-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UIp2r4gAg0xWW8ep6iUvNSzQwFfurU27ITvDKidT9GzTv/4zSd19/LImTgO0Jl86 taTNipQzqEMGHiGwxksZDA== 0001019056-98-000018.txt : 19980114 0001019056-98-000018.hdr.sgml : 19980114 ACCESSION NUMBER: 0001019056-98-000018 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOONTON ELECTRONICS CORP CENTRAL INDEX KEY: 0000013191 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 221543137 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: SEC FILE NUMBER: 000-02364 FILM NUMBER: 98506136 BUSINESS ADDRESS: STREET 1: 25 EASTMANS RD STREET 2: PO BOX 465 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0465 BUSINESS PHONE: 2013869696 MAIL ADDRESS: STREET 1: 25 EASTMANS RD STREET 2: P O BOX 465 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0465 10KSB/A 1 FORM 10KSB/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-KSB/A ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the fiscal year ended September 30, 1997 Commission File Number 2-17411 BOONTON ELECTRONICS CORPORATION A New Jersey corporation IRS Employer Identification No. 22-1543137 Mailing Address: 25 Eastmans Road, Parsippany, NJ 07054-0465 (973) 386 9696 Securities registered under Section 12(b) of the Exchange Act: None Securitiesregistered under Section 12(q) of the Exchange Act: Common Stock, par value $.10 per share Check whether the Company (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Company's knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The Company's net revenues for the year ended September 30, 1997 were $7,209,057. The aggregate market value of the voting stock held by nonaffiliates of the Company on December 2, 1997 was $838,157. The number of shares outstanding of the Company's Common Stock, par value $.10 on share on December 2, 1997 was 1,644,301. Portions of the 1997 Annual Report of Company are incorporated in Parts I,II and III of this From 10-KSB. This report consists of 60 consecutively numbered pages. The Exhibit Index appears on page 36. 1 INFORMATION REQUIRED IN REPORT PART I Item 1. Description of Business. ----------------------- (a) Business Development. --------------------- The Company is a New Jersey corporation organized in 1947. On September 7, 1993 the Company and its subsidiaries, Boonton International Sales Corporation and Integra, Inc., filed separate, voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey. On August 4, 1994 the Company filed a consensual Plan of Reorganization with the bankruptcy court and an Order Confirming Debtors' Plan of Reorganization was entered on November 15, 1994. The Company has accounted for all transactions related to the Chapter 11 proceedings in accordance with the Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code" issued by the American Institute of Certified Accountants in November 1990. Accordingly, all pre-petition liabilities that were impaired by the Plan of Reorganization are reported separately in the Company's consolidated balance sheet as "Chapter 11 Settlement", current and noncurrent. The success of the Companys' Plan of Reorganization was due primarily to the sale of its land and facility in Randolph, New Jersey and the termination of an overfunded employees' defined benefit pension plan. The Company has relocated its entire operation to the Township of Hanover, New Jersey. Further details regarding the lease are provided in Item 2.(a) below and "Note 8" to the accompanying consolidated financial statements. (b) Business of Company. -------------------- (1) The Company designs and produces electronic testing and measuring instruments including power meters, voltmeters and modulation meters. Recent models are microprocessor controlled and are often used in computerized automatic testing systems. The Company's equipment is marketed throughout the world to commercial and government customers in the electronics industry. (2) The Company markets and distributes its products throughout the United States and abroad through some 15 domestic sales representatives and 24 foreign distributors. Representatives sell on a commission basis, while distributors buy products for resale at discounted ex-factory prices. Its representatives and distributors also handle the products of other manufactures, although these are not generally competitive with the Company's products except that some items handled by foreign distributors may be somewhat competitive. (3) Not applicable. (4)The Company is in competition with many other manufacturers, several of which are substantially larger than the Company and have far larger professional staffs and far greater financial and technical resources. Of these, Hewlett-Packard is believe to account for approximately 60% of the domestic market and, together with other larger companies (including Tektronix, Fluke, Giga-tronics, 2 and Keithley Instruments in the United States, and Marconi Instruments, Mitsubishi and Anritsu abroad) accounts for approximately 90% of the worldwide market in electronic instrumentation. (5) The Company obtains raw materials from a variety of sources. Neither the sources nor the availability of essential raw materials are considered to play any significant part in the Company's business. (6) During this fiscal year approximately 21% of the Company's sales were made to the United States Government and agencies thereof. The Company believes that an additional substantial portion of purchases made by its non-Governmental customers are related to the filling of orders placed with such customers by the United States Government and agencies thereof. The Company is not able to determine the percentage of sales associated with purchases from non-Governmental customers that are related to the filling of orders placed by the United States Government and agencies thereof. (7) The trademark "Boonton" was registered in the United States Patent and Trademark Office on February 18, 1997 (Reg. No. 2,038,515). The Company does not have any other patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. (8) Not applicable. (9)Under established United States Government contract procedures, substantially all of the Company's Government contracts are subject to cancellation, in which case the Company would be entitled to recover its costs incurred to the date of cancellation plus a reasonable profit thereon. The cancellation costs and a reasonable profit are determined in accordance with standard Government accounting practices. (10) During the fiscal year ended September 30, 1997, the Company spent approximately $735,528 on company-sponsored research and development activities. The Company spent approximately $921,927 on such activities during the fiscal year ended September 30, 1996. The Company does not currently have any customer-sponsored research and development activities. (11) The New Jersey Department of Environmental Protection (the "NJDEP") has conducted an investigation concerning disposal, at a facility in New Jersey previously leased by the Company, of certain materials formerly used by the Company's manufacturing operations at that site and the possible effect of such disposal on the aquifer underlying the property. The disposal practices and the use of the materials in question were discontinued in 1978. The Company has cooperated with the NJDEP investigation and has been diligently pursuing the matter in an attempt to resolve it as rapidly as NJDEP operating procedures permits. The Company and the NJDEP have agreed upon a plan to correct ground water contamination at the site, located in the Township of Parsippany-Troy Hills, pursuant to which wells have been installed at an estimated cost to the Company of $300,000. The plan contemplates that the wells will be operated and that soil and water samples will be taken and analyzed until such time (which the Company is unable to predict) as contamination levels satisfactory to the NJDEP are attained. Operating expenditures incurred by the Company during the fiscal 3 year ended September 30, 1997 in connection with the site amounted to approximately $43,173. The Company estimates that operating expenditures in this regard during the current fiscal year, including the costs of operating the wells and taking and analyzing soil and water samples, will amount to approximately $52,000. (12) As of September 30, 1997 the Company had 48 full time employees. Item 2. Description of Property. ------------------------ (a) On September 28, 1994, the Company sold its facility in Randolph, New Jersey to NTV Realty, Inc. The proceeds of the sale of the land and building, $2,300,000, were immediately transferred to United Jersey Bank in accordance with the Company's Plan of Reorganization. The Company entered into a lease agreement, effective October 1, 1994, with 25 Eastmans Road Associates, Ltd. to lease approximately 30, 000 square feet of a facility located in Hanover Township, New Jersey. The term of the lease agreement is for seven years beginning on October 1, 1994 and ending on September 30, 2001. The lease also contains an option to extend the term of the lease by five years. (b) and (c) Not applicable. Item 3. Legal Proceedings. ------------------ (a) Reference is made to the discussion in Item 1.(a) above regarding the status of the Company's Chapter 11 Plan of Reorganization. The principal parties are the Company, its subsidiaries and its creditors. As noted, the Company's Plan of Reorganization was confirmed on November 15, 1994. Reference is made to the discussion in Item 1.(b)(11) above regarding an investigation by the NJDEP concerning certain discontinued disposal practices of the Company and their effect on the soil and ground water at a certain facility formerly occupied by the Company. No administrative or judicial proceedings have been commenced in connection with such investigation. The owner of the Parsippany-Troy Hills facility has notified the Company, that if the investigation proves to interfere with the sale of the property, it may seek to hold the Company liable for any resulting damages. Since may 1983, the owner has been on notice of this problem and has failed to institute any legal proceedings with respect thereto. While this does not bar the owner from instituting a suit, it is the opinion of the Company's legal counsel that it is doubtful that the owner would prevail on any claim due to the fact that such a claim would be barred by the statute of limitations. (b) Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. ---------------------------------------------------- Not applicable. 4 PART II Item 5. Market for the Company's Common Equity and Related Stockholder Matters. -------------------------------------------------------------- (a) Market Information. ------------------- (1) The Company's common stock is traded (symbol "BOON") on the OTC Bulletin Board. The following is the range of high and low bid information for the Company's common stock for each quarterly period within the two most recent fiscal years. These prices represent inter-dealer quotations, do not include markups, markdowns or commissions, and do not necessarily represent actual transactions. FOR THE QUARTER ENDED HIGH LOW --------------------- ---- --- 12/31/95 3 1 5/8 3/31/96 3 2 1/8 6/30/96 2 7/16 1 13/16 9/30/96 2 1 1/2 12/31/96 1 5/8 1 1/4 3/31/97 1 3/8 1 1/8 6/30/97 1 7/16 1 1/16 9/30/97 1 1/4 1 1/8 (2) Not applicable. (b) Holder. ------- There were 669 record holders of the Company's common stock as of December 9, 1997. (c) Dividends. ---------- (1) There were no cash dividends declared on the Company's common stock for the fiscal years ended September 30, 1997 and 1996. (2) Not applicable. Item 6. Management's Discussion and Analysis. ------------------------------------- (a) Results of Operations. ---------------------- (i) 1997 versus 1996 ---------------- Net sales of $7,209,057 for the fiscal year 1997 were $1,170,721 or 19.4% above the prior year. Domestic sales increased $1,400,296 which reflected a recovery from the overall industry decline experienced in fiscal 1996 an included with an increase of $607,603 in military contract revenues which resulted from the major Air Force contracts awarded in August 1996. International sales declined by $229,575 from the prior year as a result of economic difficulties in Europe. 5 The company had a gross income of $3,068,958 or 42.6% of sales. Commission expense decreased to 9.9% sales versus 10.6% of sales for the prior year due to the increased military contract revenues which carry a lower commission rate. There was a profit from operations of $71,845 versus a loss from operations of $448,315 for the prior year. During the year management continued to take steps to reduce operating costs. With the exception of commission expense all other categories of operating expense decreased in total by $156,276 when compared to fiscal 1996. Other expenses increased to $40,501 in fiscal 1997 versus $25,886 in fiscal 1996. The increase was primarily due to increased interest expense associated with the increased borrowings pursuant to the New Jersey Economic Development Authority (NJEDA) direct loan. The company borrowed an additional $394,071 under the NJEDA loan during the fiscal year, however, it should be noted that no further borrowings shall occur subsequent to July 31, 1997. There was a $51,660 gain realized from the sale of assets which resulted from the Company's sale of all of machine shop equipment. The machine shop department was eliminated during the fiscal year with all machined parts now being purchased from outside sources. The profit before taxes and special charges was $31,344 versus a prior year loss of $474,201. There were no taxes or special charges during the fiscal year resulting in a net income of $31,344 or $0.02 earnings per share versus a prior year net loss of $1,049,679 or $0.72 loss per share. Accounts receivable increased to $1,051,887 from the prior year end balance of $971,342, however, the average collection period declined to 51.2 days from the prior year's 59.9 days. Inventories increased to $1,306,115 from a $1,210,940 prior year balance. It should be noted that $51,820 of the increase in inventories was associated with the capitalization of demonstrator equipment. The average production inventory turnover increased to 3.4 times as compared to a prior year's 2.8 times. The current ratio was 2.2 to 1 versus a prior year's 2.3 to 1. The working capital at year end was $1,603,146 versus the prior year's $1,495,987. The Company's order backlog at September 30, 1997 was $1,176,115 as compared to its backlog at September 30, 1996 which was $1,362,193. It is important to note that after six years of losses the Company reported a profit before taxes and special charges of $31,344 for the fiscal year ended September 30, 1997. The Company attained its goal of $7.2 million in revenues for the fiscal year and management expects to match or exceed that level of revenues in fiscal year 1998. Also the Company, in August 1997, was notified of an military contract award for the Marines that upon completion should total approximately $1 million in revenues. 