-----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, I6c1OAFoBBAswWATkRIMpXDF0GATHFS0DTGZbfSJ7dKs+wOe3c37u0S7ODodfPff m6GOa47DlMK7lxJjyErxZA== 0000912057-96-009777.txt : 19960517 0000912057-96-009777.hdr.sgml : 19960517 ACCESSION NUMBER: 0000912057-96-009777 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EIP MICROWAVE INC CENTRAL INDEX KEY: 0000026782 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 952148645 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05351 FILM NUMBER: 96565597 BUSINESS ADDRESS: STREET 1: 3 CIVIC PLAZA STE 265 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7147201766 MAIL ADDRESS: STREET 1: 3 CIVIC PLAZA STE 265 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: JENOA INC DATE OF NAME CHANGE: 19800103 FORMER COMPANY: FORMER CONFORMED NAME: DANA ELECTRONICS INC DATE OF NAME CHANGE: 19780228 FORMER COMPANY: FORMER CONFORMED NAME: DANALAB INC DATE OF NAME CHANGE: 19750224 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------------------------- FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 [ ] Transition Report Under Section 13 or 15(d) of the Exchange Act For the transition period from to --------- --------- COMMISSION FILE NUMBER 0-5351 EIP MICROWAVE, INC. ---------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 95-2148645 - --------------------------------------------- --------------------------------- (State or other jurisdiction of incorporation (IRS Employer Identification No.) or organization) 3 Civic Plaza, Suite 265, Newport Beach, California 92660 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (714) 720-1766 --------------------------------------- (Issuer's telephone number) ---------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] OUTSTANDING COMMON STOCK: As of May 2, 1996, Registrant had only one class of common stock, and had 423,307 shares of this $.01 par value common stock outstanding. Transitional Small Business Disclosure Format (check one): YES [ ] NO [ X ] Total Number of Pages: 17 Exhibit Index 11 EIP MICROWAVE, INC. FORM 10-QSB QUARTER ENDED MARCH 31, 1996 Part I FINANCIAL INFORMATION - ----------------------------- Item 1. Condensed Consolidated Financial Statements (unaudited) Condensed Consolidated Balance Sheets as of March 31, 1996 and September 30, 1995 Page 3 Condensed Consolidated Statements of Operations and Retained Earnings for the three months and six months ended March 31, 1996 and 1995 Page 4 Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 1996 and 1995 Page 5 Notes to condensed consolidated financial statements Page 6 Item 2. Management's Discussion and Analysis of Results of Pages 7 - 8 Operations and Financial Condition Part II OTHER INFORMATION - -------------------------- Item 2. Changes in Securities Page 9 Item 6. Exhibits and Reports on Form 8-K Page 9 Signatures Page 10 Index to Exhibits Page 11 2 EIP MICROWAVE, INC. PART I - FINANCIAL INFORMATION ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data, unaudited) March 31, September 30, 1996 1995 --------- ------------- ASSETS Current assets: Cash and cash equivalents $ 42 $ 126 Short-term investments 332 319 ------------------ 374 445 Accounts receivable, net 881 1,064 Inventories 1,225 1,133 Prepaid expenses 46 74 ------------------ Total current assets 2,526 2,716 Property and equipment, net 499 271 Other assets 15 30 ------------------ $3,040 $3,017 ------------------ ------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 770 $ 610 Accrued liabilities 496 691 Credit line debt 180 - ------------------ Total current liabilities 1,446 1,301 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value; authorized - 10,000,000 shares; 423,307 issued and outstanding 5 5 Additional paid-in capital 844 844 Retained earnings 745 867 ------------------ Total stockholders' equity 1,594 1,716 ------------------ $3,040 $3,017 ------------------ ------------------ 3 EIP MICROWAVE, INC. PART I/ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Dollars in thousands except per share data, unaudited)
Three Months Six Months Ended March 31, Ended March 31, 1996 1995 1996 1995 ----------------- ----------------- Net sales $1,684 $1,750 $3,244 $3,201 --------------------------------------- Costs and expenses: Cost of sales 1,005 773 1,985 1,573 Research, development and engineering 265 196 466 372 Selling, general and administrative 520 661 1,052 1,170 Interest and other, net (119) (55) (137) (54) --------------------------------------- Total costs and expenses 1,671 1,575 3,366 3,061 --------------------------------------- Net income (loss) 13 175 (122) 140 Retained earnings at beginning of period 732 707 867 742 --------------------------------------- Retained earnings at end of period $ 745 $ 882 $ 745 $ 882 --------------------------------------- Net income (loss) per share $ .03 $ .41 $ (.29) $ .33 --------------------------------------- Weighted average common shares outstanding 423 423 423 423 --------------------------------------- ---------------------------------------
