
The Company has product liability insurance coverage with an
aggregate annual liability coverage limit, regardless of the
number of occurrences, of $5,000,000. The Company's insurance
policy will not cover liability caused by events occurring prior
to the time such policy was purchased. In addition, there is no
assurance that such insurance will continue to be available at a
reasonable cost nor will be sufficient to cover all possible
liabilities. In the event of a successful suit against the
Company, lack or insufficiency of insurance coverage could have
an adverse effect on it.
The Company currently leases a 25,000 square foot facility in
Paramus, New Jersey which is used as its principal corporate
headquarters and manufacturing plant. Rent expense for the years
ended December 31, 1996, 1995 and 1994 was $188,302, $114,530
and $81,162, respectively. The lease on this facility includes
an option for the Company to rent additional space within the
complex. The lease on this space terminates in 2006 and the
Company has an option to renew this lease for an additional 5
year term. The Company is also responsible for its proportionate
cost of utilities, repairs, taxes and insurance. The future
minimum lease payments are shown below:
<TABLE>
<S> <C>
1997 $ 187,500
1998 188,889
1999 200,000
2000 201,389
2001 212,500
Remaining five years 1,113,895
----------
$2,104,173
==========
</TABLE>
The Company has employment contracts with both its Chairman and
CEO. These contracts provide for minimum annual aggregate
compensation of approximately $502,500 in 1997. The current
contracts for the Chairman and CEO are up for renewal on August
1, 1997 and January 1, 1998, respectively.
9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a summary of selected quarterly financial data
(in thousands, except per share amounts).
1996
<TABLE>
<CAPTION>
QUARTER
------------------------------------
1ST 2ND 3RD 4TH
--- --- --- ---
<S> <C> <C> <C> <C>
Net sales $5,348 $5,031 $6,059 $6,025
Gross profit 4,023 3,557 4,625 4,420
Operating income 2,830 2,369 3,182 2,888
Net Income 1,817 1,530 2,062 2,041
Primary net income per share $.10 $.09 $.12 $.11
</TABLE>
F-13
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WIRELESS TELECOM GROUP, INC.
9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED):
1995
<TABLE>
<CAPTION>
Quarter
----------------------------------
1st 2nd 3rd 4th
--- --- --- ---
<S> <C> <C> <C> <C>
Net sales $3,427 $4,059 $4,538 $4,016
Gross profit 2,482 2,969 3,354 2,993
Operating income 1,673 2,006 2,301 1,743
Net income 1,070 1,280 1,463 1,238
Primary net income per share $.06 $.07 $.08 $.07
</TABLE>
F-14
<PAGE>
<PAGE>
EXHIBIT 10.11b
MASTER GRID NOTE
ALL REFERENCES TO CHEMICAL BANK, THE CHASE MANHATTAN BANK, N.A., OR THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION)SHALL MEAN THE CHASE MANHATTAN BANK, A NEW
YORK STATE CHARTERED BANK.
$5,000,000 AUGUST 13,1996
On the due date for each Advance or on Demand BUT IN NO EVENT LATER THAN
JUNE 30, 1997 for value received, the undersigned hereby promises to pay to the
order of CHEMICAL BANK (hereinafter the "Bank") at its offices at 270 PARK
AVENUE, N.Y. the principal sum of the aggregate unpaid principal amount of each
Advance (as recorded on the grid attached hereto or on any additional pages
thereof) made by the Bank to the undersigned. The undersigned further promises
to pay interest on the unpaid principal amount of each Advance (computed on the
basis of the actual number of days elapsed on the basis of a 360-day year ) on
AUGUST 31,1996 (specific date) and the LAST day of each MONTH (insert "month",
"third month", "quarter", etc.) thereafter, and at maturity, at the per annum
rate of interest equal to the rate of prime, but in no event higher than the
maximum interest rate permitted under applicable law. The interest rate shall
change on each date which the Prime Rate changes. Prime Rate shall be the rate
of interest as is publicly announced at the Bank's principal office from time to
time as its prime rate. Interest on any past due amount, whether at the due date
thereof or by acceleration, shall be paid at a rate of one percent per annum in
excess of the above stated rate, but in no event higher than the maximum
permitted under applicable law. Time for payment extended by law shall be
included in the computation of interest.
If any principal of any Advance hereunder which bears interest at a
fixed rate of interest is paid prior to the scheduled maturity date set forth on
the grid attached hereto or on any additional pages thereof (whether by
acceleration, prepayment or otherwise), the undersigned also agrees to pay to
the Bank, on demand, such amount as is reasonably determined by the Bank to
represent the aggregate losses, costs, and expenses incurred or suffered by the
Bank as a result of such payment (including losses, costs and expenses resulting
from not receiving the rate of interest set forth above for the entire loan
period and/or the liquidation or redeployment of funds). A certificate of the
Bank setting forth the foregoing amount shall, absent manifest error, be
conclusive and binding for all purposes.
<PAGE>
<PAGE>
The undersigned hereby grants to the Bank a lien on, security interest
in and right of set-off against all moneys, securities and other property of the
undersigned and the proceeds thereof now or hereafter delivered to remain with
or in transit in any manner to the Bank, its correspondents or its agents from
or for the undersigned, whether for safekeeping, custody, pledge, transmission,
collection or for any other purpose, or coming into possession, control or
custody of the Bank, Chemical Securities, Inc., or any other affiliate of the
Bank in any way, and, also, any balance of any deposit account and credits of
the undersigned with, and any other claims of the undersigned against , the
Bank, Chemical Securities, Inc. or any other affiliate of the Bank at any time
existing (all of which are hereafter collectively called "Collateral"), as
collateral security for the payment of this note and all other liabilities and
obligations now or hereafter owed by the undersigned to the Bank, contracted
with or acquired by the Bank, whether joint, several, direct, indirect,
absolute, contingent, secured, unsecured, matured or unmatured (all of which are
hereinafter collectively called "Liabilities"), hereby authorizing the Bank at
any time or times, without notice or demand, to apply any such Collateral or any
proceeds thereof to any of such Liabilities in such amounts as it in its sole
discretion may select, whether contingent, unmatured or otherwise and whether
any other collateral security therefor is deemed adequate or not . Undersigned
authorizes the Bank to deliver to others a copy of this note as written
notification of the undersigned's transfer of a security interest in Collateral.
The Bank further is authorized at any time or times, without demand or notice to
the undersigned, to transfer to or register in the name of its nominee or
nominees all or any part of the Collateral and to exercise any and all rights,
power and privileges (except that prior to an Event of Default the Bank shall
not have the right to vote or to direct the voting of any Collateral). The
collateral security and other rights described herein shall be in addition to
any other collateral security described in any separate agreement executed by
the undersigned.
In the event of: default in the prompt payment of any Liabilities;
default in any other indebtedness of the undersigned (which, for the purposes of
this sentence, means the undersigned or any guarantor, surety or endorser of, or
any person or entity which has pledged any of its property to secure, any
Liabilities); complete or partial liquidation or suspension of any business of
the undersigned; dissolution, merger, consolidation or reorganization of the
undersigned; death or loss of employment by an individual or any member of any
partnership (if the undersigned is an individual or a partnership); failure to
furnish any financial information or to permit inspection of any books or
records at the Bank's request; a representation, warranty or statement of the
undersigned proving false in any material respect when made or furnished;
general assignment for the benefit of creditors or insolvency of the
undersigned; commencement of any proceeding supplementary to any execution
relating to any judgment against the undersigned; attachment, distraint, levy,
execution or final judgment against the undersigned or
<PAGE>
<PAGE>
against the property of the undersigned; assignment by the undersigned of any
equity in any of the Collateral without the written consent of the Bank;
appointment of a receiver, conservator, rehabilitator or similar officer for the
undersigned, or for any property of the undersigned, tax assessment by the
United States Government or any state or political subdivision thereof against
the undersigned; the taking of possession of, or assumption of control over, all
or any substantial part of the property of the undersigned by the United States
Government, or any state or political subdivision thereof, foreign government
(de facto or de jure) or any agency of any thereof; calling of a meeting of
creditors, assignment for the benefit of creditors or bulk sale or notice
thereof; any mortgage, pledge of or creation of a security interest in any
assets without the consent of the holder of this note; filing of a petition in
bankruptcy, commencement of any proceeding under any bankruptcy or debtor's law
(or similar law analogous in purpose or effect) for the relief, reorganization,
composition, extension, arrangement or readjustment of any of the obligations by
or against the undersigned; then, and in any of those events (each, an "Event of
Default"), all Liabilities, although otherwise unmatured or contingent, shall
forthwith become due and payable without notice or demand and notwithstanding
anything to the contrary contained herein or in any other instrument. Further,
acceptance of any payments shall not waive or affect any prior demand or
acceleration of these Liabilities, and each such payment made shall be applied
first to the payment of accrued interest, then to the aggregate unpaid principal
or otherwise as determined by the Bank in its sole discretion. The undersigned
hereby irrevocably consents to the in personam jurisdiction of the federal
and/or state courts located within the State of New York over controversies
arising from or relating to this note or the Liabilities and IRREVOCABLY WAIVES
TRIAL BY JURY and the right to interpose any counterclaim or offset of any
nature in any such litigation. The undersigned further irrevocably waives
presentment, demand, protest, notice of dishonor and all other notices or
demands of any kind in connection with this note or any Liabilities. The
undersigned shall be jointly and severally liable hereon.