6 (ii) 1996 versus 1995 ---------------- Net sales of $6,038,336 for the fiscal year 1996 were $798,912 or 11.7% below the prior year. Domestic sales decreased $655,547 which, as noted in the Form 10-QSB filed for June 30, 1996, was attributable to an overall decline in the industry in the United States. It is significant to note that there was a $271,169 increase in military contract revenues during the year. In addition the Company received two significant contract awards from the United States Air Force in August 1996 which will total approximately $1.7 million in revenues upon completion. International sales declined by $143,365 below the prior year. This trend is not expected to continue in fiscal 1997 as greater emphasis will be placed on the Southeast Asia region which has shown recent indications of development. The Company had a gross profit of $2,629,756 or 43.6% of sales versus a prior year gross profit of $2,948,485 or 43.1% of sales. Commission expense increased to 10.6% of sales versus 8.5% of sales for the prior year primarily due to international sales, which carry a high commission rate and were 42.3% of revenues in fiscal 1996 versus 39.5% of sales in fiscal 1995. There was a loss from operations of $448,315 versus an income from operations of $163,032 for the prior year. The loss in 1996 was partially attributable to the reduced volume but was also impacted by certain costs that were non-recurring in nature. These costs, which represent 46.2% of the loss from operations, were "CE" mark audit fees of $108,525, funds provided for new technology research at the New Jersey Institute of Technology totaling $65,000, and severance expense for the former president of $33,920. Management of the Company has already instituted steps to reduce operating costs in fiscal 1997 which steps include reductions in wages and payroll taxes due to personnel reductions. Further cost reductions will be implemented as identified by management as fiscal 1997 progresses. Other expenses of $25,886 were below the prior years $245,527. This decrease was primarily because there were no moving expenses or Chapter 11 expenses in fiscal 1996. The loss before taxes and special charges was $474,201 versus a loss of $82,495 for the prior year. The special charges of $350,405 was primarily a result of costs, and accrued costs for work to be performed in 1997, associated with further environmental delineation work performed at a site formerly leased by the Company. This work is being performed in order to obtain a "Conditional No Further Action Letter" from the New Jersey Department of Environmental Protection (NJDEP) which would allow the Company to finalize the groundwater remediation program as discussed at Item 1.(b) (11) above. The loss per share before special charges was $.48 versus earnings per share of $.17 for the prior year. The net loss per share was $.72. 7 Accounts receivable decreased to $971,342 from a prior years $1,011,980 and the average collection period increased to 59.9 days from 53.8 days for the prior year. Inventory of $1,210,940 was comparable to the prior year. The average inventory turnover decreased, due to the reduced sales volume, to 2.8 versus a prior years 3.6. The current ratio was 2.3 to 1 versus a prior years 3.0 to 1. Working capital declined to $1,495,987 versus a prior years $1,827,718. The decline in working capital was due primarily to the accrued environmental costs for the work to be performed in fiscal 1997, reduction of deferred tax assets and increased accounts payable balances. The Company's backlog at September 30, 1997 was $1,362,193 which included $512,000 for the military contracts. The Company has prepared an operating plan for fiscal 1997 which anticipates a 19% increase in revenue and a net income of approximately $200,000. The 1997 first quarter revenues were approximately $1.8 million which supports, on an annualized basis, the expected increase in revenues. The military contracts awarded in fiscal 1996 contributed approximately $265,000 to the first quarter 1997 revenues. The Company's backlog as of December 31, 1996 was $1,296,718 which included an additional $546,000 for the military contracts. An additional $299,000 was released by the Air Force in November 1996 against these contracts. (b) Liquidity and Capital Resources. -------------------------------- The Company's working capital for the fiscal years ended September 30, 1997 and 1996 was $1,603,146 and $1,495,987, respectively. Under the conditions set forth in the Plan of Reorganization (see Item 1.(a) above), the Revolving Credit and Loan Agreement, dated August 15, 1990, as amended by Letter Agreement dated May 1, 1992, secured by assets and/or collateral as set forth in such agreement, between the Company and United Jersey Bank was satisfied by payments totaling $3,000,000. The $3,000,000 in payments consist of the following: $2,300,000 from the proceeds the Company realized from the sale of the facility and land in Randolph, New Jersey; $150,000 realized from the sale of excess inventory and assets; $150,000 consisting of three $50,000 payments in June, July and August of 1994; and a $400,00 note payable, at 8% interest, payable in $25,000 monthly installments of principal and interest commencing September 1994 and continuing until January 1996. As of January 1996, the commitment to United Jersey Bank was completed. The third payment to the unsecured creditors was made in October 1997. The Company expects to finance the $153,372 balance due unsecured creditors from operations in fiscal 1998. On February 6, 1995, The Board of Directors loaned $300,000 at 14% interest per annum to the Company. Initially these loans were to be repaid by April 1995 however due to the Company's need to maintain the use of the proceeds from these loans repayment was waived. Effective September 1, 1995, the interest rate for these loans was reduced to 9% per annum. Repayment of these loans is now covered by a Subordination Agreement by and between the Directors and the New Jersey Economic Development Authority (NJEDA) in accordance with the terms of a loan the Company has with NJEDA which is discussed below. 8 On July 31, 1996, the Company executed a Direct Loan Agreement by and between the Company and the NJEDA. The agreement provided for a direct loan of $500,000 at 6 3/4% per annum. The proceeds of the loan are to be used primarily for the acquisition of capital assets. As of September 30, 1997, the Company had used $484,090 of the loan amount and had repaid principal of $45,361. Total debt-to-capital at September 30, 1997 was 83.2% compared to 72.5% the prior year end. During 1998 the Company expects to finance capital spending and working capital requirements with cash provided from operations. Item 7. Financial Statements. --------------------- Reference is made to the financial statements and supplementary data appearing on the pages of this report set forth below. Page(s) ------- Independent Auditors' Report 17 Balance Sheet as of September 30, 1997 and 1996 18 Statements of Operations for the Years Ended September 30, 1997, 1996 and 1995 19 Statements of Changes in Stockholders Equity for the Years Ended September 30, 1997, 1996 and 1995 20 Statements for Cash Flows for the Years Ended September 30, 1997, 1996 and 1995 21 Notes to Financial Statements 23 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ----------------------------------------------------------------------- Not applicable. PART III Item 9. Directors and Executive Officers of the Company. ------------------------------------------------ Listed below are the names and ages of the directors of the Company, all positions and offices held by each such person and the period or periods during which he has served in such positions and offices. All are now directors and were elected to their present term of office at Annual Meetings of Shareholders as set forth in the table below. The By-Laws of the Company provide for a Board of Directors consisting of up to seven members. The candidacy of none of the directors is the subject of any arrangement or understanding between such director and any other person or persons, except the directors and officers of the Company acting solely in that capacity. 9 All of the directors listed below have been engaged for the past five years in the "Principal Occupation" listed below.
Position with Issuer Period As Name Age and Principal Occupation Director - ---- --- ------------------------ -------- Elected 1997 with terms expiring in 2000: - ---------------------------------------- John M. Young 79 Director, retired Vice 1947 - Present President and Operations Manager of the Corporation Abel Sheng 56 Director, President, Raamco 1996 - Present International, Inc. and 1991 - 1994 Sidco Investments, Inc., Investment companies Elected 1996 with terms expiring in 1999: - ----------------------------------------- Daniel Auzan 54 Director, Chairman of 1996 - Present The Board, President Directeur General, General de Mesure et de Maintenance Electronique, S.A. Otto H. York 87 Director, Vice Chairman 1969 - Present Of the Board, President, York Resources, Inc. Elected 1995 with terms expiring in 1998: - ----------------------------------------- Jack Frucht 83 Director; retired Chairman 1947 - Present of the Board and Chief Exe- cutive Officer of the Corporation Ronald T. DeBlis 73 Director; retired Dun & 1981 - Present Bradstreet Appointed 1997 with term expiring in 1998: - ------------------------------------------ Yves Guyomar 60 Director, President and 1997 - Present CEO of the Corporation
10 ================================================================================ Listed below are the names and ages of the executive officers of the Company and the period during which they have served as such. Each such officer generally serves for a term of one year at the pleasure of the Board of Directors. The selection of none of the officers is the subject of any arrangement or understanding between such officer and any other person or persons, except the directors and officers of the Company acting solely in that capacity. Position with Issuer Period As Name Age and Principal Occupation Officer - ---- --- ------------------------ ------- Yves Guyomar 60 President and Chief Executive 1997 - Present Officer John E. Titterton 48 Vice President Finance and 1986 - Present Secretary/Treasurer ================================================================================ Mr. Guyomar is employed as President and CEO of the Company for a period expiring April 15, 1999 pursuant to an agreement that provides for an annual salary of $140,000. This agreement provides that if Mr. Guyomar's employment is terminated by the Company during the term of the agreement other than for "cause" (as defined in the agreement) the Company will continue to pay his salary through the end of the term. Mr. Guyomar was a member of the Board of Directors and Sales and Marketing Director of General Electronique, Brive, France in 1996. Previously from 1982 to 1995 he was General Manager of the Technique and Industrial Center for TRT, a subsidiary of Phillips, in Brive. The Technique and Industrial Center had a staff of 1,000 employees which included 100 engineers and technicians in Research and Development. The center specialized in Radio Frequency equipment for military applications and in microwave link for public and private communication. Mr. Guyomar, from the University of Lille, Lille, France, holds a Diploma of Engineering in electronics and microwave. He was appointed President and CEO by the Board of Directors in April 1997. Mr. Titterton was employed as Vice President and Controller of Ruesch Machine Company, a wholly-owned subsidiary of Met-Coil Systems Corporation, prior to his entering the employ of the Company in October 1986. Prior thereto, he was employed as a Senior Accountant by Price Waterhouse. Mr. Titterton holds a Bachelor of Arts degree in Economics/Accounting from Rutgers University, Newark College of Arts and Sciences. Item 10. EXECUTIVE COMPENSATION. ---------------------- (a) EXECUTIVE COMPENSATION: ---------------------- The following table sets forth, for the fiscal years indicated, all compensation awarded to, earned by or paid to the Chief Executive Officer ("CEO") of the Company. There were no executive officers of the Company other than the CEO whose compensation exceeded $100,000 with respect to the fiscal years ended September 30, 1997, 1996, 1995. 11