4 EIP MICROWAVE, INC. PART I/ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Increase (decrease) in cash (Dollars in thousands, unaudited) Six Months Ended March 31, March 31, 1996 1995 --------- --------- Cash flows from operating activities: Net income (loss) $(122) $ 140 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 88 93 (Gain) loss on sale of capital equipment (50) - Change in assets and liabilities: Accounts receivable, net 183 (222) Inventories (92) (89) Prepaid expenses and other assets 43 4 Accounts payable, net 160 (86) Accrued liabilities (195) (2) ------------------ Cash provided by (used in) operating activities 15 (162) ------------------ Cash flows from investing activities: Purchase of short-term investments (13) - Capital expenditures (327) (1) Proceeds from the sale of capital equipment 61 29 ------------------ Cash (used in) provided by investing activities (279) 28 ------------------ Cash flows from financing activities: Borrowings under line of credit 180 - ------------------ Decrease in cash and cash equivalents (84) (134) Cash and cash equivalents at beginning of period 126 211 ------------------ Cash and cash equivalents at end of period $ 42 $ 77 ------------------ ------------------ 5 EIP MICROWAVE, INC. PART I/ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (a) The condensed consolidated financial statements presented in this Form 10-QSB have been prepared from the accounting records without audit on a basis consistent with the financial statements included in the Company's annual report filed with the Securities and Exchange Commission for the preceding fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished reflects all adjustments and disclosures which are, in the opinion of management, of a normal, recurring nature, and necessary for a fair statement of the results for the interim periods. This report should be read in conjunction with the Company's 1995 Annual Report on Form 10-KSB. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. (b) Composition of certain balance sheet captions (dollars in thousands): March 31, September 30, 1996 1995 --------- ------------- Inventories: Raw materials $ 731 $ 633 Work-in-process 480 489 Finished goods 14 11 ------- ------- $ 1,225 $ 1,133 ------- ------- Property and equipment: Cost $ 5,127 $ 5,158 Accumulated depreciation (4,628) (4,887) ------- ------- $ 499 $ 271 ------- ------- ------- ------- 6 EIP MICROWAVE, INC. PART I/ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Net sales for the three months ended March 31, 1996, were $1,684,000, a 4% decrease from sales of $1,750,000 in the same period last year. Net sales for the six months ended March 31, 1996, were $3,244,000, a 1% increase from sales of $3,201,000 in the same period last year. The decrease in sales for the three month period ended March 31, 1996, was primarily attributable to a decline in sales of microwave counters to government contractors and commercial customers. The increase in sales for the six months period ended March 31, 1996, was primarily attributable to sales of product configured in the VXIbus format to government contractors. Gross margin decreased to 40% in the second fiscal quarter of 1996, from 56% in the second fiscal quarter of 1995. Gross margin was 39% for the six months ended March 31, 1996, as compared to 51% for the same period last year. The decrease for both periods was primarily attributable to a lower average selling price on product sales for one government program. The Company expects the effect of this government program to diminish over the next fiscal quarter. Incoming orders for the second fiscal quarter were $1,238,000, a 21% decrease from orders of $1,573,000 for the same period a year ago. Incoming orders for the six months ended March 31, 1996, were $2,554,000, a 21% decrease from orders of $3,234,000 for the same period a year ago. Backlog at March 31, 1996, was $481,000, a 42% decrease from a backlog of $836,000 at the end of the second fiscal quarter last year. The decrease in orders for both periods, and backlog, resulted primarily from a decrease in orders for product configured in the VXI format from government contractors, compared to the same periods a year ago. Research, development and engineering expenses increased 35% to $265,000 in the second fiscal quarter of 1996, compared to $196,000 for the same quarter last year. Research, development and engineering expenses increased 25% to $466,000 for the six months ended March 31, 1996, compared to $372,000 for the same period last year. The increase in research, development and engineering expenses for both periods was primarily attributable to new product development expenditures. Selling, general and administrative expenses decreased 21% to $520,000 during the second fiscal quarter of 1996, compared to $661,000 for the same quarter last year. Selling, general and administrative expenses decreased 10% to $1,052,000 for the six months ended March 31, 1996, compared to $1,170,000 for the same period last year. The decrease in selling, general and administrative expenses for both periods is due primarily to a deferral of advertising costs to subsequent quarters of fiscal 1996, and no accrued bonuses, compared to the same periods last year. 7 EIP MICROWAVE, INC. PART I/ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) The Company earned net income of $13,000 for the second fiscal quarter of 1996, as compared to net income of $175,000 during the same period last year. A credit of $111,000 due to the forgiveness by the Company's Board of Directors of accrued directors' fees as of February 13, 1996, is included in second quarter net income. A net loss of $122,000 was recorded for the six months ended March 31, 1996, as compared to net income of $140,000 for the same period last year. A gain on sale of capital equipment of $50,000 is also included in the six month net loss ended March 31, 1996. The decrease in earnings for both periods, compared to the same periods last year, is primarily due to decreased gross margin resulting from product sales to one government program, and increased research, development and engineering expenses. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company's cash, cash equivalents and short-term investment balance was $374,000, as compared with a cash, cash equivalents and short-term investment balance of $445,000 at September 30, 1995. At March 31, 1996, the Company had no material commitments for capital expenditures. At March 31, 1996, working capital decreased $185,000 from September 30, 1995, and the Company's current ratio decreased to 1.95:1 from 2.09:1 over the same time period. On November 27, 1995, the Company renewed its bank line of credit ("line") which provides for borrowings up to 70% of eligible accounts receivable, not to exceed $500,000, which expires November 15, 1996. Interest is charged at the bank's prime rate plus 2% provided that the interest rate in effect each month shall not be less than 7.5% per annum, and is payable monthly. This line is secured by the Company's accounts receivable, inventory and fixed assets. The agreement, as amended, contains various restrictive covenants requiring, among other matters, the maintenance of minimum levels of tangible net worth and certain financial ratios, including debt to net worth. At March 31, 1996, the Company was in compliance with the restrictive covenants of the line. However, the Company believes that it will not remain in compliance with such covenants during the remaining portion of fiscal 1996 unless it obtains a waiver from its lender. Borrowings of $180,000 were outstanding under the line at March 31, 1996. The Company believes that the cash on hand, funds generated from operations and borrowings under the Company's line of credit will adequately finance the Company's operations during the remaining portion of fiscal 1996. If the Company is unable to obtain a waiver of noncompliance of the restrictive covenants under its line, the Company believes that additional funds sufficient to adequately finance its operations during fiscal 1996 can be obtained from the liquidation of its short-term investments and further reductions in expenses. 8 EIP MICROWAVE, INC. PART II - OTHER INFORMATION - --------------------------- Item 2. Changes in Securities The existing credit facility between the Company and its commercial bank contains restrictions on dividend payments and financial ratios regarding, among other matters, the maintenance of minimal levels of profitability and tangible net worth, minimum quick ratio and limits of debt to net worth. The credit agreement is more fully described in Part I/Item 2 - Liquidity and Capital Resources. Item 4. Submission of Matters to a Vote of Security Holders (a) The Company held its Annual Meeting of Stockholders on February 7, 1996. Two items were voted on by the stockholders. (1) J. Sidney Webb was re-elected as a Class II member of the Board of Directors with term expiring at the 1999 Annual Meeting. The votes cast for or withheld for J. Sidney Webb were as follows: For - 366,788; Withheld - 12,064. Mr. James J. Shelton did not seek re-election as a Class II director, and the Board did not nominate another candidate at or prior to the Annual Meeting to fill the vacancy. John F. Bishop, and J. Bradford Bishop, each a Class I director, and Robert D. Johnson a Class III director, were not up for re-election and continue in office. (2) The stockholders approved the Company's Amended and Restated 1994 Stock Option Plan, as adopted by the Board of Directors. Vote to approve as follows: For - 354,004; Against - 24,287; Abstain - 561. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10(a) Indemnification Agreement dated February 13, 1996, between the Company and Michael E. Johnson. 27 Financial Data Schedule. (b) Reports on Form 8-K. The Company did not file with the Commission any reports on Form 8-K in the quarter ended March 31, 1996. 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EIP MICROWAVE, INC. ------------------- (Registrant) DATE: May 10, 1996 BY: /s/ J. Bradford Bishop --------------------------------- J. Bradford Bishop Chairman of the Board and Chief Executive Officer DATE: May 10, 1996 BY: /s/ John Ardizzone --------------------------------- John Ardizzone Vice President Operations and Chief Financial Officer 10 EIP MICROWAVE, INC. INDEX TO EXHIBITS Sequentially Exhibit No. Description Numbered Page - ----------- ----------- ------------- 10(a) Indemnification Agreement dated February 13, 1996, between the Company and Michael E. Johnson 12 27 Financial Data Schedule 17 11 EX-10.