The Bank may, at its option, at any time when in the judgment of the
Bank the Collateral is inadequate or the Bank deems itself insecure, or upon or
at any time after the occurrence of an Event of Default, proceed to enforce
payment of the same and exercise any of or all the rights and remedies afforded
the Bank by the Uniform Commercial Code (the "Code") or otherwise possessed by
the Bank. Any requirement of the Code for reasonable notice to the undersigned
shall be deemed to have been complied with if such notice is mailed, postage
prepaid, to the undersigned and such other persons entitled to notice, at the
address shown on the records of the Bank at least four (4) days prior to the
time of sale, disposition or other event requiring notice under the Code.
<PAGE>
<PAGE>
The undersigned agrees to pay to the Bank, as soon as incurred all costs
and expenses incidental to the care, preservation, processing, sale or
collection of or realization upon any of or all the Collateral or incurred in
connection with the enforcement or collection of this note, or in any way
relating to the rights of the Bank hereunder, including reasonable inside or
outside counsel fees and expenses. Each and every right and remedy hereby
granted to the Bank or allowed to it by law shall be cumulative and not
exclusive and each may be exercised by the Bank from time to time and as often
as may be necessary. The undersigned shall have the sole responsibility for
notifying the Bank in writing that the undersigned wishes to take advantage of
any redemption, conversion or other similar right with respect to any of the
Collateral. The Bank may release any party (including any partner of any
undersigned) without notice to any of the undersigned, whether as co-makers,
endorsers, guarantors, sureties, assigns or otherwise, without affecting the
liability of any of the undersigned hereof or any partner of any undersigned
hereof.
Upon any transfer of this note, the undersigned hereby waiving notice of
any such transfer, the Bank may deliver the Collateral or any part thereof to
the transferee who shall thereupon become vested with all the rights herein or
under applicable law given to the Bank with respect thereto and the Bank shall
thereafter forever be relieved and fully discharged from any liability or
responsibility in the matter; but the Bank shall retain all rights hereby given
to it with respect to any Liabilities and Collateral not so transferred. No
modification or waiver of any of the provisions of this note shall be effective
unless in writing, signed by the Bank, and only to the extent therein set forth;
nor shall any such waiver be applicable except in the specific instance for
which given. This agreement sets forth the entire understanding of the parties,
and the undersigned acknowledges that no oral or other agreements, conditions,
promises, understandings, representations or warranties exist in regard to the
obligations hereunder, except those specifically set forth herein.
If the undersigned is a partnership, the agreement herein contained
shall remain in force and applicable, notwithstanding any changes in the
individuals composing the partnership or any release of any partner or partners
and their partners shall not thereby be released from any liability. If this
note is signed by more than one party, the terms "undersigned", as used herein,
shall include and mean the "undersigned and each of them" and each undertaking
herein contained shall be their joint and several undertaking, provided,
however, that in the phrases "of the undersigned", "by the undersigned",
"against the undersigned", "for the undersigned", "to the undersigned" and "on
the undersigned", the term "undersigned" shall mean the "undersigned or any of
them", and the Bank may release or exchange any of the Collateral belonging to
any of the parties hereto and it may renew or extend any of the liabilities of
any of them and may make additional advances or extensions of credit to any of
them or release or fail to set off any deposit account or credit to any of them
or grant other indulgences to any of them, all from time to time, before or
after maturity hereof, with or without further notice to or assent from any of
the other parties hereto. Each reference herein to the Bank shall be deemed to
include its successors, endorsees and assigns, in whose favor the provisions
hereof shall also inure. Each reference herein to the
<PAGE>
<PAGE>
undersigned shall be deemed to include the heirs, executors, administrators,
legal representatives, successors and assigns of the undersigned, all of whom
shall be bound by the provisions hereof.
The provisions of this note shall be construed and interpreted and all
rights and obligations hereunder determined in accordance with the laws of the
State of New York, and, as to interest rates, applicable federal law.
WIRELESS TELECOM GROUP, INC.
ALL REFERENCES TO CHEMICAL BANK, THE CHASE MANHATTAN BANK, N. A. OR THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION) SHALL MEAN THE CHASE MANHATTAN BANK, A
NEW YORK STATE CHARTERED BANK.
<PAGE>
<PAGE>
EXHIBIT 10.12
LEASE
THIS LEASE is made as of the 24th day of April, 1996 by and between:
PARAMUS PARKWAY BUILDING ASSOCIATES,LTD having an
address c/o Berger and Bornstein 237 South Street
Morristown, New Jersey 07962, (hereinafter referred
to as "Landlord")
and
WIRELESS TELECOMMUNICATIONS GROUP INC.
a corporation of the State of New Jersey
having an address at
64 Midland Avenue
Paramus, New Jersey
W I T N E S S E T H:
Landlord and Tenant hereby agree with each other as follows:
1. Demised Premises. Landlord hereby leases to the Tenant and
Tenant hereby rents from Landlord that certain portion of premises located in a
building known as 64 Midland Avenue Paramus, Bergen County, New Jersey. Said
building, together with the land on which it is situated, is hereinafter
referred to as the "Building" or "Property". The portion of the Building being
leased to Tenant hereunder is outlined in red on Exhibit A annexed hereto and is
hereinafter referred to as the "Demised Premises". The Demised Premises contains
approximately 25,000 square feet of space. The Demised Premises shall also
include the non-exclusive right, in common with the Landlord and other tenants
at the Building (now or hereinafter existing), and their employees, customers,
visitors, guests and invitees to use the landscaped areas, common egress and
ingress, passageways, hallways and lobbies, driveways, parking areas, walkways
and roadways, and common areas which service the Building ("Common Areas").
<PAGE>
<PAGE>
2. Term.
a. The "Initial Term" of this Lease shall be ten
(10) lease years and three months and shall commence on the "Commencement Date".
The Commencement Date shall be June 1, 1996. The Initial Term of this Lease
shall expire on the "Termination Date" which shall be June 30, 2006, or such
date upon which this Lease may be sooner terminated pursuant to the terms hereof
or the last day of any extended term pursuant to paragraph 3b below. The term
"Lease Year" shall mean twelve (12) consecutive months except the tenth (10th)
Lease Year of the Initial Term shall be a period of fifteen consecutive months.
3. Rent and Option.
a. Tenant's obligation to pay fixed annual rent
shall commence on the "Rent Commencement Date", which shall be September 1,
1996. In consideration of the leasing of the Demised Premises, Tenant hereby
covenants and agrees to pay Landlord during the Initial Term of this Lease a
fixed annual rental pursuant to the following schedule:
<TABLE>
<CAPTION>
Fixed Monthly
Lease Year Annual Rental Installment
---------- -------------- ------------
<S> <C> <C>
1-2 $187,500.00 $15,625.00
3-4 $200,000.00 $16,666.67
5-6 $212,500.00 $17,708.33
7-8 $225,000.00 $18,750.00
9-10 $237,500.00 $19,791.67
</TABLE>
b. Tenant shall have the option to extend the Initial Term of this
Lease by five (5) lease years, with the option period commencing on the day
immediately following the Termination Date for the Initial Term and terminating
five (5) lease years thereafter ("Option Period"). This option to extend, as
well as the commencement of the Option Period, shall be expressly conditioned
upon Tenant, up to the time the Option Period is to begin, having fully complied
with all its monthly rental obligations under this Lease and there being no
uncured breach or default of any of Tenant's other obligations under this Lease.
This option is exercisable by Tenant, if at all, only in
strict compliance of the aforesaid conditions and by giving Landlord written
notice of its election to extend the Initial Term,
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together with written notice naming an appraiser for purposes of paragraph 3c
below, not later than one hundred eighty (180) days prior to the Termination
Date of the Initial Term. Strict compliance with the conditions of this option
and the exercise thereof is deemed material to the parties, and time for
exercise is of the essence. Tenant's failure to timely exercise this option,
including the timely naming of an appraiser, shall be deemed a waiver of this
option by Tenant, in which event this Lease shall expire on the Termination Date
for the Initial Term.
c. The fixed annual rent for the Option Period shall be
determined as follows:
(i) The fixed annual rental during the Option
Period shall be the fair market rental value for the Demised Premises for said
period as determined by an M.A.I. appraiser who shall be selected pursuant to
the following procedure: Landlord shall name, by written notice to Tenant, an
M.A.I. appraiser not later than thirty (30) days after receiving Tenant's
notice, pursuant to paragraph 3(b) above, naming Tenant's M.A.I. appraiser. The
two appraisers shall, within ten (10) days of the date Landlord names its
appraiser, submit the matter to an M.A.I. appraiser selected by them
("Independent Appraiser") whose appraisal shall be completed within sixty (60)
days of his selection and whose appraisal shall be binding on all parties.