Summary Compensation Table Long-Term Name and Annual Compensation Compensation All other Principal Position Year Salary Bonus Other Awards Compensation - ------------------ ---- ------ ----- ----- ------ ------------ Yves L. Guyomar 1997 $105,000 N/A N/A N/A N/A President & CEO Ronald T. DeBlis 1996 N/A N/A N/A N/A N/A President & CEO Otto H. York 1996 N/A N/A N/A N/A N/A President & CEO Holmes Bailey 1996 $ 72,962 N/A N/A N/A $32,308 President & CEO Holmes Bailey 1995 $140,000 N/A N/A N/A $13,124 President & CEO
Note: Pre-requisites and other personal benefits, securities or property to each officer did not exceed either $50,000 or 10% of such executives salary and bonus (b) Board of Directors Compensation: ------------------------------- Those Directors of the Company who are not salaried officers (Messrs. Auzan, DeBlis, Frucht, Sheng, York and Young) are paid Directors' fees at the rate of $10,000 per year, in quarterly installments, plus $500 per scheduled meeting of the Board or any committee. The Board has, by resolution, agreed to be paid fifty percent (50%) of their fees for fiscal year 1997 and 1996 respectively. (c) Aggregated Fiscal Year-End Option Values: ---------------------------------------- Not applicable. Item 11. Security Ownership of Certain Beneficial Owners and Management. -------------------------------------------------------------- The following tabulation lists, as to (I) each present Director of the Company, (ii) each other person known to the Company to be the beneficial owner of more than five percent of the voting common stock of the Company, and (iii) all Directors and officers as a group, the number and percentage of the Company's voting common stock owned by each beneficial owner, Director and group on the date indicated. Except as reflected in the tabulation, all shares of common stock are directly owned by the named individual and group members, and such individuals and group member possess sole voting and investment power with respect to such shares. 12 Number of Shares Beneficially Owned Percentage Beneficial Owner on December 9, 1997 of Ownership - -------------------------------------------------------------------------------- Daniel Auzan (Director) * c/o General Electronique SA ZI de Bracheux 16 rue Joseph Cugnot 60000 Beauvais France Ronald T. DeBlis (Director) 63,648 3.87% 37 Farmstead Road Short Hills, NJ 07087 Jack Frucht (Director) 36,782 2.24% 380 Mountain Road, Apt. #512 Union City, NJ 07087 Otto H. York (Director) 181,087 11.01% 130 Hempstead Court Madison, NJ 07940 John M. Young (Director) 130,606** 7.94% 9749 Maplecrest Circle, S.E. Lehigh Acres, FL 33936 G.E.M. USA, Inc. 268,016 16.30% Sidco Investment, Inc. 151,304 9.20% Holmes Bailey 212,500 12.92% 280 The Orchard at Heath Village Schooleys Mt. Road Hackettstown, NJ 07840-4031 All directors and officers 844,043*** 50.94% as a group (8 persons) - -------------------------------------------------------------------------------- * Mr. Auzan is the indirect beneficial owner of the shares owned by G.E.M. USA, Inc. ** Includes 6,000 shares owned by his wife, to which Mr. Young is claims beneficial ownership. *** Includes 12, 500 shares which may be acquired on exercise of outstanding options. - -------------------------------------------------------------------------------- Item 12. Certain Relationships and Related Transactions. ---------------------------------------------- None. 13 Item 13. Exhibits and Reports on Form 8-K. --------------------------------- Exhibits: (See Page 36 for Index to Exhibits filed in the Annual Report on Form 10-KSB for the year ended September 30, 1997.) Exhibit 3.1 Certificate of Amendment of the Certificate of Incorporation of the Company filed February 28, 1991. Filed as an Exhibit in the Annual Report on Form 10-K for the year ended September 30, 1991, and incorporated herein by reference. 3.2 Articles of Incorporation of the Company as amended to date. Filed as an Exhibit in the Annual Report on Form 10-K for the year ended September 30, 1991, and incorporated herein by reference. 3.3 By-Laws of the Company as amended to date. Filed as an Exhibit in the Annual Report 10-K for the year ended September 30, 1991, and incorporated herein by reference. 10.1 1987 Incentive Stock Option Plan, 1987 Employee Stock Purchase Plan and 1987 Stock Option Program for Non-Employee Directors and form of option grant(s) thereunder. Filed as an Exhibit in the Annual Report on Form 10-K for the year ended September 30, 1988, and incorporated herein by reference. 10.2 Report on Form 8-K dated December 23, 1994 for "Other Events", "order Confirming Debtors' Plan of Reorganization", effective November 15, 1994. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1994, and incorporated herein by reference. 10.3 Lease Agreement with Eastmans Road Associates, Ltd. Effective October 1, 1994. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1994, and incorporated herein by reference. 10.4 Employment Agreement with Holmes Bailey dated January 1, 1995. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1995, and incorporated herein by reference. 10.5 Report on Form 8-K dated September 27, 1995 for "Other Events", "Letter of Intent", effective September 25, 1995. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1995, and incorporated herein by reference. 10.6 Report on Form 8-K dated December 15, 1995 for "Other Events", "Letter of Intent", effective December 5, 1995. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1996, and incorporated herein by reference. 10.7 Report on Form 8-K dated February 26, 1996 for "Other Events", "Purchase of Treasury Stock", effective February 23, 1996. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1996, and incorporated herein by reference. 10.8 Report on Form 8-K dated March 18, 1996 for "Other Events", "Purchase of Treasury Stock", effective March 7, 1996. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1996, and incorporated herein by reference. 14 10.9 Report on Form 8-K dated January 7, 1997 for "Other Events", "Purchase of Stock", effective December 9, 1996. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1996, and incorporated herein by reference. 10.10 Report on Form 8-K dated June 18, 1997 for "Other Events", "Purchase of Stock", effective June 9, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. 10.11 Report of on Form 8-K dated July 7, 1997 for "Other Events", "Purchase of Stock" and "Appointment of President and CEO", effective June 30, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. 10.12 Employment Agreement with Yves Guyomar effective April 16 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. 10.13 Shared Manufacturing and Facilities Agreement between Boonton Electronics Corporation and G.E.M. Illinois, Inc. dated October 1, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. 27. Financial Data Schedule Exhibits (2),(4), (9), (13), (16),(18),(19),(21),(22),(23),(24) and (28), as defined in Regulation S-B, Item 601, are omitted because they are not applicable. Exhibit (11) is omitted because the computation can be readily determined from the financial statements in Item 7. Above. 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BOONTON ELECTRONICS CORPORATION ------------------------------- (Company) By /s/ YVES GUYOMAR ----------------------------- Yves Guyomar, President and Chief Executive Officer Date: January 9, 1998 Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- By /s/ RONALD T. DEBLIS Director January 9, 1998 ----------------------- Ronald T. DeBlis By /s/ YVES GUYOMAR Director, President and January 9, 1998 ----------------------- Chief Executive Officer Yves Guyomar (principal executive officer) By /s/ JACK FRUCHT Director January 9, 1998 ----------------------- Jack Frucht By /s/ OTTO H. YORK Director, Vice Chairman January 9, 1998 ----------------------- of the Board Otto H. York By /s/ JOHN E. TITTERTON Secretary and January 9, 1998 ----------------------- Treasurer (principal John E. Titterton financial and accounting officer)
16 INDEPENDENT AUDITORS REPORT To the Board of Directors and Shareholders Boonton Electronics Corporation and Subsidiaries We have audited the accompanying Balance Sheet of Boonton Electronics Corporation as of September 30, 1997 and the related Statements of Operations, Changes, in Stockholders' Equity and Cash Flows for the year then ended. We have also audited the Consolidated Balance Sheets of Boonton Electronics Corporation and Subsidiaries as of September 30, 1996 and 1995, and the related Consolidated Statements of Operations, Changes in Stockholders' Equity and Cash Flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Boonton Electronics Corporation as of September 30, 1997 and Boonton Electronics Corporation and Subsidiaries as of September 30, 1996 and 1995, and the results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles. By /s/ I. WEISMANN ASSOCIATES --------------------------------- CERTIFIED PUBLIC ACCOUNTANTS Morristown, New Jersey November 7, 1997 17
BOONTON ELECTRONICS CORPORATION BALANCE SHEETS September 30, -------------------------- 1997 1996 ----------- ----------- ASSETS: Current assets: Cash and cash equivalents $ 121,620 $ 113,041 Trade receivable (Note 1) 1,051,887 971,342 Inventories (Notes 1 & 3) 1,306,115 1,210,940 Deferred tax benefit (Note 10) 81,058 81,058 Prepaid expenses 333,325 230,340 ----------- ----------- Total current assets 2,894,005 2,606,721 ----------- ----------- Property and equipment - net (Notes 1 & 4) 534,023 163,858 ----------- ----------- Other assets: Deferred tax benefit (Note 10) 988,651 988,651 Deposits 71,169 67,768 ----------- ----------- Total other assets 1,059,820 1,056,419 ----------- ----------- Total assets $ 4,487,848 $ 3,826,998 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Note payable (Note 6) $ 63,379 $ 10,503 Related party loans (Note 6) 93,530 43,530 Accounts payable 800,931 469,882 Other current liabilities 284,528 538,328 Unsecured claims payable (Chapter 11 settlement) - Current (Notes 2) 48,491 48,491 ----------- ----------- Total current liabilities 1,290,859 1,110,734 Note payable - noncurrent (Note 6) 375,351 77,837 Related party loans (Note 6) 218,970 218,970 Unsecured claims payable (Chapter 11 settlement) noncurrent (Note 2) 153,372 201,505 ----------- ----------- Total liabilities 2,038,552 1,609,046 ----------- ----------- Commitments and Contingencies (Note 8) Stockholders' equity: Common stock (Note 9) 163,659 155,659 Capital in excess of par 4,613,637 4,421,637 Deficit (2,328,000) (2,359,344) ----------- ----------- Total stockholders' equity 2,449,296 2,217,952 ----------- ----------- Total liabilities and stockholders' equity $ 4,487,848 $ 3,826,998 =========== ===========
The accompanying notes are an integral part of these statements. 18
BOONTON CORPORATION STATEMENTS OF OPERATIONS YEARS ENDED SEPTEMBER 30, ------------------------- 1997 1996 1995 ----------- ----------- ----------- Net sales $ 7,209,057 $ 6,038,336 $ 6,837,248 Cost of sales 4,140,099 3,408,580 3,888,763 ----------- ----------- ----------- Gross profit 3,068,958 2,629,756 2,948,485 ----------- ----------- ----------- Operating expenses: Commissions 715,835 640,517 586,969 Research and development 735,528 921,827 783,132 Other operating expenses 1,545,750 1,515,727 1,415,352 ----------- ----------- ----------- Total operating expenses 2,997,113 3,078,071 2,785,453 ----------- ----------- ----------- Income/(loss) from operations 71,845 (448,315) 163,032 ----------- ----------- ----------- Other (income)/expense: Interest expense 47,823 27,709 44,181 Chapter 11 expense -- -- 34,037 Gain on sale of assets (51,660) (1,000) (21,771) Environmental expense 43,173 51,879 66,539 Moving expense -- -- 98,516 Interest income (4,257) (39,390) (3,859) Other (income)/expense: 5,422 (13,312) 27,884 ----------- ----------- ----------- Total other/(income) expense 40,501 25,886 245,527 ----------- ----------- ----------- Income/(loss) before taxes and special charges 31,344 (474,201) (82,495) Income taxes/(benefit) -- 225,073 (316,339) ----------- ----------- ----------- Income/ (loss) before special charges 31,344 (699,274) 233,844 Special charges (Note 12) -- (350,405) -- ----------- ----------- ----------- Net income/(loss) $ 31,344 $(1,049,679) $ 233,844 =========== =========== =========== Earnings/(Loss) per common share (Note 13): Earnings/(loss) from continuing operations $ .02 $ (.48) $ .17 Special charges -- (.24) -- ----------- ----------- ----------- Net earnings/(loss) $ .02 $ (.72) $ .17 =========== =========== ===========
The accompanying notes are an integral part of these statements. 19
BOONTON ELECTRONICS CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995 Common Stock ------------ Additional Retained Treasury Number of Paid-in Earnings/ Shares At of Shares Par Value Capital (Deficit) Cost Total ---------- --------- ----------- ------------ ------------ ----------- Balance 9/30/94 1,492,085 $ 149,209 $ 4,359,556 $(1,117,342) $(1,002,729) $ 2,388,694 Exercise of stock options 30,000 3,000 28,875 -- -- 31,875 Treasury stock reissued -- -- -- (57,314) 70,438 13,124 Net income - year ended 9/30/95 -- -- -- 233,844 -- 233,844 ----------- ----------- ----------- ----------- ----------- ----------- Balance 9/30/95 1,522,085 152,209 4,388,431 (940,812) (932,291) 2,667,537 Exercise of stock options 34,500 3,450 33,206 -- -- 36,656 Treasury stock reissued -- -- -- (368,853) 932,291 563,438 Net (loss) - year ended 9/30/96 -- -- -- (1,049,679) -- (1,049,679) ----------- ----------- ----------- ----------- ----------- ----------- Balance 9/30/96 1,556,585 155,659 4,421,637 (2,359,344) -- 2,217,952 Exercise of stock option 80,000 8,000 192,000 -- -- 200,000 Net income - year ended 9/30/97 -- -- -- 31,344 -- 31,344 ----------- ----------- ----------- ----------- ----------- ----------- Balance 9/30/97 1,636,585 $ 163,659 $ 4,613,637 $(2,328,000) $ -- $ 2,449,296 =========== =========== =========== =========== =========== =========== The accompanying notes are an integral part of these statements.