(A) 2 EXHIBIT 10(A) EXHIBIT 10(a) INDEMNIFICATION AGREEMENT This INDEMNIFICATION AGREEMENT is made this 13th day of February, 1996, by and between EIP MICROWAVE, INC. (the "Company") and Michael E. Johnson ("Indemnitee"). R E C I T A L S: A. The Company acknowledges Indemnitee's reluctance to serve the Company as a director or agent without assurances that adequate liability indemnification is and will continue to be provided; B. The Company desires to attract and retain the services of Indemnitee by entering into an agreement providing for broad indemnification of Indemnitee by the Company; C. The Company has been advised that it may provide such indemnification under and in accordance with Delaware law by entering into an agreement providing for broad indemnification of Indemnitee by the Company. D. The stockholders of the Company have approved an agreement providing for the indemnification of directors of the Company to the maximum extent authorized by Delaware law in accordance with Section 145(f) of the Delaware General Corporation Law; and E. The Company desires to enter into this Agreement with Indemnitee to provide Indemnitee with indemnification in accordance with the terms hereof. NOW, THEREFORE, the Company and Indemnitee hereby agree as follows: 1. Indemnification. 1.1 Subject to Section 1.3 hereof, the Company hereby agrees to hold harmless and indemnify Indemnitee of and from all claims and all threatened, pending or completed actions, suits or proceedings, whether civil, criminal, administrative or investigative, involving Indemnitee by reason of the fact that he is or was a director or agent of the Company (or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) including all expenses (including attorneys' fees) judgments, fines and amounts paid in settlement, to the broadest and maximum extent permitted by Delaware law. 1.2 Without limiting the generality of Section 1.1 hereof, the indemnification provided for by Section 1.1 shall: (i) extend to and fully cover any Loss (as hereinafter defined), whether such Claim is made against Indemnitee, individually or jointly with others, by reason of any Wrongful Act (as hereinafter defined) made in Indemnitee's capacity as a director and/or agent, 12 (ii) include all rights of indemnification provided to Indemnitee under the existing provisions of the Bylaws of the Company, and (iii) include all such additional rights of indemnification as might possibly be provided to Indemnitee under the non-exclusivity of Article 9, Section 3 of the Bylaws of the Company or Section 145(f) of the Delaware General Corporation Law and which shall not be violative of Section 145 of the Delaware General Corporation Law or contrary to the public policy of the State of Delaware. 1.3 Nothing in this Section 1 shall be deemed to provide any indemnity by the Company to Indemnitee on account of any matter: (i) in respect to remuneration paid to Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law, or (ii) for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law, or (iii) brought about or contributed to by the dishonesty of Indemnitee if a final judgment or other final adjudication adverse to Indemnitee establishes that acts of active and deliberate dishonesty were committed or attempted by Indemnitee with actual dishonest purpose and intent and were material to the adjudication, or (iv) which is based on or attributable to Indemnitee having gained any personal profit or disadvantage to which he was not entitled, in the event that a final judgment or other final adjudication adverse to Indemnitee establishes that Indemnitee in fact gained such personal profit or other advantage to which he was not entitled, or (v) in respect of which any final decision by a court having jurisdiction of the matter shall determine that indemnification is not lawful. 1.4 The Company shall pay the expenses incurred by Indemnitee in defending any civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, provided that the Company receives an undertaking by or on behalf of Indemnitee to repay such amounts advanced if it is ultimately determined that he is not entitled to be indemnified by the Company as authorized under this Agreement. The Company shall perform its obligation under this Section 1.4 until such time as it may be determined that Indemnitee is not entitled to indemnification by virtue of one or more of the exclusions set forth in Section 1.3 hereof. 1.5 The reference in Section 1.1. hereof to Delaware law is to Delaware law as the same exists from time to time but, in the case of any amendment to or change in Delaware law, only to the extent that such amendment or change permits the Company to provide broader 13 or greater rights of indemnification than is permitted to the Company prior to such amendment or change. 2. DEFINITIONS. 2.1 LOSS. The term "Loss" shall mean any amount Indemnitee is obligated or asserted to be obligated to pay in respect to his legal liability, whether actual or asserted, for a Wrongful Act, and shall include damages, judgments, settlements and costs, attorneys' fees, charges and expenses incurred in the defense of Claims. 2.2 WRONGFUL ACT. The term "Wrongful Act" shall mean any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by Indemnitee so alleged by any claimant or any other matter claimed against Indemnitee by reason of Indemnitee being a director, officer, employee or agent. 2.3 SUBSIDIARY. The term "Subsidiary" shall mean any corporation of which at least 50% of the stock is owned by the Company or by any Subsidiary. 2.4 CLAIM. The term "Claim" shall mean any suit, action, proceeding, investigation or claim threatened, whether civil, criminal, administrative or investigative, made or instituted against or with respect to Indemnitee and/or the property of Indemnitee either by or in the right of the Company or by or in the right of a party other than the Company. 