(ii) The Independent Appraiser shall calculate the
fair net rental value for the Demised Premises on a per square foot basis for
the First Option Period by first determining such fair net rental value for each
calendar year of the period and then determining a sum equal to the weighted
average of said rents. For example:
<TABLE>
<CAPTION>
Lease Year Fair Rental Value Weighted Weighted
- ---------- ----------------- -------- --------
Per Square Foot Percentage Average
--------------- ---------- -------
<S> <C> <C> <C>
1 $ 9.50 .2 1.9
2 $ 9.50 .2 1.9
3 $ 10.00 .2 2.0
4 $ 10.50 .2 2.1
5 $ 10.50 .2 2.1
-- ---
TOTAL 1.0 $10.00
</TABLE>
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Thus, pursuant to this example, which example is solely for
illustrative purposes, the fair net rental value per square foot for the Option
Period would be $10.00 per square foot.
(iii) Landlord and Tenant agree and consent that
in the event the parties' appraisers fail to elect an Independent Appraiser
within ten (10) days of the date Landlord names its appraiser, either party may
apply summarily, by order to show cause or otherwise, to the Supervisor Court of
New Jersey for the designation of an Independent Appraiser.
(iv) In the event the Independent Appraiser does
not complete his appraisal by the first day of the Option Period, then
commencing as of the first day of the Option Period, the Tenant shall pay a
fixed annual rent in an amount equal to the fixed annual rent for the Initial
Term. Upon completion of the apprais al, Tenant shall immediately pay to
Landlord any underpayment. In no event shall the fixed annual rent for the First
Option Period be less than the fixed annual rent for the last lease year of the
Initial Term.
g. The parties hereto agree that the fixed
annual rent payable hereunder shall be net to the Landlord so that this Lease
shall yield to Landlord the fixed rent per annum specified herein during the
term of this Lease. Tenant shall pay, as additional rent, the costs and expenses
as provided for herein so as to render the fixed annual rental net to the
Landlord.
h. Whenever under the terms of this Lease any
sum of money is required to be paid by Tenant in addition to the fixed annual
rent reserved hereunder, said additional sum shall be deemed additional rent and
shall be payable without setoff or abatement. All payments of additional rents
due in installments pursuant to paragraph 11 below shall be made by the Tenant
to the Landlord without notice or demand in equal monthly installments, in
advance, and shall be due and payable on the first day of each and every
calendar month throughout the term of this Lease commencing on the Commencement
Date. Notwithstanding the foregoing, additional rents that are not due and
payable in installments pursuant to paragraph
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11 below shall be paid by Tenant to Landlord on the tenth (10th) day following
Tenant's receipt of Landlord's written notice that such sums are due and owing.
Nothing contained in this subparagraph shall be deemed to suspend or delay the
obligation of Tenant to pay any and all other sums as and when due hereunder,
nor otherwise limit or circumscribe any other remedy of Landlord, except as
provided herein.
5. Proportionate Share.
a. The term "Proportionate Share" shall mean
the fraction, the denominator of which is the total square feet of space in the
Building (94,000) and the numerator of which is the square feet of the Demised
Premises(25,000)or 26.6%.
b. The Proportionate Share shall be adjusted as
the total square feet of the Demised Premises or Building may increase or
decrease.
6. Real Estate Taxes and Assessments.
a. Tenant agrees to pay monthly during the term
of this Lease, as additional rent, an amount equal to its Proportionate Share,
defined above, of all the real estate taxes, assessments and other local
governmental charges, whether general or special, ordinary and extraordinary,
unforeseen as well as foreseen, of every kind and nature, assessed against the
Building of which the Demised Premises is a part.
b. If at any time during the term of this
Lease, under the laws of the State of New Jersey or any political subdivision
thereof, a tax on rents is assessed against the Landlord as a substitution, in
whole or in part, for a real estate tax or assessment, water or sewer charge, or
other governmental imposition or charge, Tenant shall pay its Proportionate
Share of same.
7. Utilities.
a. Tenant agrees to pay monthly during the term
0f this Lease, as additional rent, an amount equal to its Proportionate Share
for all water and sewer charges attributable to the Building.
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b. Tenant shall arrange to have the utilities
that are separately metered for the Demised Premises billed in its own name and
shall pay all charges therefor directly to the utility company furnishing the
services. Removal of Tenant's trash from the Building and Property shall be
Tenant's responsibility and shall be done at Tenant's cost.
c. Landlord reserves the right to enter upon
the Demised Premises upon reasonable notice, during normal business hours and
provided Landlord shall not unreasonably disturb Tenant's operation, for the
purpose of connecting to wires, cables conduits and pipes and the like within
the Demised Premises which supply utilities to the Building in order to supply
other tenants of the Property with gas, electric, water and such other
utilities.
8. Common Area Maintenance.
Tenant agrees to pay monthly during the term of this
Lease, as additional rent, an amount equal to its Proportionate Share of the
annual cost incurred by Landlord for the repair, replacement, management and
maintenance of the Building, including but not limited to, landscaping, lawn
maintenance, painting of buildings and other improvements, snow and ice removal,
parking lots, roads, driveways, sidewalks, utilities and lighting ("Common Area
Charges").
9. Use and Operation of Premises.
a. Throughout the term of this Lease, Tenant
covenants to use the Demised Premises solely for office space and the production
of electronic instruments for testing wireless communication devices as
permitted by law.
b. In the event Tenant's use of the Demised
Premises shall result in a Use Group H - High Hazard Uses classification for the
Building or the Demised Premises under the applicable BOCA codes or other
applicable laws, Tenant shall be solely responsible, at its cost, to bring the
Building and Demised Premises within compliance of the applicable BOCA codes or
other applicable laws.
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c. Tenant shall not enter into any activities
at the Demised Premises which involve the on-site generation, manufacture,
refining, transportation, treatment, storage, handling or disposal of "Hazardous
Substances" and/or wastes as defined in ISRA and its implementing regulations,
or as defined under the New Jersey Spill Compensation and Control Act (the
"Spill Act"), N.J.S.A. 58:10-23.11, et seq., as amended, or the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.
["CERCLA"]), Tenant shall indemnify, defend and save Landlord harmless from all
fines, costs, suits, damages, procedures, judgments, or actions of any kind
resulting from such use by Tenant of the Demised Premises.
d. The use by the Tenant of the Demised
Premises shall be in careful, lawful, safe and proper manner, and the Tenant
shall not permit the same to be used for any unlawful purpose, nor commit nor
suffer any waste. Tenant covenants to comply with all reasonable rules and
regulations which Landlord may, at any time or from time to time during the term
of this Lease, impose on other tenants, their employees, agents, licensees and
customers.
10. Insurance.
a. Tenant agrees to pay monthly during the term
of this Lease, as additional rent, an amount equal to its Proportionate Share of
the annual cost for all insurance the Landlord maintains for the Property,
including, but not limited to, all insurance for loss or damage by fire and all
other casualties ordinarily included in extended coverage, public liability,
insurance for the payment of rent, personal injury, property damage and all
other insurance of any type, kind or description which may be reasonably
required for the Property. Landlord shall maintain such insurance coverage as is
typical for buildings of like size, use, construction and location. Landlord may
alter the type and amount of insurance coverage presently carried for the
Property provided such coverage is typical for a building of like size, use,
construction and location.
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b. Tenant shall not do, nor permit to be done,
any act or thing on the Demised Premises which shall invalidate or be in
conflict with, or cause any additional premium for, any insurance policy
insuring the Property.
c. Tenant shall, during the entire term hereof,
at its sole cost and expense, keep in full force and effect a policy of
comprehensive public liability and property damage insurance with respect to the
Demised Premises and the business operated by Tenant in the Demised Premises as
to which the limits of liability shall not be less than ONE MILLION
($1,000,000.00) DOLLARS per person and TWO MILLION ($2,000,000.00) DOLLARS per
accident or occurrence and in which the property damage liability shall not be
less than FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS. The policy shall be from
a New Jersey licensed insurance company, with at least a Best's rating of "A",
and shall name the Landlord and Landlord's mortgagee(s) as additional insureds.
The policy shall contain clauses that: (i) the amount of any "deductible" shall
be not more than $10,000.00; (ii) the insurer will not cancel or modify the
insurance coverage without first giving the Landlord thirty (30) days' prior
written notice. A copy of a certificate evidencing such coverage will be
delivered to Landlord before the Commencement Date, together with proof that the
first year's premium has been paid in full.