20
BOONTON ELECTRONICS CORPORATION STATEMENTS OF CASH FLOWS Years Ended September 30, ----------------------------------------- 1997 1996 1995 ----------- ----------- ----------- Cash flows from operating activities: Net income (loss) $ 31,344 $(1,049,679) $ 233,844 Adjustments to reconcile net income: Depreciation and amortization 60,398 27,335 26,294 Deferred taxes -- 223,873 (316,339) (Gain) on sale of equipment (51,660) (1,000) (21,771) Decrease (increase) in current assets: Accounts receivable (80,545) 40,638 (7,616) Inventories (95,175) (7,582) (251,438) Prepaid expenses (102,985) 33,230 281,904 Increase (decrease) in current liabilities: Accounts payable 331,049 181,754 159,953 Accrued expenses (253,800) 120,566 (58,320) Chapter 11 settlement-current -- (53,024) (10,854) ----------- ----------- ----------- Net cash provided (used) by operating activities (161,374) (483,889) 35,657 ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sale of assets 51,660 1,000 21,771 Purchase of equipment (430,563) (89,024) (71,647) Proceeds from cash surrender of life insurance policies -- -- 245,190 Other (3,401) -- (421) ----------- ----------- ----------- Net cash provided (used) by investing activities $ (382,304) $ (88,024) $ 194,893 ----------- ----------- -----------
The accompanying notes are an integral part of these statements. 21
BOONTON ELECTRONICS CORPORATION STATEMENTS OF CASH FLOWS Years ended September 30, ----------------------------------- 1997 1996 1995 --------- --------- --------- Cash flows from financing activities: Treasury stock reissued $ -- $ 932,291 $ 70,438 Excess cost of treasury stock reissued -- (368,853) (57,314) Increase in notes payable 394,071 90,019 -- Payments on loans (43,681) (99,444) (279,902) Related party borrowings 50,000 -- 300,000 Payments on related party loans -- -- (37,500) Chapter 11 settlement-noncurrent (48,133) (52,283) (13,771) Payment of borrowings on life insurance policies -- -- (229,921) Proceeds from stock options exercised 200,000 36,656 31,875 --------- --------- --------- Net cash provided (used) by financing activities 552,257 538,386 (216,095) --------- --------- --------- Increase (decrease) in cash and cash equivalents 8,579 (33,527) 14,455 Cash and cash equivalents at beginning 113,041 146,568 132,113 --------- --------- --------- Cash and cash equivalents at ending $ 121,620 $ 113,041 $ 146,568 ========= ========= ========= Supplemental disclosures of cash flow information: Income taxes paid $ 1,425 $ 1,025 $ 7,125 ========= ========= ========= Interest paid $ 33,575 $ 33,082 $ 38,808 ========= ========= =========
The accompanying notes are an integral part of these statements. 22 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS: A. The Company is a New Jersey corporation organized in 1947. The Company designs and produces electronic testing and measuring instruments including power meters, voltmeters and modulation meters. Recent models are microprocessor controlled and are often used in computerized automatic testing systems. The Company's equipment is marketed throughout the world to commercial and government customers in the electronics industry. The Company markets and distributes its products throughout the United States and abroad through some 15 domestic sales representatives and 24 foreign distributors. Representatives sell on a commission basis, while distributors buy products for resale at discounted ex-factory prices. Its representatives and distributors also handle the products of other manufacturers, although these are not generally competitive with the Company's products except that some items handled by foreign distributors may be somewhat competitive. B. Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. C. The company accounts for uncollectible accounts under the direct write-off method whereas generally accepted accounting principals require provision for such expenses under the allowance method. The effect of using this method approximates the allowance method as all amounts are deemed to be fully collectible. D. Inventories - stated at the lower of cost or market determined by the first-in, first-out (FIFO) method. E. Property, plan and equipment - Depreciation and amortization are calculated by the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: Building and improvement 39 Machinery and equipment 5-10 Office furniture and fixtures 5-10 Transportation equipment 3 23 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 The accelerated cost recovery system and modified accelerated cost recovery system is used for income tax purposes. Cost of major renewals and betterments that extend the life of the property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. F. Financial Risk - The Company regularly maintains bank account balances in excess of FDIC insurable limit. G. Income Taxes - The Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in a Company's financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and tax basis of assets and liabilities using expected tax rates in effect in the years in which the differences are expected to reverse. The Company recognized the benefit of net operating loss carryforwards applying the valuation allowance which requires that the tax benefit be limited based on the weight of available evidence and the probability that some portion of the deferred tax asset will not be realized. H. Financial Instruments - The Company's financial instruments include cash, cash equivalents, trade receivables and payables, long-term debt and loans from related parties for which carrying amounts approximate fair value. It is not practicable to estimate the fair value of related party loans and long-term debt. I. Stock-Based Compensation - The Company has elected to follow Account Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB25) and related interpretations in accounting for its employee stock options. Under APB25, because the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. Effective October 1, 1997, the Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (Statement 123). 24 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 2 - PROCEEDINGS UNDER CHAPTER: The Company operated under Chapter 11 proceedings for the period September 7, 1993 through November 15, 1994 when, on the later date, the order confirming the Plan of Reorganization was entered by the United States Bankruptcy Court, District of New Jersey subject to the court closing the case 180 days after said entry (Local Rule 25(a)) cause for extension of time in closing case (Local Rule 25(b)) and filing of application for allowance of fees and allowance within 90 days after entry of final order confirming plan (Local Rule 25(c)). In accordance with S.A.S. Sections 560.03, the Company has adjusted downward all liability accounts that were affected by the confirmed Plan of Reorganization entered on November 15, 1994. Therefore, the financial statements reflect the maximum liabilities to creditors under the Chapter 11 proceedings and the Plan of Reorganization. The settlement of unsecured claims under the confirmed Plan of Reorganization totaling 35% of allowed claims for accounts payable and accrued expenses provided for the following payments to be made subsequent to November 15, 1994: % -- 10 From after tax proceeds from termination of the company's pension plan 5 One year after initial payout 5 Two years after initial payout 15 Three years after initial payout Pre-petition liabilities in accordance with the November 15, 1994 confirmed plan of reorganization were compromised of the following: Accounts payable $ 702,233 Accrued expenses: Commissions payable 126,370 Vacation pay 96,250 Severance pay 25,108 Other 78,282 ----------- Total September 30, 1994 1,028,243 Court authorized payments/adjustments (75,073) ----------- Balance subject to settlement 953,170 Amount discharged and/or paid to date 751,307 ----------- Chapter 11 settlement total September 30, 1997 $ 201,863 =========== 25 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997
NOTE 3 - INVENTORIES September 30, ------------- 1997 1996 ---- ---- Raw material $ 639,045 $ 468,619 Work in process 577,337 688,273 Finished Goods 89,733 54,048 ------------- ------------- Total inventories $ 1,306,115 $ $1,210,940 ============= ============= NOTE 4 - PROPERTY, PLANT AND EQUIPMENT: September 30, ------------- 1997 1996 ---- ---- Building and improvements $ 62,329 $ 61,054 Machinery and equipment 1,657,819 1,512,488 Office furniture and fixtures 582,518 444,959 Transportation equipment 13,188 13,188 ------------- ------------- Total 2,315,854 2,031,689 Less Accumulated depreciation 1,781,831 1,867,831 ------------- ------------- Net depreciated cost $ 534,023 $ 163,858 ============= =============
NOTE 5 - RESULTS OF OPERATIONS: The Company reported a profit before taxes of $31,344 for the current fiscal year ended spetember 30, 1997. The loss for the fiscal year ended September 30, 1996 was primarily attributable to; a) the reduced sales volume; b) recurring costs for research and development in connection with the approval for a "CE" mark necessary for international sales and; c) severance pay for a former employee. 26 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 6 - NOTES PAYABLE September 30, ------------- 1997 1996 ----------- ----------- A. Board of Directors: Notes, subordinated to NJEDA loan, dated February 6, 1995, payable in monthly installments of $5,449 including interest at 9% per annum through September 30, 2001: $ 262,500 $ 262,500 Less current portion 43,530 43,530 ----------- ----------- Noncurrent portion $ 218,970 $ 218,970 =========== =========== Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted to $24,757 and $24,019, respectively. No principal payments were made due to these notes being subordinated to the NJEDA loan. September 30, ------------- 1997 1996 ----------- ----------- B. New Jersey Economic Development Authority: Notes, dated July 31, 1996, payable in monthly installments of $1,352 including interest at 6.75% per annum through June 30, 2003: $ 438,730 $ 88,340 Less current portion 63,379 10,503 ----------- ----------- Noncurrent portion $ 375,351 $ 77,837 =========== =========== Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted to $23,066 and $1,042, respectively. Future principal payments under the terms of the agreement are as follows: Fiscal Year Amount ----------- --------- 1998 $ 63,379 1999 67,855 2000 72,647 2001 77,778 2002 83,271 2003 73,800 -------- TOTAL: $438,730 ======== 27 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 7 - CONCENTRATION OF CREDIT RISK: The Company maintains cash and cash equivalents at three financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) and/or Securities Investor Protection Corporation (SIPC). The Company at times during the year had amounts in these institutions that exceeded insurable limits of $100,000 FDIC and $500,000 SIPC. In the normal course of business the Company extends unsecured credit to customers in the United States and Asia. NOTE 8 - COMMITMENTS AND CONTINGENCIES: Commitments: A. Retirement Plans: Effective July 1, 1989, the Company adopted a defined contribution plan for all eligible employees. In accordance with Internal Revenue Code Section 401(k), the plan provides for elective deferral of up to 15% of total compensation. The plan further provided for a Company matching contribution of 25% of the elective deferral amount of each participant that did not exceed 6% of total compensation. Effective January 1, 1994, the matching Company contribution was suspended due to the company's financial condition and pending reorganization. Effective October 1, 1995, the Company reinstated a matching contribution at 50% of the elective deferral amount for each participant that does not exceed 6% of total compensation. The amounts charged to operations were $37,581 and $46,151 for the years ended September 30, 1997 and 1996, respectively. B. Employee Stock Options Plans: On February 26, 1987, the Stockholders approved the 1987 Incentive Stock Option Plan, the 1987 Employee Stock Purchase Plan and the 1987 Stock Option Program for Non-Employee Directors. Subject to the provisions of these plans, an aggregate of 150,000 shares of the Company's stock was made available for option purchases; namely, 75,000 shares, 37, 500 shares and 37,500 shares, respectively. The plans ended effective December 1996 and no further grants may be made for options. 