3. SCOPE OF INDEMNIFICATION. This Agreement and the indemnification provided herein: 3.1 Shall apply to Indemnitee in his capacity or capacities as a director, officer, employee or agent, or the like, of (i) the Company, (ii) any Subsidiary or former Subsidiary, or any Subsidiary which is hereafter acquired or created by the Company, and (iii) corporations, partnerships, associations and entities other than the Company and its Subsidiaries where Indemnitee is directed or requested to serve by the Company; 3.2 Shall be irrevocable and perpetual, and, subject to Section 1.3 hereof, shall apply to any Claim arising or Loss incurred after the date hereof, whether made or incurred prior to or after the termination of Indemnitee's services to the Company in the capacities described in Section 3.1 above; and 3.3 Subject to Section 1.3 hereof, shall cover Losses arising from any Claims made against the estate, heirs, legal representative or assigns of Indemnitee. 3.4 The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against the Indemnitee for which payment is actually made to the Indemnitee under a valid and collectible insurance policy, except in respect of any excess beyond the amount of payment under such insurance. 14 4. AGREEMENT TO BE LIBERALLY CONSTRUED. The purpose of this Agreement is to induce Indemnitee either to serve the Company in one or more of the capacities described in Section 3.1 hereof, or to induce Indemnitee to continue to serve in one or more such capacities. The Company acknowledges that, but for this Agreement and the expectation by Indemnitee that the Company will perform each of its obligations hereunder, Indemnitee may not consent to serve or to continue to serve the Company in such capacities. Therefore, it is the intention of the Company and the Indemnitee that this Agreement be liberally construed so as to achieve its purpose of, subject to Section 1.3 hereof, protecting Indemnitee from and against Losses arising from Wrongful Acts. The Company agrees that it will not do or fail to do any act which would or might prevent or hinder the performance by the Company of its obligations under this Agreement. 5. AGREEMENT NOT EXCLUSIVE. The rights and benefits of Indemnitee, and the obligations of the Company, under this Agreement shall be in addition to, and shall not supersede or be in lieu of, the provisions (if any) relating to the indemnification of Indemnitee by the Company in the Certificate of Incorporation, Bylaws or resolutions of the Board of Directors of the Company; the provisions of policies of insurance of the Company; the provisions of policies of insurance or indemnification arrangements provided by persons or entities other than the Company; or applicable law. Notwithstanding anything to the contrary in this Agreement, the Company agrees to defend, indemnify and hold harmless Indemnitee to the full extent permitted from time to time by applicable law. 6. SEVERABILITY. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. In the event any provision of this Agreement is finally determined by the courts to require the Company to do or fail to do such an act, such provision shall be limited or modified in its application to the minimum extent necessary to avoid a violation of law, and as so limited or modified such provision and the balance of this Agreement shall be enforceable in accordance with their terms. 7. CHOICE OF LAW. This Agreement is made and entered into pursuant to Delaware General Corporation Law, and this Agreement shall be governed by, and its provisions construed in accordance with, the laws of the State of Delaware. 8. CHOICE OF FORUM. The Company agrees that any action by or on behalf of the Company under this Agreement or to enforce or interpret any provision of this Agreement shall be brought only in the state courts of the State of Delaware, and in no other court; and that if any action is instituted in any court by Indemnitee under this Agreement or to enforce or interpret any of its terms, the Company hereby agrees, and will at such time agree, to the exclusive jurisdiction and exclusive venue of such court, and to personal service upon the Company by such court, for the purpose of such action, and will not attempt to transfer or remove such action to another court. 9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee's estate, heirs, legal representatives and assigns. 15 10. ATTORNEYS' FEES. In the event that any action is instituted by Indemnitee under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action the court determines that each of the material assertions made by Indemnitee as a basis of such action was not made in good faith or were frivolous. In the event any action is instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross claims made in such action), unless as a part of such action the court determines that each of Indemnitee's material defenses to such action was made in bad faith or was frivolous. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. EIP MICROWAVE, INC. By: /s/ John F. Bishop --------------------------------- John F. Bishop President AGREED TO AND ACCEPTED BY INDEMNITEE: /s/ Michael E. Johnson - --------------------------------------- Michael E. Johnson 16 EX-27 3 EXHIBIT 27
5 1,000 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 42 332 955 74 1,225 2,526 5,127 4,628 3,040 1,446 0 0 0 5 1,589 3,040 3,244 3,244 1,985 1,985 1,381 0 0 (122) 0 0 0 0 0 (122) (.29) (.29)
-----END PRIVACY-ENHANCED MESSAGE-----