11. Estimated Costs. The initial monthly additional rent
charges for Tenant's Proportionate Share of real estate taxes, water and sewer
charges, Common Area Charges and insurance costs shall be initially estimated at
the sum of THREE THOUSAND and 00/100 ($3,000.00) DOLLARS, which sum commencing
as of the Commencement Date, shall be paid monthly, on the first day of each
month. An adjustment to the estimated payments shall be made at least once
annually by the Landlord after the actual cost and expense data is known, and
any overpayments or under payments shall be credited against or paid with the
next month's additional rent charges after Tenant is notified of same. Tenant
shall pay monthly the adjusted amount upon written notice from Landlord. Tenant
may
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audit Landlord's books and records provided Tenant shall have first paid all
sums due and owing to Landlord.
12. Repairs and Alterations.
a. Tenant covenants that throughout the term of
this Lease it will take good care of the Demised Premises, including all
alterations, changes and improvements at any time erected thereon, and to keep
and maintain same in good order and condition subject to normal wear and tear
and casualty damage not caused by Tenant. Except for roof and structural
repairs, Tenant shall promptly make, at its sole cost and expense, all repairs
and replacements to the Demised Premises, including but not limited to all
electrical, air-conditioning, heating, plumbing and other mechanical systems
servicing the Demised Premises. Landlord shall deliver, and Tenant shall accept,
the Demised Premises in an "as is" condition, except for "Landlord's Work" set
forth on Exhibit B annexed hereto. Tenant shall pay to Landlord the sum of
$96,320.00, being Tenant's contribution to the cost of Landlord's Work "Tenant's
Contribution". Tenant's Contribution shall be paid as follows: $45,000.00 upon
signing this Lease; $51,320.00 upon the date Tenant receives written notice from
Landlord's Architect that Landlord's Work is substantially complete.
b. Tenant shall, during the term of this Lease,
at its sole cost and expense, promptly comply with any statute, ordinance, rule,
order, regulation or requirement of the Federal, State and Municipal Government
and any and all departments, agencies, bureaus and subdivisions thereof as same
shall apply to the Demised Premises and observe and promptly comply with: (i)
all reasonable rules, orders and regulations of the Board of Fire Underwriters;
or any like agency; and (ii) the requirements of all insurance carriers issuing
policies maintained by the Landlord on the Demised Premises or on the Property
of which the Demised Premises is a part.
c. Tenant shall have the right during the term
of this Lease to make interior alterations and improvements to the Demised
Premises subject to the following conditions: (i) any and
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all governmental permits and authorizations required therefor shall have been
obtained by Tenant prior to the undertaking of said alterations or improvements;
(ii) no alteration or improvement of the Demised Premises shall be undertaken
until detailed plans and specifications have first been submitted to and
approved in writing by the Landlord; (iii) all alterations and improvements,
when completed, shall be of such a character as shall not reduce, or otherwise
adversely affect, the value of the Demised Premises, reduce the cubic content of
the Building, affect the structural soundness of the Building, or change the
character of the Building; (iv) all work done in connection with any alterations
and improvements shall be done promptly and in a good and workmanlike manner and
in compliance with all building and zoning laws, and with all laws, ordinances,
orders, rules, regulations and requirements of all Federal, State and Municipal
governments and the appropriate departments, commissions, boards and officers
thereof, and in accordance with the orders, rules and regulations of the Board
of Fire Underwriters (or like agency) where the Demised Premises is situated, or
any other body exercising similar functions and having jurisdiction thereover;
(v) said alteration or improvement shall be completed free of liens for labor
and materials supplied or claimed to have been supplied to the Demised Premises;
and (vi) Tenant shall, at its sole cost and expense, maintain adequate insurance
therefor, including statutory workmen's compensation insurance (or Tenant shall
deliver to Landlord certificates of insurance for contractors indicating
workmen's compensation insurance is in force) covering all persons employed in
connection with the work and with respect to whom death or injury claims could
be asserted against the Landlord, the Tenant or the Demised Premises; and
general liability insurance naming the Landlord as an additional insured, which
policy shall have limits of not less than ONE MILLION ($1,000,000.00) DOLLARS
per person and THREE MILLION ($3,000,000.00) DOLLARS per accident or occurrence
and FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS for property damage. The policy
shall contain clauses that: (i) the amount of
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<PAGE>
any "deductible" shall be not more than $10,000.00; and (ii) the insurer will
not cancel or modify the insurance coverage without first giving the Landlord
thirty (30) days' prior written notice. All such insurance will be in a company
or companies authorized to do business in New Jersey, with at least a Best's
rating of "A", and all such policies shall be delivered to the Landlord prior to
the commencement of any work, endorsed "premium paid" by the company or agency
issuing the same.
13. Eminent Domain.
a. If the total Demised Premises is taken,
acquired or purchased by or through condemnation proceedings or any right of
eminent domain or any other authority of law, with or without the entry of an
order in a judiciary proceeding, this Lease shall terminate as of the date of
taking without further liability by the parties hereto.
b. The date of any taking shall be the date
specified in the official notice of the condemning authority, or in the absence
of such notice, the vesting of title in said authority. Subject to the
provisions as hereinafter provided in this paragraph, all rent or other charges
paid or payable by Tenant to Landlord shall be abated as of the date of said
taking. Upon any termination or cancellation of this Lease, as provided in this
section, all rent or other charges paid in advance for any period after the
effective date of the taking shall be refunded to Tenant, less any sums due
Landlord from Tenant.
c. Landlord reserves to itself all rights to
damages or compensation accruing on account of any such taking of the real
property comprising and included in the Demised Premises as aforesaid or by
reason of any act or any public or quasi-public authority for which damages are
payable. Tenant shall not be entitled to any portion of the award as a result of
the loss of its leasehold interest; however, Tenant may seek compensation for
Tenant's fixtures and moving expenses, provided such award shall not diminish
Landlord's award.
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d. In the event that only a portion of the
Demised Premises is taken, this Lease shall remain in full force and effect and
the rental payable hereunder shall be equitably adjusted.
14. Indemnity and Liability for Injury and Loss.
a. Landlord, except as a result of Landlord's,
negligent or willful acts: (1) shall not be liable to Tenant or any other person
on the Demised Premises or Property for any damage either to person or property;
(2) shall not be responsible or liable in any way whatsoever for the quality,
quantity, impairment, interruption, stoppage of or other interference with
services involving water, heat, gas, electrical current for light and power,
telephone or any other service by any public utility; and (3) shall not be
liable for any damage or injury by water, steam, electricity, gas, rain, ice or
snow which may be sustained by Tenant or other person.
b. Tenant shall indemnify, defend and save
Landlord harmless from and against all injuries, liability, judgments, expenses,
claims or damages to any person or property while on or about the Demised
Premises arising out of the use or occupancy of the Demised Premises by Tenant
except to the extent caused by the negligence or willful acts of Landlord.
15. Lease Subordination.
a. Any mortgages that are now or hereafter may
be placed against the Building or any part thereof shall have preference and
precedence and be superior and prior to the lien of this Lease, irrespective of
the date of granting or recording. Tenant does hereby agree to accept any
mortgagee as the Landlord hereunder and to perform its obligation as Tenant
under this Lease, if any mortgagee acquires title to the Property by foreclosure
or otherwise.
b. The term "mortgage" as used in this section
includes mortgages, deeds of trust or any similar instruments and modifications,
extensions, renewals and replacements thereof.
c. The provisions of the subordination and
attornment contained in this paragraph shall be self-operative and
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no further instrument of subordination shall be required in order to bind Tenant
hereunder. In the event Landlord desires confirmation of such subordination and
attornment, Tenant shall deliver any instrument which may be reasonably required
to further evidence the subordination of this Lease to the lien of any such
mortgage or mortgages and the agreement by Tenant to accept the mortgagee as the
Landlord and perform under this Lease if the mortgagee acquires title to the
Building by foreclosure or otherwise, as shall be desired by any aforesaid
mortgagee or proposed mortgagee, provided such instrument shall not alter the
terms of this Lease.
d. Tenant does hereby agree to any assignment
by Landlord of the rentals under this Lease to a mortgagee.
e. Tenant shall: (i) within ten (10) days after
receipt of Landlord's written request, execute and deliver to Landlord a current
financial statement of the Tenant, certified by an officer of Tenant to be
accurate, and/or (ii) within ten (10) days after Landlord's written request,
execute and deliver an estoppel certificate, prepared by Landlord at its cost,
in a form required by Landlord's mortgagee, stating, to the extent such
statements are accurate: (i) it is the Tenant under this Lease; (ii) the Demised
Premises has been unconditionally accepted and occupied and rent payments have
commenced; (iii) the Lease is in full force and effect and fully sets forth the
agreement of the parties; (iv) the Lease has not been modified, amended,
assigned or sublet, or if it has been, in what manner; and (v) no claim or right
of setoff exists, and neither Landlord nor Tenant is in default and no grounds
for reducing the rent or canceling the Lease exist. Tenant's failure to timely
deliver the financial statement and/or the estoppel certificate shall be deemed
a material default under this Lease.