28 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 Option ------- Price per Share Number of Shares --------------- ---------------- Shares under option at September 30, 1994 $3.00 50,000 Granted $1.0625 130,000 Exercised $1.0625 (30,000) Expired $1.0625 (18,750) Expired/surrender $3.00 (50,000) --------- Shares under option at September 30, 1995 $1.0625 81,250 Exercised $1.0625 (34,500) Expired $1.0625 (250) --------- Shares under option at September 30, 1996 $1.0625 46,500 Expired $1.0625 (20,000) --------- Shares under option at September 30, 1997 $1.0625 26,500 ========= Lease Commitments Subsequent to the sale of the Company's facility in Randolph, New Jersey on September 28, 1994, the company entered into a seven year lease for its present office and manufacturing facility in Hanover Township, New Jersey with a five year renewal option. Rent charged to operations for the fiscal year ended September 30, 1997 was $227,400. Annual rent for the initial seven year term is $227,400 for the first four years and $300,00 for years five through seven. Future minimum lease payments required under the operating lease are as follows: Fiscal Year Amount ----------- ------ 1998 $227,400 1999 300,000 2000 300,000 2001 300,000 The Company leases office equipment under a five-year operating lease with an option to upgrade after three years that it intends to exercise. The annual lease payment for the term of the lease is $17,617. Future lease payments required under the operating lease are as follows: 29 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 Fiscal Year Amount ----------- ------ 1998 $17,617 1999 17,617 2000 17,617 2001 1,468 Contingencies: A. Environmental Contingencies: Following an investigation by the New Jersey Department of Environmental Protection (NJDEP) of the Company's waste disposal practices at a certain site that it formerly leased, the Company put a ground water management plan into effect as approved by the Department. Costs associated with this site are charged directly to income as incurred. The owner of this site has notified the Company that if the NJDEP investigation proves to have interfered with a sale of the property, the owner may seek to hold the Company liable for any loss it suffers as a result. However, corporate counsel has informed management that, in their opinion, the lessor would not prevail in any lawsuit filed due to the imposition by law of the statute of limitations. Costs charged to operations in connection with the water management plan amounted to $43,173 and $51,879 for the years ended September 30, 1997 and 1996, respectively. The Company estimates the expenditures in this regard for the fiscal year ending September 30, 1998 will amount to approximately $52,000. The Company will continue to be liable under the plan in all future years until such time as the NJDEP releases it from all obligations applicable thereto. B. Contingent Subscription and Option Agreement: On June 30, 1997, the Board of Directors of Boonton Electronics Corporation (BEC) agreed to enter into a Subscription and Option Agreement with G.E.M. USA, Inc. (GEM), a wholly-owned subsidiary of General de Mesure et de Maintenance Electronique, S.A. (GMME), whereby GEM shall have the option to buy 435,984 shares of the common stock of BEC at an option price of $3.24 per share. The term of the option agreement shall be for a period of two years. GEM paid BEC $25,000 for this option and simultaneously purchased 7,716 shares of BEC's common stock from the corporation for $25,000. 30 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 Further, on June 30, 1997, the Board of Directors of BEC resolved to enter into a Shared Facilities Agreement with B&K Precision, Inc. (B&K), a wholly-owned subsidiary of GEM, as additional consideration for the above noted option. B&K shall pay BEC a monthly management fee of $15,000 and shall also pay rent at the same price per square foot as BEC for the area sublet to B&K. The effective date of both of the above noted agreements was October 1, 1997, one day subsequent to the fiscal year end, September 30, 1997. The company also received the payment of $50,000 on October 1, 1997. C. Income Tax Contingencies: The Company's income tax returns filed for the fiscal years ended September 30, 1994, 1995 and 1996 are subject to review. NOTE 9 - COMMON AND TREASURY STOCK:
September 30, ------------------------- 1997 1996 -------- -------- Common Stock: $.10 par value, authorized 5,000,000 shares, issued and outstanding 1,636,585 shares and 1,556,585 shares, respectively. $163,659 $155,659 ======== ========
NOTE 10 - INCOME TAXES: The components of the deferred tax asset are: September 30, ------------------------------- 1997 1996 ----------- ----------- Deferred tax asset $ 2,867,591 $ 3,799,877 Less: Valuation allowance (1,797,882) (2,730,168) ----------- ----------- Net deferred tax asset $ 1,069,709 $ 1,069,709 =========== =========== Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes", requires that the Company record a valuation allowance when it is "more likely than not that some portion or all of the deferred tax assets will not be realized". It further states that "forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years". 31 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 The ultimate realization of this deferred income tax asset depends on the ability to generate sufficient taxable income in the future. The Company is undergoing substantial restructuring changes and has made strategic realignments of its operations in association with its Plan or Reorganization that management believes will result in future profitability. While it is management's belief that these measures will allow the total deferred income tax asset to be realized by future operating results, the losses in recent years and a desire to be conservative make it appropriate to record a valuation allowance. Accordingly, the Company has provided a valuation allowance (based on estimated future taxable income) for the portion of the total deferred income tax asset that will not be realized as related to the operating loss carryforward. Income tax laws allow for the utilization of loss carryforwards over periods not to exceed 15 and 7 years for Federal and State purposes, respectively. If the Company is not able to generate sufficient taxable income in the future through operating results, increases in the valuation allowance will be required through a charge to expense (reducing stockholder's equity). In the event the Company reports sufficient profitability to use all of the deferred income tax assets, the valuation allowance will be eliminated through a credit to expense (increasing stockholder's equity). The provision for income taxes consists of the following: September 30, ------------- 1997 1996 --------- --------- Current: Federal $ 443,904 $ -- State 129,125 1,200 --------- --------- 573,029 1,200 --------- --------- Deferred: Federal (443,904) 198,510 State (129,125) 25,363 --------- --------- (573,029) 223,873 --------- --------- Total $ -- $ 225,073 ========= ========= 32 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 The following is a reconciliation of income taxes of the federal statutory rate with income taxes recorded by the Company: September 30, ---------------------- 1997 1996 --------- --------- Computed income taxes at statutory rate $ 573,029 $(280,366) Recognition of net operating loss (573,029) (139,441) Increase(decrease) in tax asset valuation allowance (932,286) 651,765 IC-DISC dissolution 932,286 (6,885) --------- --------- Expense (Benefit) $ -- $ 225,073 ========= ========= The Company has net operating loss carryforwards for federal and state purposes approximating $6,266,666 and $8,188,055 that will not begin to expire until the year 2011and 2003 respectively. These loss carryforwards can be utilized to reduce future taxable income dollar for dollar. In May 1997, the Company dissolved Boonton International Sales Corporation (BIS) (former wholly-owned subsidiary) and received a Certificate of Dissolution from the state of New Jersey. BIS, as an Interest Charge Domestic International Sales Corporation (IC-DISC), had $1,456,000 of deferred income. The deferred income became taxable to the Company upon the dissolution of BIS and therefore reduced the deferred tax asset and related valuation allowance accordingly. NOTE 11 - SEGMENT INFORMATION: The Company is engaged in the manufacture and sale of electronic test and measurement equipment and management considers its business as a single segment for reporting purposes. A. The Company's export sales were as follows: Years Ended % of September 30, Amount Total Sales ------------- ------ ----------- 1997 $2,369,499 33% 1996 2,599,074 42% 1995 2,702,439 40% 33 BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 B. Customers sales to domestic government agencies were as follows: Years Ended % of September 30, Amount Total Sales ------------- ------ ----------- 1997 $1,514,792 21% 1996 907,189 15% 1995 636,020 9% NOTE 12 - SPECIAL CHARGES: In accordance with the GMME agreement, the Company was required to obtain an agreement, acceptable to GMME, with the New Jersey Department of Environmental Protection for finalizing the clean-up of a site it formerly leased. In order to fulfill this requirement, it was necessary for the Company to incur and accrue charges of $271,772, for the year ended September 30, 1996, from its environmental consultants and counsel that were deemed not to be in the ordinary course of business. Other components of the total special charge amount of $350,405 in 1996 were $45,000 for anticipated settlement for the Sharkey Landfill and $33,633 penalty from the NJDEP for a missed monitoring event at the site formerly leased. NOTE 13 - EARNINGS PER SHARE: Earnings/(loss) per share have been computed by dividing net earnings /(loss) by the weighted average number of common shares outstanding of 1,621,462 for 1997, 1,460,730 for 1996 and 1,341,785 for 1995. Options to purchase a total of 443,700 shares of common stock at $3.24 per share were not included because the exercise price exceeded the average market price which would result in antidilution. Incentive stock options to purchase 26,500 shares in 1997, 46,500 shares in 1996 and 81,250 shares in 1995 were not included because they were insignificant. 34
BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 14 - QUARTERLY FINANCIAL DATA: SEPTEMBER 30, 1997 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. - ------------------ -------- -------- -------- -------- Sales $1,811,075 $1,793,647 $1,798,348 $1,805,987 Gross Profit 823,780 788,830 744,175 712,173 Net income/(loss) 25,377 31,204 (15,182) (10,055) Earnings/(loss) per share .02 .02 (.01) (.01) SEPTEMBER 30, 1996 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. - ------------------ -------- -------- -------- -------- Sales $1,632,222 $1,559,269 $1,410,126 $1,436,719 Gross Profit 803,166 766,387 644,537 415,666 Net income/(loss) 52,710 (47,683) (294,884) (759,822) Earnings/(loss) per share .04 (.04) (.19) (.53)
35 BOONTON ELECTRONICS CORPORATION INDEX TO EXHIBITS FILED IN THE ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED SEPTEMBER 30, 1997 10.10 Report on Form 8-K dated June 18, 1997 for "Other Events", "Purchase of Stock", effective June 9, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. . . . . . . . . . . . . 37 10.11 Report of on Form 8-K dated July 7, 1997 for "Other Events", "Purchase of Stock" and "Appointment of President and CEO", effective June 30, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. . . . . . . . . . . . . . . . . . . . 38 10.12 Employment Agreement with Yves Guyomar effective April 16 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. . . . . . . . . . 40 10.13 Shared Manufacturing and Facilities Agreement between Boonton Electronics Corporation and G.E.M. Illinois, Inc. dated October 1, 1997. Filed as an Exhibit in the Annual Report on Form 10-KSB for the year ended September 30, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 27. Financial Data Schedule. . . . . . . . . . . . . . . . . . . .. 59 36 EX-10.10 2 EXHIBIT 10.10 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT UNDER SECTION 13 OR 15(d) OF The SECURITIES ACT OF 1934 Date of Report: June 9, 1997 BOONTON ELECTRONICS CORPORATION A New Jersey corporation IRS Employer Identification No. 22-1543137 25 Eastmans Road, Parsippany, NJ 07054-0465 (201) 386-9696 Item 5. OTHER EVENTS On June 9, 1997, O.E.M. USA, Inc. (GEM), a wholly-owned subsidiary of General de Mesure et de Maintenance Electronique S.A. (GMME), did not exercise its option to purchase an additional 443,700 shares of the common stock of Boonton Electronics Corporation (BEC), as provided for in the Subscription and Option Agreement dated October 21, 1996, by and between BEC and GMME. Although no extension has been provided to GEM and or GMME for the option to purchase additional shares of BEC common stock, discussions between the parties are expected to continue during BEC's Fourth Fiscal Quarter of 1997. EXHIBITS: None SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BOONTON ELECTRONICS CORPORATION By /s/ JOHN E. TITTERTON --------------------------------------- John E. Titterton, Vice President Finance Secretary/Treasurer Dated: June 18, 1997 37 EX-10.11 3 EXHIBIT 10.11 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 Date of Report: June 30, 1997 BOONTON ELECTRONICS CORPORATION A New Jersey Corporation IRS Employer Identification No. 22-1543137 25 Eastmans Road, Parsippany, NJ 07054-0465 (973) 386-9696 Item 5. OTHER EVENTS ------------ On June 30, 1997, the Board of Directors of Boonton Electronics Corporation (BEC) agreed to enter into a Subscription and Option Agreement with G.E.M. USA, Inc. (GEM), a wholly-owned subsidiary of General de Mesure et de Maintenance Electronique, S.A. (GMME), whereby GEM shall have the option to buy 435,984 shares of the common stock of BEC at an option price of $3.24 per share. The term of the option agreement shall be for a period of wo years. GEM shall pay BEC $25,000 for this option and shall simultaneously purchase 7,716 shares of BEC's common stock from the corporation for $25,000. Further, on June 30, 1997, the Board of Directors of BEC resolved to enter into a Shared Facilities Agreement with B&K Precision, Inc. (B&K), a wholly-owned subsidiary of GEM, as additional consideration for the above noted option. B&K shall pay BEC a monthly management fee of $15,000 and shall also pay rent at the same price per square foot as BEC for the area sublet to B&K. This agreement shall reduce BEC's overhead costs substantially and shall improve BEC's results of operations. In addition, at the Board of Directors meeting held on June 30, 1997, in accordance with the by-laws of the corporation, Yves Guyomar, President and CEO of BEC, was appointed to serve as a member of the Board of Directors until the next election of directors at BEC's 1998 Annual Meeting of Shareholders. Victor Tolan resigned his seat on the Board in order to accommodate Mr. Guyomar's appointment. 