16. Fire Damage.
a. If, after the date hereof, the Demised
Premises is damaged by fire, enemy action, or other casualty (such damage being
hereafter called "fire damage"), Landlord shall repair or
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restore the Demised Premises, except Landlord shall have the option not to
repair or restore the fire damage if:
(i) the fire damage shall be to more
than twenty (20%) percent of the Building; or
(ii) there shall be remaining less than
two (2) Lease Years remaining of the then current term of this Lease; or (iii)
the fire damage shall be uninsured or if insured, the mortgagee(s) shall not
release to Landlord sufficient insurance proceeds to repair or restore; or
(iii) the fire damage shall be uninsured
or if insured, the mortgagee(s) shall not release to Landlord sufficient
insurance proceeds to repair or restore; or
(iv) if Landlord is unable to obtain any
necessary governmental approvals necessary to repair or restore within ninety
(90) days of its application for same, after using reasonable diligence to
obtain same during said ninety (90) day period.
In the event Landlord shall repair or restore the
fire damage, there shall be a fair and proportionate abatement of all rent
payable hereunder according to the time during which and the portion or extent
to which the Demised Premises may not be used by Tenant.
b. If Landlord shall elect not to repair or
restore the Demised Premises pursuant to paragraph 15(a) above, this Lease shall
terminate on the date of occurrence of the fire damage. Landlord shall notify
Tenant in writing not more than thirty (30) days after the occurrence of the
fire damage if it elects not to repair or restore, in which event Landlord shall
return to Tenant a fair and proportionate rebate of all rent paid in advance to
Landlord by Tenant, if any, prorated as of the date of the occurrence of the
fire damage.
17. ISRA Compliance.
a. Anything contained to the contrary in
paragraph 16b below notwithstanding, Landlord shall be responsible for all
environmental conditions existing as of the Commencement Date of this Lease, and
Tenant shall only be responsible for those environmental conditions caused by
Tenant.
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b. Tenant shall, at Tenant's own expense,
comply with N.J.S.A. 13:1k-6 et seq., and the regulations promulgated thereunder
("ISRA"), as well as all other environmental laws now or hereafter enacted and
applicable to the Demised Premises and Tenant's use thereof. Tenant shall, at
Tenant's own expense, make all submissions to, provide all information to, and
comply with all requirements of the New Jersey Department of Environmental
Protection (the "NJDEP") or such other appropriate agency charged with the
administration of ISRA or other applicable environmental laws. Should any
division of NJDEP determine that a cleanup plan be prepared and that a cleanup
be undertaken because of any spills or discharges of hazardous substances or
wastes which occur during the term of this Lease, then Tenant shall, at Tenant's
own expense, prepare and submit the required plans and financial assurances and
carry out the approved plans. Tenant's obligations under this paragraph shall
arise if there is any closing, terminating or transferring of operations of
owner ship of the industrial establishment at this premises pursuant to ISRA, or
any other triggering event under ISRA or other environmental law which would
necessitate compliance. At no expense to Landlord, Tenant shall promptly provide
all information requested by Landlord for preparation of non-applicability
affidavits and shall promptly sign such affidavits when requested by Landlord.
Tenant shall indemnify, defend and save Landlord harmless from all fines, suits,
procedures, claims and actions of any kind arising out of or in any way
connected with any spills or discharges of hazardous substances or wastes caused
by Tenant at the premises which occur during the term of this Lease, and from
all fines, suits, procedures, claims and actions of any kind arising out of
Tenant's failure to provide all information, make all submissions and take all
actions required by ISRA, or any other division of NJDEP or under any
environmental law. Tenant's obligations and liabilities under this paragraph
shall continue so long as Landlord remains responsible for any spills or
discharges of hazardous substances or wastes at the premises which occur during
the term of this Lease.
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Tenant's failure to abide by the terms of this paragraph shall be restrainable
by injunction. Tenant shall effectuate and complete full compliance with ISRA
and any other applicable environmental law, including but not limited to any
necessary cleanup, prior to the Termination Date of this Lease. Tenant shall
commence its compliance with such laws in sufficient time prior to the
Termination Date so as to complete its obligations under this paragraph by no
later than the Termination Date. In the event ISRA shall not apply to Tenant's
occupancy of the Demised Premises at the end of the term of this Lease, Tenant
shall furnish Landlord with a letter of non-applicability from the NJDEP at the
end of the term. Tenant's obligation under this paragraph shall survive the
termination of this Lease.
c. Tenant warrants that its Standard Industrial
Code number is, and shall remain during the term of this Lease, 3825.
18. Defaults and Remedies.
a. The following shall constitute events of
default under this Lease:
(1) failure to pay any installment of
the fixed rent, or additional rent, Tenant's Contribution, or any part thereof
by the date such payment is due;
(2) failure in the performance of or
compliance with any of the other covenants, conditions and/or terms of this
Lease, which failure shall continue for more than twenty (20) days after written
notice thereof by Landlord to Tenant, provided however that if the default is of
a nature that cannot be cured within twenty (20) days, Tenant shall not be in
default if it commences the cure of the default within twenty (20) days of
Landlord's notice and thereafter diligently proceeds to cure the default;
(3) if this Lease shall be assigned or
sublet except as permitted in Paragraph 19 below;
(4) the filing by or against Tenant of
any petition with respect to its own financial condition under any
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bankruptcy law or any amendment thereto (including, without limitation, a
petition for reorganization, arrangement or extension), or under any other
insolvency law or laws providing for the relief of debtors (which petition, if
filed against Tenant, shall not be dismissed within ninety (90) days); the
appointment of a receiver, trustee, custodian, conservator or liquidator for
Tenant on all or substantially all of Tenant's assets, and the custodianship or
appointment is not dismissed within ninety (90) days after the commencement
thereof; the admission by Tenant of its insolvency; making of a general
assignment for the benefit of creditors; however, the foregoing shall not be a
default if rent is paid on a current basis;
(5) if Tenant liquidates or ceases to exist;
(6) Tenant recording this Lease or a
memorandum thereof.
b. Upon the occurrence of any event of default,
Landlord, in addition to any and all rights and remedies it may have at law and
equity, may exercise any one or more of the following remedies:
(1) Landlord may give Tenant a notice (the
"Termination Notice") of its intention to terminate this Lease specifying a date
not less than three (3) days thereafter, upon which date this Lease, the term
and estate hereto granted and all rights of Tenant hereunder shall expire and
terminate. Notwithstanding the foregoing: (i) Tenant shall remain liable for
damages as hereinafter set forth, and (ii) Landlord may institute dispossess
proceedings for non-payment of rent, or other proceedings to enforce the payment
of rent, without giving the Termination Notice. Upon any such termination or
expiration of this Lease, Tenant shall peaceably quit and surrender the Demised
Premises to Landlord, and Landlord may without further notice enter upon,
re-enter, possess and repossess itself thereof, by summary proceedings,
ejectment or otherwise and may have, hold and enjoy the Demised Premises and the
right to receive all rental and other income of and from the same;
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(2) Landlord may, at Landlord's sole
option (without imposing any duty upon Landlord to do so), and Tenant hereby
authorizes and empowers Landlord to: (i) re-enter the Demised Premises for its
own account or otherwise; (ii) relet the same for any term; (iii) remove
Tenant's improvements if reasonably necessary or desirable for such reletting
purposes; (iv) restore the Demised Premises to the condition in which it was
required to be surrendered by Tenant; and (v) receive and apply the rent so
received to pay all fees and expenses incurred by Landlord, directly or
indirectly, as a result of Tenant's default, including, without limitation, any
reasonable legal fees and expenses arising therefrom, the reasonable cost of
re-entry, repair, remodeling and reletting and the payment of the rent and other
charges due hereunder. No entry, re-entry or reletting by Landlord, whether by
summary proceedings, termination or otherwise, shall discharge Tenant from any
of its liability to Landlord as set forth in this Lease, and in no event shall
Tenant be entitled to or receive any benefit or credit from any rental in excess
of the rent reserved under this Lease which results from a reletting of the
Demised Premises after Tenant's default;
(3) Tenant will pay Landlord, and be
liable to Landlord for, the full amount of all fixed annual rent and additional
rent thereafter to become due. Landlord shall be deemed to have satisfied its
obligation, if any, to mitigate its damages provided Landlord shall list the
Demised Premises for lease with a licensed real estate broker;
(4) If Tenant shall fail to make any
payment required to be made under this Lease, or shall default in the
performance of any covenant, agreement, term, provision or condition herein
contained, Landlord may, without being under any obligation to do so and without
thereby waiving such default, make such payment and/or remedy such default for
the account and at the sole expense of Tenant. Tenant shall pay to Landlord, on
demand, the amount of all sums so paid and all expenses so incurred by Landlord,
together with interest, at the rate set forth in
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subparagraph 17(b)(5) below, on such sums and expenses from the date incurred
until payment in full;
(5) Interest on any sums due to Landlord
from Tenant under this Lease shall accrue from the date due at a variable rate
equal to two (2) percentage points above the prime interest rate as set daily by
Chase Manhattan Bank, N.Y.C., N.Y., but in no event less than ten (10%) per
annum;
(6) Tenant, for itself and on behalf of
any and all persons claiming through or under it, including without limitation,
creditors of every kind, hereby waives and surrenders all rights and privileges
which it or any of them may have under, or by reason of, any present or future
law to redeem the Demised Premises, or to have a continuance of this Lease for
the remainder of the term, after a judgment for possession or after Tenant is
ejected therefrom by process of law or after the termination of this Lease as
herein provided;
(7) Tenant shall be liable to Landlord
for any and all reasonable attorney's fees and costs which Landlord may incur as
a result of Landlord seeking to enforce or protect its rights against Tenant in
connection with an event of default by Tenant.
c. The failure on the part of Landlord to re-
enter or repossess the Demised Premises, or to enforce any of its rights as
provided in this section upon any default, shall not be deemed a waiver of any
of the terms and conditions of this Lease and shall not preclude said Landlord
from exercising any such rights upon any subsequent occurring default or
defaults. All of Landlord's rights shall be cumulative and shall not preclude
the Landlord from exercising any other rights which it may have under law.
19. Assignment and Subletting.
a. Tenant shall not be entitled to transfer,
sell, mortgage, pledge, hypothecate, or assign this Lease or sublet or grant a
concession or license or otherwise permit any other person or entity to occupy
the Demised Premises or any part thereof
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(hereinafter referred to as "Assignment") without the prior written consent of
Landlord.
b. In the event Landlord consents to an
Assignment (however, Landlord may terminate this Lease in lieu of consenting to
an Assignment unless such Assignment is in conjunction with Tenant's sale of its
business), such consent to that Assignment shall be expressly conditioned upon
the compliance by Tenant and the Assignee of the following provisions:
(1) From the time of the request for a
consent to the Assignment through the effective date of the Assignment itself,
this Lease must be in full force and effect without any breach or default
thereunder existing on the part of the Tenant;
(2) The Assignee shall assume, by
written instrument, in form and content reasonably satisfactory to Landlord, the
due performance of all of Tenant's obligations under the Lease, including any
accrued obligations at the time of the Assignment;
(3) A copy of the Assignment and the
original assumption agreement (both in form and content satisfactory to the
Landlord) fully executed and acknowledged by the Assignee, together with a
certified copy of a properly executed corporate resolution authorizing such
assumption, if applicable, shall be delivered to the Landlord prior to the
effective date of such Assignment. Tenant shall acknowledge, in writing, in a
form acceptable to Landlord, that it shall remain liable under this Lease
regardless of the Assignment;
(4) Such Assignment shall be upon and
subject to all the provisions, terms, covenants and conditions of this Lease and
the Tenant and Assignee shall continue to be and remain liable hereunder;
(5) Tenant shall comply with the
requirements of ISRA in accordance with the provisions of Paragraph 16. 20.
Signs. The Tenant shall not display any sign, picture, advertisement, awning,
merchandise, or notice on the Building, nor anywhere in the Common Area, except
Tenant may
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display such signs as first approved by Landlord in writing. Tenant shall be
responsible for the maintenance and repair of its signs and shall remove them at
the expiration of the term of this Lease and repair all damage caused by the
removal.
21. Landlord's Right to Make Modifications.
Landlord reserves the right to make improvements to
the Building, provided that such changes and construction shall not unreasonably
interfere with Tenant's use of the Demised Premises or access to the Demised
Premises.
22. Security. Tenant shall, upon execution of this Lease,
deposit with the Landlord the sum of FORTY ONE THOUSAND FOUR HUNDRED TWENTY
($41,420.00) DOLLARS ("Security") as security for the full and faithful
performance of the obligations of Tenant to be performed by Tenant pursuant to
this Lease. Said sum shall be returned without interest to the Tenant after the
expiration of the term of this Lease, provided that the Tenant shall have fully,
faith fully and timely carried out all of the terms, covenants and conditions on
its part to be performed.
23. Bankruptcy of Tenant.
a. Upon the filing of a petition by or against
Tenant under the United States Bankruptcy Code, Tenant, as debtor and as debtor
in possession, and any trustee who may be appointed agree as follows: (i) to
perform each and every obligation of Tenant under this Lease including, but not
limited to, the manner of "use and operation" of the Demised Premises as
provided in paragraph 8 of this Lease until such time as this Lease is either
rejected or assumed by order of the United States Bankruptcy Court; and (ii) to
pay monthly in advance on the first day of each month, as reasonable
compensation for use and occupancy of the Demised Premises, an amount equal to
all rent and other additional rent otherwise due pursuant to this Lease; and
(iii) to reject or assume this Lease within sixty (60) days of the filing of
such petition under Chapter 7 of the Bankruptcy Code or within one hundred
twenty (120) days (or such shorter term as Landlord, in its sole discretion, may
deem reasonable so long as notice of such
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period is given) of the filing of a petition under any other Chapter; and (iv)
to give Landlord at least forty five (45) days' prior written notice of any
proceeding relating to any assumption of this Lease; and (v) to give at least
thirty (30) days' prior written notice of any abandonment of the Demised
Premises; and such abandonment to be deemed a rejection of this Lease; and (vi)
to do all other things of benefit to Landlord otherwise required under the
Bankruptcy Code; and (vii) to be deemed to have rejected this Lease in the event
of the failure to comply with any of the above; and (viii) to have consented to
the entry of an order by an appropriate United States Bankruptcy Court providing
all of the above, waiving notice and hearing of the entry of same.
b. No default of this Lease by Tenant, either
prior to or subsequent to the filing of such a petition, shall be deemed to have
been waived unless expressly done so in writing by Landlord.
24. Quiet Enjoyment.
Landlord covenants and agrees with Tenant that upon
Tenant's prompt and full payment of all rent and other sums required to be paid
by Tenant under this Lease and observing and performing all the terms, covenants
and conditions on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the Demised Premises, subject, nevertheless, to the
terms and conditions of this Lease and any present or future underlying leases,
ground leases and/or mortgages on the Building or Property.
25. Holding Over.
The Tenant shall have no right to remain in
possession after the Termination Date. If the Tenant shall occupy the Demised
Premises after the expiration of this Lease with the consent of the Landlord
(which consent shall be the obligation of Tenant to obtain in writing prior to
the Termination Date and which consent Landlord shall be under no obligation to
give), and rent is accepted and collected from said Tenant, such occupancy and
payment shall be construed as an extension of this Lease for a term of
month-to-month only, from the date of such expiration. In such
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event, if either Landlord or Tenant desires to terminate said occupancy at the
end of any month after the termination of this Lease, the party so desiring to
terminate the same shall give the other party thirty (30) days' written notice
to that effect. If such occupancy continues after the aforesaid notice of
termination, or if Tenant shall continue its occupancy after the Termination
Date without obtaining Landlord's written consent, Tenant shall pay to Landlord,
as partial damages, double the amount of both fixed annual rental (at the rate
which was last in effect for the term) and all additional rent for the time, on
a per diem basis, Tenant retains possession of the Demised Premises or any part
thereof after termination of the term, together with all costs, expenses and
damages incurred by Landlord and its agents to obtain possession from Tenant.
Furthermore, if such occupancy continues after the aforesaid notice of
termination, or if Tenant shall continue its occupancy after the Termination
Date without obtaining Landlord's written consent, Tenant shall be liable to
Landlord for any loss of rents and/or liability sustained by Landlord or its
agents in connection with any subsequent tenancy which may have intended to
occupy said Demised Premises at the expiration of the term herein. The
acceptance of rent and/or additional rent by Landlord shall not be deemed to
create a new or additional tenancy other than aforesaid.