38 EXHIBITS: None -------- SIGNATURE --------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BOONTON ELECTRONICS CORPORATION By /s/ JOHN E. TITTERTON ------------------------------------------ John E. Titterton, Vice President Finance, Secretary/Treasurer Dated: July 7, 1997 39 EX-10.12 4 EXHIBIT 10.12 EMPLOYMENT AGREEMENT -------------------- AGREEMENT made as of this 16th day of April, 1997 by and between BOONTON ELECTRONICS CORPORATION, a New Jersey corporation, having an address at 25 Eastman's Road, Parsippany, New Jersey, (hereinafter referred to as "Company"), and YVES GUYOMAR, an individual having an address at c/o 25 Eastman's Road, Parsippany, New Jersey (hereinafter referred to as "Employee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Company desires to employ Employee and Employee desires to be employed by the Company in accordance with the terms and conditions provided herein. NOW, THEREFORE, in consideration of the mutual covenants herein after contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. Company agrees to employ Employee and Employee agrees to serve Employer upon the terms and conditions hereinafter set forth. 2. TERM. Employee's employment hereunder shall be effective and shall commence as of April 16, 1997 (the "Commencement Date") and shall terminate on April 15, 1999 (the "Term"). 3. COMPENSATION. (a) SALARY. Company shall pay Employee for all services rendered hereunder a salary at the rate of $140,000.00 per year payable in accordance with the Company's regular payroll practice (the "Salary"). (b) BENEFITS. During the Term of this Agreement and in addition to the Salary, Company shall provide to Employee the general benefits provided to all employees of the Company. (c) VACATION. Employee shall be entitled to four (4) weeks vacation with pay per year and holidays in accordance with Company's policies in effect from time to time. (d) TAXES. Employee understands that any and all payments provided in this Agreement shall be subject to such tax treatment as applies thereto, and to such withholding, if any, as may be required under applicable tax laws. (e) AUTOMOBILE. The Company hereby agrees to provide Employee with an automobile throughout the Term of this Agreement. All costs associated with the insurance and maintenance of the automobile shall be borne solely by the Company. 40 4. DUTIES AND POSITION. (a) Employee shall be employed as the President of the Company and shall assume and perform all of the duties and responsibilities customarily assigned to and performed by the President of a public company, together with such additional duties and responsibilities as may be specifically assigned to Employee by the Board of Directors of the Company. (b) Employee shall devote his full time and undivided attention to the affairs of the Company and will not at any time engage in any other business activities which would interfere with the full performance of his duties and responsibilities assigned hereunder. 5. TERMINATION. (a) TERMINATION BY EMPLOYER FOR CAUSE. Company shall have the right to terminate the employment of Employee under this Agreement without prior notice to Employee, if Employee shall commit any material act of malfeasance, disloyalty, dishonesty or breach of trust against Company or upon Employee's conviction of, or plea of NOLO CONTENDRE to a felony. In the event Employee's employment with Company shall terminate under the terms of this Section 5(a), Company shall pay Employee any Salary due and owing Employee up to and including the date of such termination and no further payments of any type shall be payable to Employee. (b) EMPLOYEEE'S DEATH OR DISABILITY. In the event of the permanent disability or death of Employee during the Term hereof, Employee's employment hereunder shall terminate and Company shall pay to Employee, or Employee's estate, any Salary due and owing Employee up to and including the date of such termination and no further payments of any type shall be payable to Employee. 6. TRADE SECRET/CONFIDENTIAL INFORMATION. (a) Employee recognizes and acknowledges that during the course of his employment with Company he will have access to certain information of the Company, which information shall be confidential in nature and/or constitute trade secrets of the Company, and is therefore valuable, special and unique property of the Company (hereafter "Confidential Information"). Such Confidential Information shall include, without limitation, knowledge of processes, plan, devices, customer lists, pricing, marketing plans and strategy, research projects, business opportunities and similar such information. (b) Except as may be required for use by Employee in the regular course of business of the Company, Employee will not at any time, during or after termination of his employment with the 41 Company, use such Confidential Information or disclose any such Confidential Information to any person or firm, corporation, association or other entity for any reason or purpose whatsoever. In the event of a breach or what appears to the Company to be a threatened reach by Employee of the provisions of this paragraph, Company shall be entitled to appropriate injunctive relief, restraining employee from using or disclosing, in whole or in part, such Confidential Information. Nothing contained herein shall be construed as prohibiting the Company from pursing any other remedies available to it in the event of such breach or perceived breach, including the recovery of damages from Employee. 7. SURVIVAL OF PROVISIONS. The provisions of Section 6 hereof shall survive the termination or expiration of this Agreement, irrespective of the reason therefor. 8. WAIVER. The failure of any party to insist upon strict adherence to any term of the Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver of any breach of any provision of this Agreement shall not constitute a waiver of any other breach of such provision or any provision hereof. 9. NOTICES. Any Notice or other communication under this Agreement shall be in writing and shall be deemed duly given if delivered personally or if mailed by Certified Mail (Return Receipt Requested), postage prepaid, to the other party at the address indicated below (or at such other address as shall be specified by Notice give pursuant hereto): (a) To the Company: Boonton Electronics Corporation 25 Eastman's Road P.O. Box 465 Parsippany, New Jersey 07054-0465 Attn: John Titterton, Vice President - Finance with a copy to: -------------- Smith, Luhn & Doran, P.C. Courthouse Plaza 60 Washington Street Morristown, NJ 07960 Attn: Gregory Luhn, Esq. 42 (b) To the Employee: Boonton Electronics Corporation 25 Eastman's Road P.O. Box 465 Parsippany, New Jersey 07054-0465 10. ASSIGNMENT. This Agreement and any rights of the parties hereunder may not be transferred or assigned by either party hereto. 11. SEVERABILITY. The invalidity or unenforceability of any term or provision of the Agreement shall not affect the validity or enforceability of the remaining terms or provisions hereof, which shall remain in full force and effect. 12. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between the parties as of the date hereof with respect to the Employee's employment by the Company and may not be amended or terminated orally. No modification hereof shall be valid unless in writing and signed on behalf of the Company by an officer duly authorized by the Board of Directors, and by the Employee. 13. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of New Jersey applicable to contracts made and to be performed therein. 14. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be considered an original by which taken together shall constitute the same instrument. 15. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, representatives, successors and assigns. 16. HEADINGS. Headings in this Agreement are included solely as a matter of convenience for reference and are not intended to be a part of this Agreement. [SIGNATURE PAGE FOLLOWS] 43 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. WITNESS: BOONTON ELECTRONICS CORPORATION /s/ JOHN E. TITTERTON By: /s/ RONALD T. De Blis - ------------------------------- ------------------------------- JOHN E. TITTERTON September 5, 1997 RONALD T. DE BLIS Director, Chairman of Compensation & Benefits Committee WITNESS: EMPLOYEE: /s/ JOHN E. TITTERTON /s/ Yves Guyomar - ------------------------------- ------------------------------- JOHN E. TITTERTON September 2, 1997 Yves Guyomar 44 EX-10.13 5 EXHIBIT 10.13 SHARED MANUFACTURING AND FACILITIES AGREEMENT DATED AS OF OCTOBER 1, 1997 BETWEEN BOONTON ELECTRONICS CORPORATION AND G.E.M. ILLINOIS, INC. 45 SHARED MANUFACTURING AND FACILITIES AGREEMENT This Shared Manufacturing and Facilities Agreement ("Agreement") dated as of October 1, 1997 is entered into between Boonton Electronics Corporation, a New Jersey corporation ("Boonton"), and G.E.M. Illinois, Inc., a Delaware corporation ("GEM"). W I T N E S S E T H - - - - - - - - - - WHEREAS, Boonton leases approximately thirty thousand (30,000) square feet of manufacturing, warehouse and office space, located at premises commonly known as 25 Eastmans Road, Parsippany, New Jersey, pursuant to a lease agreement dated September 24, 1994, by and between Boonton, as lessee, and Eastmans Road Associates, Ltd., a New Jersey limited partnership ("Landlord"), as lessor, (as complete copy of the Lease has been previously furnished to GEM. The real estate and improvements thereon rented pursuant to the Lease are referred to herein as the "Premises". WHEREAS, GEM desires to relocate its B&K Precision manufacturing operations (the "B&K Business") to the Premises; and WHEREAS, the parties desire to share the Premise and certain other items during the term of this Agreement and to share certain costs, in each case subject to the terms and conditions of this Agreement. A G R E E M E N T - - - - - - - - - NOW, THEREFORE, For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. TERM. The term of this Agreement (the "Term") shall begin on and include October 1, 1997 and shall end at 11:59 p.m. on September 30, 1999, unless earlier terminated pursuant to Section 11, and may be extended by GEM to the term of the Lease by GEM provided that GEM gives written notice to Boonton of its intent to extend the Term on or before March 31, 1999. Thereafter, if Boonton exercises its option to renew the lease GEM shall have the right to extend the Term provided that written notice is given to Boonton within sixty (60) days after Boonton exercises its option to renew the Lease. 2. RELOCATION OF B&K BUSINESS. GEM shall, solely at its expense (the "Relocation Expense"), relocate its manufacturing operations to the Premises. The Relocation Expense shall include all costs involved with the relocation of personnel, machinery, equipment and inventory as well as costs associated with the preparation of the 46 Subleased Premises (as hereinafter defined) for the B&K Business. Notwithstanding the above the parties agree that Boonton shall incur no expenses, other than those expenses presently incurred in the ordinary course of its business as currently operated, with respect to the relocation of GEM. Further, any damages that are incurred to the Premises as the result of the relocation of GEM shall be remedied at the sole cost and expense of GEM. 3. SEPARATE OPERATIONS. Except as otherwise provided in this Agreement: (a) GEM shall operate the B&K Business at its expense separately from the business of Boonton (the "Boonton Business"); and (b) Boonton shall operate the Boonton Business at its expensed separately from the B&K Business. 4. SHARED SHIPPING FACILITIES. (a) The loading dock and shipping and receiving area (collectively, the "Shipping Area") in the Premises are currently used in the Boonton Business. During the Term, GEM will, as part of the sublease described in Section 6, have the right to share equally with Boonton the use of the Shipping Area. (b) Individuals mutually satisfactory to the parties will make any needed decisions regarding the shares use of the Shared Shipping Area, including decisions regarding the shared use of the Shared maintenance. Currently, the persons designated to make such decisions are Victor Tolan and Yves Guyomar. In each case, both GEM and Boonton will instruct such person to make all such decisions fairly, reasonably, impartially, and with the goal of enabling both GEM and Boonton to efficiently maximize production Notwithstanding the foregoing, the parties hereto shall be entitled to binding arbitration pursuant to Section 15. 5. EMPLOYEES. (a) Each of Boonton and GEM shall employ its own separate personnel and employees and shall be responsible for its own payroll and benefits and in no event shall any GEM employee be deemed an employee of Boonton nor shall any Boonton employee be deemed an employee of GEM. (b) At all times during the Term, each party shall take commercially reasonable steps: (i) to prevent labor disharmony between such party and its employees (ii) to attempt promptly to restore labor harmony between such party and its employees if any such labor disharmony between such party and its employees if any such labor disharmony becomes actually known to such party and (iii) to cause personnel entering the other party's work area to comply with the rules and regulations in effect in that area. Nothing in this Section 5(b) shall restrict any party's right to terminate the employment of any employees or require any party to spend any money other than nominal amounts in order to restore labor harmony. 47 6. SUBLEASE. (a) Boonton hereby subleases to GEM and GEM hereby subleases from Boonton (the "Sublease"), subject to the terms and conditions of this Agreement and the Lease: (i) the area in the Premises that is designated as the "B & K Area" on EXHIBIT A comprised of approximately 11,500 square feet of manufacturing, warehouse and office space, which area is not a single contiguous area; and (ii) the area in the Premises that is designated as the "Shared Area" on EXHIBIT A comprised of lobby, entryway, exits, corridors, rest rooms, loading dock, lunch room, and other common areas and facilities on the Premises (provided that the Shared Area shall be deemed to include rights of ingress and egress to the Premises), which area is not a single contiguous area (the Shared Area and the B&K Area are sometimes referred to herein collectively as the "Subleased Premises"). (b) The term of the Sublease shall be the same as the Term of this Agreement. (c) GEM shall have the exclusive use of the B&K Area during the Term for the purpose of conducting its business, subject to the right of entry of the Landlord and any of the Landlord's mortgagees under Section 15b.(2) or Section 21e of the Lease and to an equivalent right of entry on Boonton's part. (d) GEM and Boonton shall each have the nonexclusive right (in common with the Landlord and Landlord's other tenants, to the extent that they have such right under the Lease) to use the Shared Area during the Term. (e) Boonton shall have the exclusive use of the area of the Premises designated as the "Boonton Area" on EXHIBIT A for the purpose of conducting its business (the Boonton Area and the Shared Area are sometimes referred to herein collectively as the "Boonton Premises"). The Boonton Area is not being subleased to GEM. (f) GEM shall use the Subleased Premises only for the purpose of conducting the B&K Business. GEM shall use the Subleased Premises in a manner that does not interfere with or hinder the operations of the Boonton Business in the Boonton Premises or otherwise create a nuisance. (g) GEM shall conduct its operations on the Subleased Premises in a manner that does not violate, or cause Boonton to violate, the Lease. (h) Boonton shall use the Boonton Premises only for the purpose of conducting the Boonton Business. Boonton shall use the Boonton Premises in a manner that does not interfere with or hinder the operations of the B&K Business in the B&K Area or otherwise create a nuisance. 48 (i) Boonton shall conduct Its operations on the Boonton Premises in a manner that does not violate, or cause GEM to violate, the Lease. (j) GEM will maintain the interior of the B&K Area in as good a condition and state of repair as it is in on the date hereof (fire or other casualty and ordinary wear and tear excepted). (k) GEM shall not make any alterations, installations or additions to the Subleased Premises without Boonton's prior written consent, such consent not to be unreasonably withheld. (l) Boonton represents as of the date hereof (i) that it is in compliance with all Laws with respect to the physical condition of the Premises and the use and occupancy and physical operations of the Premises. As used herein, "Laws" means any and all laws, statutes, regulations, orders, or decrees of, or agreements with, or permits from, any federal, foreign, state or local government or other governmental or quasi-governmental authority, including laws, statutes or regulations relating to equal employment opportunities, fair employment practices, occupational health and safety, wages and hours and discrimination. (m) GEM shall pay to Boonton for each month, (i) rent (the "Rent") in the amount of (x) $7,264.17 per month ($7.58 per square foot) with respect to the period from October 1, 1997 to September 30, 1998, both inclusive; and (y) $9,583.33 per month ($10.00 per square foot) with respect to the period from October 1, 1998 to the end of the Term, both inclusive, and (ii) a fee of $15,000 per month (the "Maintenance Fee") towards all costs incurred by Boonton in operating and maintaining the Premises, including, without limitation, use of the Shared Area, providing utilities, providing shipping and receiving and engineering support, human resource support and day-to-day management and supervision of the operations of the Premises. Payment for the months October 1997, November 1997 and December 1997 shall be made on November 1, 1997, December 1, 1997 and January 1, 1998 respectively. Payment for January, 1998 shall be on January 15, 1998. Payments for all months thereafter shall be on the first day of each month. Notwithstanding any provision to the contrary herein, Rent and Maintenance Fees shall not be payable with respect to any period after the date of termination of the Lease. (n) If a fire or other casualty to the Premises damages the B&K Area and the Boonton Area disproportionately, and results in an abatement of rent under the Lease, such abatement of rent shall be allocated equitably between the parties. (o) On or prior to the end of the Term, GEM shall, at its sole expense: (i) remove all of its inventory, equipment, machinery, furniture and other tangible personal property and fixtures (the "GEM Property") from the Premises and otherwise vacate 49 the Subleased Premises; (ii) repair any damage caused by such removal; and (iii) restore any condition created by the installation of the GEM Property at any time on the Premises to the condition existing prior to such installation. Any GEM Property not so removed on or prior to the end of the Term may be handled, removed or stored by Boonton at the expense of GEM, and Boonton shall in no event be responsible for the value, preservation or safekeeping thereof. GEM shall pay Boonton for all storage charges incurred by Boonton regarding the GEM Property while it is in Boonton's possession. All such property not removed from the Premises or retaken from storage by GEM within thirty (30) days after the Termination Date, shall, at Boonton's option, be conclusively deemed to have been conveyed by GEM to Boonton as by bill of sale without further payment or credit by Boonton to GEM. (p) On the date hereof, Boonton shall provide to GEM an estoppel and nondisturbance letter from the Landlord substantially in the form set forth as EXHIBIT B. 7. ADDITIONAL COSTS. In addition to Rent and Maintenance Fees which shall remain fixed throughout the Term, B&K shall bear its portion of any increase in expenses not provided for in the Rent and Maintenance Fees which are paid by Boonton during the Term and which result solely from the expansion of the B&K Business after October 1, 1997. 8. INSURANCE. (a) During the Term, Boonton shall maintain, at its sole expense, insurance coverage in at least the amounts and types listed on SCHEDULE 8(A). Each of such insurance policies shall: (i) name GEM as an additional insured; (ii) be written by an insurance company reasonably acceptable to GEM; (iii) provide that should such insurance coverage be cancelled before the expiration date thereof, the insurance company will endeavor to mail at least 30 days, prior written notice to GEM, but failure to mail such notice shall impose no obligation or liability on the insurance company (or a similar provision to this clause (iii)); and (iv) contain the insurer's standard waiver of subrogation endorsement. Boonton has furnished GEM policies or certificates of insurance evidencing such coverage (including the matters referred to in clause (iii) and (iv) of the preceding sentence), and will furnish to GEM the same with respect any renewal or substitute policy during the Term at least ten (10) business days prior to the termination, cancellation or reduction of the preceding policy. (b) During the Term, GEM shall maintain, at its sole expense, insurance coverage in at least the amounts and types listed on SCHEDULE 8(B). Each of such insurance policies shall: (i) name Boonton as an additional insured; (ii) be written by an insurance company reasonably acceptable to Boonton; (iii) provide that should such insurance coverage be cancelled before the expiration date 50 thereof, the insurance company will endeavor to mail at least 30 days, prior written notice to GEM, but failure to mail such notice shall impose no obligation or liability on the insurance company (or a similar provision to this clause (iii)); and (iv) contain the insurer's standard waiver of subrogation endorsement. GEM has furnished to Boonton policies or certificates of insurance evidencing such coverage (including the matters referred to in clause (iii) and (iv) of the preceding sentence), and will furnish to Boonton the same with respect to any renewal or substitute policy during the Term at least ten (10) business days prior to the termination, cancellation or reduction of the preceding policy. 9. WAIVER OF CLAIMS. (a) Notwithstanding anything to the contrary herein, except for claims arising from fraud, wilful misconduct or gross negligence that are not covered by insurance in Boonton's favor, and except for any claim that is the subject of indemnification pursuant to Section 10(b)(iv), Boonton waives all claims against GEM and its affiliates, officers, directors, employees and agents, for damages arising from the occurrence or existence of any of the events or conditions set forth in Section 9(c) during the Term. (b) Notwithstanding anything to the contrary herein, except for claims arising from fraud, wilful misconduct or gross negligence that are not covered by insurance in GEM's favor, and except for any claim that is the subject of indemnification pursuant to Section l0(a)(iv), GEM waives all claims against Boonton and its affiliates, officers, directors, employees and agents for damages arising from the occurrence or existence of any of the events or conditions set forth in Section 9(c) during the Term. (c) For purposes of this Section 9, damages include (i) casualty or accident in or upon the Premises; (ii) leaking of roofs, bursting, stoppage or leaking of water, gas, sewer or steam pipes or equipment, including sprinklers, (iii) wind, rain, ice, flooding, freezing, fire, explosion, earthquake, excessive heat or cold, fire or other casualty, (iv) any heating, cooling, ventilating, plumbing, electrical or other systems on the Premises, or any machinery, equipment or fixtures being defective, out of repair, or failing, and (iv) vandalism, theft, malicious mischief or other acts or omissions of any other Persons (as defined herein) including contractors or invitees at the Premises. 