26. Surrender.
a. On the last day of the term or on the sooner
termination thereof, Tenant shall, at Tenant's sole cost and expense: (i)
peaceably surrender the Demised Premises broom-clean, in as good order and
condition as of the commencement of the term of this Lease, except for
reasonable wear and tear and damage by casualty; and (ii) remove from the
Demised Premises its signs, furniture, equipment, machinery and trade fixtures,
other than the ramps, ductwork and dividing walls referred to in paragraph 11
("Tenant's Property"). Tenant's Property not so removed within thirty (30) days
following the Termination Date, may at Landlords' election and without limiting
Landlord's right to compel removal
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<PAGE>
thereof, be deemed abandoned. Any damage to the Demised Premises caused by
Tenant in the removal of Tenant's Property shall be immediately repaired by
Tenant at Tenant's sole cost and expense, and this obligation shall survive the
expiration or sooner termination of this Lease.
b. Title to all alterations, additions,
improvements, repairs, fixtures, other than Tenant's Property, which shall have
been made, furnished or installed by or at the expense of either the Landlord or
Tenant in or upon the Demised Premises, shall vest in Landlord upon the
installation thereof, and the same shall remain upon and be surrendered with the
Demised Premises as part thereof without disturbance and without charge, unless
otherwise required by Landlord.
27. Notices.
a. All notices and demands which are required
to or are permitted by the terms of this Lease shall be given in writing,
whether herein specified or not, and shall be deemed effectively given upon
receipt or rejection if personally delivered, delivered by overnight courier
with return receipt, telecopied or sent by United States registered, express or
certified mail, postage prepaid, addressed to the parties at the following
addresses:
For Landlord:
PARAMUS PARKWAY BUILDING ASSOCIATES,LTD
c/o Berger & Bornstein, P.A.
237 South Street
Morristown, New Jersey 07962
For Tenant:
WIRELESS TELECOMMUNICATIONS GROUP INC.
having an address at
64 Midland Avenue
Paramus, New Jersey
Said addresses and the names of the parties to whom
notices are to be sent may be changed from time to time by either party, or by
an assignee or successor of either of them, by the giving of written notice to
the other sent as above provided.
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28. Brokers.
a. Tenant and Landlord represent and warrant
that neither they nor any of their employees or agents have acted so as to
entitle any brokers to a commission in connection with this transaction except
Masi Boyle.
b. In the event Tenant or Landlord shall have
breached their representations and warranties set forth in paragraph 28a above,
the breaching party covenants and agrees to indemnify and hold the other
harmless against any claim asserted by any broker, or by anyone else with whom
they dealt, for any compensation in bringing about this transaction and to
reimburse the non-breaching party for any costs or expenses including, without
limitation, reasonable attorneys' fees and disbursements, incurred by the
non-breaching party in defending against claims made against non-breaching party
for any such compensation.
29. Miscellaneous
a. Definitions.
(1) The term "Landlord" as used in this
Lease shall mean the owner or lessee (if the Landlord claims the right of
possession by reason of a lease or sublease from the owners) for the time being
of the Building, and if such property or the Lease be sold or transferred,
voluntarily or involuntarily, the seller, or assignor, shall be entirely
relieved of all covenants and obligations under this Lease arising after
transfer without further agreement between the parties hereto and their
successors;
(2) The words "rent" or "rental" may be
used interchangeable and are defined to include all monies specifically reserved
as fixed annual rent, additional rental, and all costs, expenses and damages
which the Landlord may suffer or incur by reason of any default of the Tenant or
failure on its part to comply with the covenants, terms or conditions of this
Lease, and all other sums of money which by virtue of this Lease shall at any
time or times become due and owing by Tenant to Landlord.
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b. Abandonment of Fixtures. If, after the
default in payment of rent or violation of any other provision of this Lease or
at any time during the term hereof or upon expiration of this Lease, Tenant
moves out or is dispossessed and fails to remove any trade fixtures or any other
property within thirty (30) days after said moving or dispossession then, in
that event, the said fixtures and property shall be deemed abandoned by the
Tenant and shall become the property of the Landlord.
c. Waiver. No agreement to accept a surrender
of the Demised Premises shall be valid unless in writing signed by Landlord. The
delivery of keys to any employee of Landlord or of Landlord's agents shall not
operate as a termination of the Lease or a surrender of the Demised Premises.
The failure of Landlord to seek redress for violation of, or to insist upon the
strict performance of, any covenant or condition of this Lease, or of any rule
or regulation, shall not be construed as a waiver or relinquishment for the
future of such covenant, condition, rule or regulation. The receipt by Landlord
of rent with knowledge of a breach of any covenant of this Lease shall not be
deemed a waiver of such breach. No payment by Tenant or receipt by Landlord of a
lesser amount than the rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement on any check nor any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept the balance of
such rent or pursue any other remedy in this Lease provided.
d. Entire Agreement. This Lease and the
Exhibits, if any, attached hereto and forming a part hereof, set forth all the
covenants, promises, agreements, conditions and understandings between Landlord
and Tenant concerning the Demised Premises. There are no oral agreements or
understandings between the parties hereto affecting this Lease, and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
agreements and understandings, if any, between the parties hereto with respect
to the subject matters hereof, and none thereof shall be used to
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interpret or construe this Lease. Except as herein otherwise expressly provided,
no subsequent alteration, amendment, change or addition to this Lease, shall be
binding upon Landlord or Tenant unless reduced to writing and signed by them.
e. Lease Effective. The submission of this
Lease by Landlord to Tenant for examination shall not be deemed to constitute an
offer by Landlord or a reservation to Tenant of an option to lease, and this
Lease shall become effective as a binding instrument only upon the execution and
delivery thereof by both Landlord and Tenant.
f. Partial Invalidity. If any term, covenant
or condition of this Lease or the application thereof shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term, covenant or condition to persons or circumstances, other than those for
which it is held invalid or unenforceable, shall not be affected thereby and
each remaining term, covenant or condition of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
g. Rights of Entry. Landlord or its duly
authorized agents or representatives shall have the right, upon reasonable
notice, except in the case of an emergency, to enter upon the Demised Premises
during all reasonable business hours for the purpose of examining the same,
showing same to banking and insurance representatives, governmental inspectors,
or, in the event of emergency, in order that repairs and alterations may be made
for the safety and preservation thereof, provided, however, that Landlord's
right to enter upon said Demised Premises shall be subject to the exercise of
ordinary care and caution in doing so. Landlord or Landlord's duly authorized
agents or representatives shall also have the right to show the Demised Premises
to persons wishing to purchase or lease the same during the nine (9) months next
prior to the expiration of the term of this Lease. Landlord or its duly
authorized agents or representatives shall have the right to place notices on
the front of the Building offering the Demised Premises for lease or for sale.
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h. Elimination of Liens by Tenant. Tenant shall
not suffer or permit or cause any liens or any action to be filed against the
Demised Premises by reason of any cause of Tenant or Tenant's agents or
employees. In the event that any such lien is filed, Tenant shall have the same
discharged within thirty (30) days after notice thereof or post appropriate
security satisfactory to Landlord to protect Landlord's interest as a result of
said lien. Nothing in this Lease contained shall be deemed to be a consent on
the part of Landlord to subject the Demised Premises to a lien or a claim under
a mechanic's lien law of New Jersey by reason of labor or material furnished to
Tenant in connection with the Demised Premises.
i. Interpretation. The captions and headings
throughout this Lease are for convenience and reference only and the words
contained therein shall in no way be held or deemed to define, limit, describe,
explain, modify, amplify or add to the interpretation, construction or the
meaning of any provisions of, or the scope or intent of, this Lease, nor in any
way affect this Lease.
All references to nouns and pronouns used herein
shall be construed in the singular or plural and in such gender and tense as the
sense of this Lease requires.
No provisions of this Lease shall be construed by
any court or other judicial authority against either Landlord or Tenant by
reason of any such party being deemed to have drafted or structured such
provision.
The words "hereby", "herein", "hereof", "hereto",
"hereunder", and similar words shall always be deemed to refer to this Lease in
its entirety, and not merely to the subparagraph or paragraph wherein such words
appears, unless expressly so modified.
j. Trial by Jury Waiver. The parties hereby waive
trial by jury in any action, proceeding or counterclaim brought by either party
against the other on any matter arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, or Tenant's use and occupancy of
the Demised Premises.
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k. Successors and Assigns. This Lease shall be
binding upon and shall inure to the benefit of the parties hereto, their
respective heirs, representatives, successors, and to the extent that this Lease
is assignable by the terms hereof, to the assigns of such parties. No rights,
however, will inure to the benefit of any assignee of Tenant unless the
assignment to such assignee has been made in accordance with the provisions of
this Lease.
l. Exculpation. Notwithstanding anything to the
contrary set forth in this Lease, it is specifically understood and agreed by
Tenant that there shall be absolutely no personal liability on the part of
Landlord or on the part of the partners or agents of Landlord with respect to
any of the terms, covenants and conditions of the Lease, and Tenant shall look
solely to the equity, rent and profits of the Landlord in and of the Building of
which the Demised Premises is a part for the satisfaction of each of the terms,
covenants and conditions of this Lease to be performed by Landlord, and
including any judgments or other liens obtained by Tenant against the Landlord.
This exculpation of personal liability is absolute and without any exception
whatsoever.