10.INDEMNIFICATION. (a) Boonton shall indemnify and hold harmless GEM and its directors, officers, employees and agents from and against any and all Damages: (i) resulting from any breach by Boonton of any of its obligations under this Agreement or the Lease (except for 51 breaches of the Lease caused by any action or omission of GEM); (ii) arising from the operation of the Boonton Business during the Term; (iii) arising from any failure during the Term by Boonton or any of its employees or agents to comply with any applicable Law; or (iv) arising under or imposed by any Environmental Law (as defined herein) or common law related to environmental matters or contamination, including Damages related to the release by Boonton or any entity for which it is legally responsible of a hazardous or toxic substance or waste, including petroleum and related products, at, on or from: (A) the Boonton Premises, (B) any property or facility to which wastes or byproducts generated by Boonton are sent for disposal or treatment, or (C) the Subleased Premises prior to the date hereof, which Damages, in each case under this subparagraph (a) (iv), arise out of the operations of Boonton. (b) GEM shall indemnify and hold harmless Boonton and its directors, officers, employees and agents from and against any and all Damages: (i) resulting from any breach by GEM of any of its obligations under this Agreement; (ii) arising from the operation of the B&K Business during the Term; (iii) arising from any failure during the Term by GEM or any of its employees or agents to comply with any applicable Law; or (iv) arising under or imposed by any Environmental Law or common law related to environmental matters or contamination, including Damages related to the release by GEM or any entity for which it is legally responsible of a hazardous or toxic substance or waste, including petroleum and related products, at, on or from: (A) the Subleased Area or (B) any property or facility to which wastes 52 or byproducts generated by GEM are sent for disposal or treatment, which Damages, in each case under this subparagraph (b) (iv), arise out of the operations of GEM. (C) For purposes of this Agreement: (i) "Damages" means liabilities, damages, costs and expenses (including reasonable attorneys' fees), except for any liabilities, damages, costs or expenses that are covered by insurance proceeds actually paid to the indemnitee (in the case of Section 11) or the Person waiving the claim (in the case of Section 10); provided that, for purposes of this definition, insurance proceeds do not include insurance deductible amounts; and (ii) "Environmental Laws" means all federal, state and local statutes, ordinances, rules, court orders, court decrees and arbitration determinations, in each case pertaining to environmental matters or contamination of any kind. 11.TERMINATION. (a) Each party hereto may terminate this Agreement upon written notice to the other party if the other party: (i) fails to timely pay any amount due hereunder, which failure continues for twenty (20) business days after written notice thereof; or (ii) fails to perform any other obligation hereunder, which failure continues for fifteen (15) days after written notice thereof, unless a shorter period is provided herein; (b) GEM may terminate this Agreement upon written notice to Boonton if Boonton is then entitled to terminate the Lease as a result of any fire or other casualty or other governmental taking. (c) GEM may terminate this Agreement if by 5:00 p.m. (E.D.T.) August 15, 1997, Boonton has not provided a written representation that it has obtained all consents necessary to sublease the Subleased Premises. (d) This Agreement shall automatically terminate if the Lease expires (without renewal or extension) or is terminated. (e) Certain obligations, including, but not limited to the following obligations (the "Surviving Obligations") shall survive the expiration or earlier termination (for any reason) of this Agreement (the date of such expiration or earlier termination being referred to herein as "Termination Date"): (i) indemnification obligations under Section 10; 53 (ii) obligations of each party under Section 13; and (iii) payment obligations with respect to arbitrator's fees pursuant to Section 15. Without limitation of the foregoing, the Surviving Obligations shall survive the giving of any notice in connection with (x) the termination of this Agreement or (y) the exercise by the non-breaching party of any rights or remedies (including any notice in any forcible entry and detainer action). No implication is intended that the above listed obligations comprise all of the Surviving obligations. The liability of a party for any breach(es) of this Agreement shall survive the expiration or termination of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, in the event that GEM terminates this Agreement prior to the end of the term for reasons other that those set forth in Section 11(a), (b), (c) or (d), then in that event the parties agree that GEM shall continue to pay on a monthly basis for the remainder of the Term any and all Rent allocable to the additional 3,200 square feet of space which Boonton was caused to lease from the Landlord to comply with the terms of this Agreement and the Maintenance Fee for a period of three (3) months from the date of sub termination. 12.NO PARTNERSHIP. The parties hereto are not partners. Neither the execution, delivery or performance of this Agreement, nor any of the terms, conditions or provisions hereof, shall create any partnership or joint venture between the parties. Without limitation of the foregoing, the cost-sharing and space-sharing aspects of this Agreement do not create any partnership relationship. The obligations of Boonton and GEM hereunder are several and all not intended to be and shall not be joint and several for any purpose or in any instance. Nothing contained herein shall be as to authorize other party to represent to the other or to contract on behalf of the other party. Each party shall be solely and entirely responsible for the management of its respective business and operations. At all times during the term of this Agreement, Boonton and GEM shall enjoy all rights which allow independent and viable management in the operation of their respective business. 13.RESTRICTIVE COVENANTS. (a) GEM covenants that during the Term and continuing for one (1) year from the Termination Date (regardless of the reason for expiration or termination of the Term), GEM shall not, directly or indirectly, without Boonton's prior written consent (which Boonton may refuse to give in Boonton's sole discretion), solicit the employment of, or employ, any person who is employed by Boonton as the date hereof or at any time during the Term. (b) Boonton covenants that during the Term and continuing for one (1) year from the Termination Date (regardless of why the Term was terminated or expired), Boonton shall not, directly or 54 indirectly, without GEM'S prior written consent (which GEM may refuse to give in GEM'S sole discretion), solicit the employment of, or employ, any person who is employed by GEM as of the date hereof or at any time during the Term. (c) The parties hereto recognize that the time and scope limitations set forth in this Section 13 are reasonable and are required for the protection of the parties hereto and in the event that any such limitation is deemed to be unreasonable by a court of competent jurisdiction, Boonton and GEM agree to the reduction of any or all of said limitations to such a period or scope as said court shall deem reasonable under the circumstances. 14.INJUNCTIVE RELIEF Boonton and GEM specifically recognize that any breach of Section 13 will cause irreparable injury to the non-breaching party and that actual damages may be difficult to ascertain, and in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement), Boonton and GEM agree that in the event of any such breach, the non-breaching party shall be entitled to injunctive relief (without the necessity of posting bond) in addition to such other legal and equitable remedies that may be available. 15.ARBITRATION. Any dispute in relation to this Agreement shall be exclusively settled as follows: The dispute shall be discussed by the parties thereto in an attempt to reach an amicable solution. If such attempts fail within thirty (30) days the matter shall be submitted to Daniel Auzan (as long as he is a director of Boonton). If the dispute is not settled within thirty days, either party may submit the issue to be settled by arbitration. Any arbitration of this Agreement shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, using three (3) arbitrators, with such arbitration to be held in Morristown, New Jersey. Boonton and GEM shall each select one arbitrator, and the two arbitrators so selected shall select the third arbitrator. The arbitrators' fees shall be shared equally by the parties. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 16.UNAVOIDABLE DELAYS If either party fails to timely perform any of the terms, covenants or conditions hereunder (other than the payment of money) and such failure is due in whole or in part to any strike, lockout, labor trouble, civil disorder, inability to procure materials or supplies, failure of power, restrictive governmental laws or regulations, civil disorder, insurrection, war, fuel shortages, accidents, casualties, acts of God, or any other cause beyond the reasonable control of the party, then the time for performance shall be extended by the period of delay resulting from such cause. 17.CONFIDENTIALITY. Boonton and GEM shall each respect and 55 maintain the confidentiality of all the information about the other's activities that comes to its knowledge in connection with this Agreement. Unless and only to the extent that such information has previously been in the possession of the recipient or is in the public domain, any information exchanged between Boonton and GEM and any data derived therefrom shall be Confidential Information and all intellectual property rights connected therewith and the right to use such Confidential Information shall remain vested in the disclosing party. Each recipient shall preserve and cause its officers, employees and agents to preserve the secrecy of Confidential Information and shall not disclose or use the same without the prior written consent of the disclosing party. Such consent is deemed to have been given in respect of affiliates of GEM who are involved in the business operation of provided that Boonton and GEM procure that such affiliates observe the same standard of care and non-use of the Confidential Information received as the parties observe pursuant to this clause. Such consent is also deemed to have been given in respect of third parties to the extent reasonably required to effect the purpose hereof. Each party shall ensure that information proprietary to third parties is not disclosed to the other party. 18.MISCELLANEOUS. (a) NOTICES. All notices required or permitted to be given hereunder shall be in writing and may be delivered by hand, by facsimile, by nationally recognized private courier, or by United States mail. Notices delivered by mail shall be deemed to have been given three (3) business days after being deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested. Notices delivered by hand, by facsimile, or by nationally recognized private courier shall be deemed to have been given on the date of receipt; provided, however, that a notice delivered by facsimile shall only be effective if such notice is also delivered by hand, or deposited in the United States mail, postage prepaid, registered or certified mail, on or before two (2) business days after its delivery by facsimile. All notices shall be addressed as follows: If to Boonton: Boonton Electronics Corporation 25 Eastmans Road Parsippany, New Jersey 07054 Attention: President Fax Number: (973) 386-9191 with a copy to: Smith, Luhn & Doran, P.C. Courthouse Plaza 60 Washington Street Morristown, NJ 07960 Attention: Gregory Luhn, Esq. 56 Telecopier: (973) 292-9168 If to GEM: Victor Tolan, President G.E.M. Illinois, Inc. 1031 Segovia Circle Placentia, CA 92870 with a copy to: Graham, Curtin & Sheridan A Professional Association 4 Headquarters Plaza Box 1991 Morristown, New Jersey 07962-1991 Attention: Joseph M. Lamastra Telecopier: (973) 898-0107 and/or to such other respective addresses and/or addressees as may be designated by notice given in accordance with the provisions of this Section 17(a). (b) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties. The parties make no representations or warranties to each other, except as expressly set forth in this Agreement. (c) NON-WAIVER. The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege in this Agreement conferred, or the waiver by said party of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, rights or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative the waiving party. (d) APPLICABLE LAW. This Agreement shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the State of New Jersey applicable to contracts made in that State. (e) BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and their successors and permitted assigns. Nothin9 in this Agreement, express or implied, is intended to confer on any Person other than the parties hereto, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, including, without limitation, third party 57 beneficiary rights. (f) ASSIGNABILITY. This Agreement shall not be assignable by either party without the prior written consent of the other party. (g) AMENDMENTS. This Agreement shall not be modified or amended except pursuant to an instrument in writing executed and delivered on behalf of each of the parties hereto. (h) CONSTRUCTION. The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement: (i) "including" means including without limitation; and (ii) the terms 11herein", '1hereunder" and "hereof" refer to this Agreement as a whole rather than just the sections or subsections where such terms appear. (i) REPRESENTATIVES.' If Yves Guyomar is unable to act for Boonton pursuant to this Agreement, Boonton shall appoint a substitute representative who is reasonably satisfactory to GEM. If Victor Tolan is unable to act for GEM pursuant to this Agreement, GEM shall appoint a substitute representative who is reasonably satisfactory to Boonton. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. BOONTON ELECTRONICS CORPORATION By: /s/ ------------------------------------------ Its: President G.E.M. ILLINOIS, INC. By: /s/ VICTOR TOLAN ------------------------------------------ Victor Tolan, President 58 EX-27 6 FDS FOR 10KSB
5 (Page 59) 0000013191 Boonton Electronics 1 YEAR SEP-30-1997 SEP-30-1997 121,620 0 1,051,887 0 1,306,115 2,894,005 2,315,854 1,781,831 4,487,848 1,290,859 0 0 0 163,659 2,285,637 4,487,848 7,209,057 7,209,057 4,140,099 2,997,113 (7,322) 0 47,823 31,344 0 31,344 0 0 0 31,344 .02 .02
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