30. Right of First Refusal.
In the event that the adjacent to the Demised Premises now
occupied by Bergen County Special Services School District shall become
available ("Additional Space"), and Landlord shall desire to accept a bona fide
offer to lease the Additional Space, Landlord shall notify Tenant in writing of
Landlord's receipt of such offer and shall include within its notice the terms
of the offer to lease the Additional Space. Tenant shall have the option to
elect to lease the Additional Space pursuant to the same terms as the offer
received by Landlord ("Right of First Refusal"). Tenant must exercise its Right
of First Refusal within ten (10) days of receipt of Landlord's notice. If Tenant
shall fail to exercise its Right of First Refusal within said ten (10) day
period, or shall fail to execute a lease pursuant to the terms of
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said offer within twenty (20) days of exercising its Right to First Refusal,
Tenant shall be deemed to have waived its Right of First Refusal.
31. Option to Terminate.
a. In the event that as of the last day of the
fourth (4th) lease year of the Initial Term Tenant shall desire to expand the
Demised Premises and there shall not be sufficient available space in the
Building, then Tenant, in consideration for payment to the Landlord of the
"Option Termination Payment" (defined below), shall have the option to terminate
this Lease, which termination shall be effective upon the last day of the fifth
(5th) lease year of the Initial Term ("Termination Option"). The Termination
Option shall be expressly conditioned upon Tenant, up to the time of the last
day of the fifth (5th) lease year of the Initial Term, having fully and timely
complied with all of its monthly rental obligations under this Lease and Tenant
not having committed a breach or default of any of its other obligations under
this Lease, through and including the last day of the fifth (5th) lease year of
the Initial Term.
b. The Termination Option is exercisable by
Tenant, if at all, only in strict compliance of the aforesaid conditions and by
giving Landlord written notice of its election to terminate this Lease, together
with a payment in cash, certified check or attorney's trust account check, equal
to the Option Termination Payment not later than three hundred sixty five (365)
days prior to the last day of the fifth (5th) lease year of the Initial Term,
time being of the essence. Strict compliance with the conditions of the
Termination Option and the exercise thereof is deemed material to the parties.
Tenant's failure to timely exercise this Termination Option shall be deemed a
waiver by Tenant of this Termination Option.
c. In the event Tenant timely exercises this
Termination Options in accordance with Section (b) above, termination of this
Lease shall be deemed effective as of the last day of the fifth (5th) lease year
of the Initial Term. If Tenant
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shall fail to timely vacate the premises, Tenant shall be deemed to be "holding
over" without Landlord's consent and shall pay double the rent due for each day
beyond the last day of the fifth (5th) lease year of the Initial Term during
which Tenant shall occupy the Demised Premises. Tenant shall also be liable for
consequential damages if Tenant fails to timely vacate the Demised Premises.
d. The Option Termination Payment shall be $31,098.62.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals the day and year first above written.
LANDLORD:
PARAMUS PARKWAY BUILDING ASSOCIATES,LTD
BY: UNITED STATES LAND RESOURCES, L.P.
General Partner
BY: UNITED STATES REALTY RESOURCES, INC.,
General Partner
By: LAWRENCE S. BERGER
-----------------------------------
LAWRENCE S. BERGER, President
TENANT:
WIRELESS TELECOMMUNICATIONS GROUP INC.
BY: /s/ DALE SYDNOR
----------------------------------
President
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<PAGE>
EXHIBIT A
[FLOOR PLAN]
<PAGE>
<PAGE>
EXHIBIT B
LANDLORD'S WORK
DEMOLITION
1. Kitchen Area - move existing cabinets and sink to
rear wall adjoining other tenants.
2. Remove existing wall (approximately 24') as shown
on plans to be provided by Landlord.
3. Remove wall between entry and large room (on left
of entry).
4. Remove 4 walls and corner closet (approximately
170') as shown on plans to be provided by Landlord.
CONSTRUCTION
1. Office Area (9,100 square feet): New 20 oz.
commercial grade carpet (color selected by tenant).
Carpet allowance $8.50/sq. yard installed.
2. Remaining areas (15,900 square feet): new
commercial grade VCT tile (color selected by
tenant). Tile allowance $1.25/sq. ft.
3. Vinyl base to be used on all interior walls. Base
allowance $1.00/linear foot.
4. All new ceilings to be 10 ft. high with acoustic
lay-in tiles. Ceiling allowance is $1.10/sq. ft.
5. All existing drop ceilings to remain.
6. Existing sprinkler system to be lowered to new
ceiling height.
7. All new areas to be lit with flush mount 2 x 4
florescent ceiling fixtures 50 foot candles
minimum. Reception area to have upgraded lighting.
8. All lighting to be controlled by switch bank in each
common area, offices and dedicated areas to have 1
wall switch per unit. The minimum lighting shall be
50' candles in existing areas.
9. All areas to have HVAC using hot water baseboard or
forced air through flush mount ceiling diffusers.
Four zones. The AC shall maintain a 25 degree
fahrenheit delta minimum when the outside
temperature is 95 degrees fahrenheit. The heating
shall maintain a 55 degree fahrenheit delta minimum
when the outside temperature is 10 degrees
fahrenheit.
10. All utilities to be metered separately from other
tenants.
11. Provide 400 amp electrical service, with 126
breakers (3 panels), 20 A circuit.
12. Include 40 duplex outlets on ceiling drop cords. 3
drops per 20 amp circuit.
13. All offices to have 2 duplex outlets. Elsewhere to
Code.
14. All offices to have operational doors and door
hardware. No locks.
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15. 1 set of wood double doors at entrance to tiled
hazardous waste area.
16. All walls (except where mechanicals enter building)
to be sheet rock. The mechanicals shall be
visually shielded by sheet rock walls.
17. Exposed steel columns to be boxed in to 10'6.
18. Damages sheet rock walls to be repaired.
19. All walls to be spackled and painted with an off
white color.
20. Wrap half columns on wall adjoining adjacent
tenant.
21. Two of the three existing overhead doors to be
covered with insulation and sheetrock. The third
overhead door area will be enclosed by extending
existing walls up to the existing ceiling.
22. Provide new men's and women's bathrooms to Code
with four toilets in women's room and two toilets
and two urinals in men's room.
23. Construct demising walls for 500 square foot
kitchen.
24. Bathroom floors to be ceramic tile.
25. Tenant's space to meet all Codes and handicap
access requirements.
26. Relocate knee wall in front reception area.
27. Install sink in front closet.
28. Landlord to pay for any additional underground
waste piping necessary for bathrooms and kitchen
area.
29. Permits to be paid for by Landlord.
30. Signed architectural plans must be provided to the
Township and contractor at Landlord's expense.
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Exhibit 11.1
WIRELESS TELECOM GROUP, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the year ended December 31,
------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net income from operations $7,450,457 $5,050,708 $2,221,106
========== ========== ==========
PRIMARY
Weighted average shares 17,334,750 17,101,928 15,828,918
Assumed conversions:
Stock options and warrants 400,257 408,610 843,696
---------- ---------- ----------
Weighted common shares outstanding 17,735,007 17,510,538 16,672,614
========== ========== ==========
Earnings per share $.42 $.29 $.13
==== ==== ====
FULLY DILUTED
Weighted average shares 17,334,750 17,101,928 15,828,918
Assumed conversions:
Stock options and warrants 434,501 448,904 1,122,912
---------- ---------- ----------
Weighted common shares outstanding 17,769,251 17,550,832 16,951,830
========== ========== ==========
Earnings per share $.42 $.29 $.13
==== ==== ====
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-78308, Form S-8 No. 33-93008 and Form S-3 Post-Effective
Amendment to Registration Statement No. 33-42468 on Form S-18) of our report
dated January 30, 1997 with respect to the financial statements of Wireless
Telecom Group, Inc., included in the Annual Report (Form 10-K) for the fiscal
year ended December 31, 1996.
/S/ LAZAR, LEVINE & COMPANY LLP
New York, New York
February 11, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,039,128
<SECURITIES> 0
<RECEIVABLES> 4,326,822
<ALLOWANCES> 74,707
<INVENTORY> 4,998,575
<CURRENT-ASSETS> 17,562,778
<PP&E> 1,762,937
<DEPRECIATION> 740,251
<TOTAL-ASSETS> 19,044,242
<CURRENT-LIABILITIES> 1,379,641
<BONDS> 0
0
0
<COMMON> 175,029
<OTHER-SE> 17,424,497
<TOTAL-LIABILITY-AND-EQUITY> 19,044,242
<SALES> 22,463,029
<TOTAL-REVENUES> 22,463,029
<CGS> 5,838,230
<TOTAL-COSTS> 10,841,818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,621,211
<INCOME-TAX> 4,170,754
<INCOME-CONTINUING> 7,450,457
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,450,457
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
