Document:

Exhibit 10.2

    
      
        

      

    

    ASSET
      SALE AND TRANSITION AGREEMENT

    

    THIS
      ASSET SALE AND TRANSITION AGREEMENT (“Agreement”),
      dated
      as of October 21, 2005 (the “Effective
      Date”),
      is
      entered into between M-WAVE,
      INC.,
      a
      Delaware corporation (“M-Wave”),
      and
AMERICAN
      STANDARD CIRCUITS, INC.,
      an
      Illinois Corporation (“American
      Standard”).

    

    RECITALS:

    

    M-Wave
      and American Standard are parties to that certain Amended and Restated Agreement
      for Strategic Operating Alliance, dated December 31, 2004 (“SOA
      Agreement”),
      pursuant to which, among other things, M-Wave obtained orders for high
      performance circuit boards for Radio Frequency (“RF”)
      and
      Digital applications, and American Standard fulfilled such orders;

    

    M-Wave
      desires to sell, and American Standard desires to purchase, all rights related
      to that certain list of customers for the RF business (the “Customer
      List”),
      attached hereto as Exhibit
      A,
      in
      exchange for the consideration and covenants set forth herein.

    

    In
      connection with the transactions contemplated hereby, American Standard desires
      to appoint M-Wave as its exclusive representative through December 31, 2006
      with
      regard to those customers on the Customer List.

    

    In
      connection with the transactions contemplated hereby, the parties wish to
      terminate and extinguish certain agreements and reaffirm certain
      obligations.

    

    M-Wave
      is
      the tenant under, and AMI Partners, LLC is the landlord under, that certain
      Industrial Loft Lease (the “Lease”),
      dated
      January 28, 2004, as amended, in respect of the second floor of an industrial
      building located at 475 Industrial Way, West Chicago, Illinois 60185 (the
“Leased
      Facility”).

    

    NOW,
      THEREFORE, in consideration of the foregoing recitals and the mutual promises
      and covenants herein set forth, the parties hereto agree as
      follows:

    

    1.  Sale
      of
      Assets.
      M-Wave
      hereby sells, conveys and transfers, and American Standard hereby purchases,
      the
      Customer List for RF products, the Customers on it and all of M-Wave’s right,
      title and interest in the name “Poly Circuits” (but only to the extent any
      rights therein exist) in exchange for the consideration and covenants set forth
      herein; provided, however, M-Wave provides no representations or warranties
      with
      respect to the name “Poly Circuits,” including, without limitation, with regard
      to its availability, suitability, general commercial use or value. In the event
      that M-Wave or its present or past affiliates has registered the name “Poly
      Circuits” with the United States or any state agency as a trademark, it agrees
      to execute any and all documents necessary to transfer the registration to
      American Standard.

    

    2.  Consideration.
      In
      consideration of the agreements and covenants set forth herein, the parties
      hereto agree as follows:

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (a)  Except
      as
      otherwise provided herein, the SOA Agreement shall be terminated in its entirety
      and extinguished as of the Effective Date, and after the Effective Date the
      parties thereto shall have no further liability or obligation under the SOA
      Agreement to any other party thereto;

    

    (b)  On
      the
      Effective Date, American Standard shall issue the promissory note, attached
      hereto as Exhibit
      B,
      in the
      principal amount of $205,000 (the “Note”), to M-Wave. After termination of the
      Representation Term (as defined below), and once all commissions due under
      this
      Agreement have been paid, and as long as no Event of Default (as defined in
      the
      Note) or Breach (as defined below) of this Agreement has occurred, which Breach
      has not been cured within 30 days following written notice from M-Wave to
      American Standard to do so, M-Wave shall forgive the unpaid balance due under
      the Note, including all interest accrued thereon, and the Note shall be
      cancelled. American Standard’s Breach for purposes of this paragraph shall not
      constitute an Event of Default if M-Wave is in material Breach under this
      Agreement. 

    

    (c)  If
      M-Wave
      is in Breach of this Agreement, which Breach has not been cured within 30 days,
      and as long as an Event of Default has not occurred, and American Standard
      is
      not itself in Breach of this Agreement, M-Wave shall forgive the unpaid balance
      due under the Note, including all interest accrued thereon, and the Note shall
      be cancelled. “Breach”
shall
      mean (i) with respect to M-Wave, any material breach by M-Wave of its
      obligations set forth in Section 5 hereof, and (ii) with respect to American
      Standard, the failure of American Standard to make any payment with regard
      to
      any commissions due and owing to M-Wave as provided in this
      Agreement.

    

    (d)  After
      the
      Effective Date, American Standard shall purchase from M-Wave, at cost, any
      inventory outstanding on the Effective Date, as more particularly described
      on
Exhibit
      C
      attached hereto, that is to be sold, directly or indirectly, to those customers
      set forth on the Customer List. The purchase price for each item of inventory
      purchased pursuant to the Section 2(d) shall be paid within thirty (30) business
      days following the date such item is delivered by American Standard to its
      customer. American Standard shall use such outstanding inventory to satisfy
      orders from customers set forth on the Customer List whenever possible. Prior
      to
      any payment to M-Wave for such inventory, M-Wave agrees to have any lien on
      such
      inventory released by any party having a lien on it.

    

    (e)  American
      Standard shall cause the Lease to be terminated and extinguished as of October
      31, 2005, and after October 31, 2005 the parties thereto shall have no further
      liability or obligation under the Lease to any other party thereto; provided,
      however, M-Wave shall leave at the Leased Premises, furniture and fixtures
      currently located at the Leased Premises. M-Wave will be required to vacate
      the
      premises no later than December 31, 2005. M-Wave will pay to American Standard
      the amount of $7857.50 per month or a prorated amount of $258.33 for every
      day
      of occupancy after October 31, 2005.

    

    3.  Appointment
      of Representative.
      As of
      the Effective Date, and through December 31, 2006 (the “Representation
      Term”),
      American Standard hereby appoints M-Wave as its exclusive sales representative
      with regard to those customers set forth on the Customer List, and M-Wave
      accepts the appointment and agrees to sell and promote American Standard’s
      products to such customers on the terms and conditions set forth herein.

    
      
         

        
        

      

      
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    4.  Terms
      of Representation.
      M-Wave’s representation of American Standard, in accordance with Section 3
      above, shall be subject to the following terms and conditions:

    

    (a)  M-Wave
      shall receive a commission on each sale of products by American Standard, with
      regard to the Customers on the Customer List, whether sold through M-Wave or
      directly by American Standard or any of its affiliates (including affiliated
      persons), equal to the product of the percentage rate, set forth opposite the
      applicable Customer’s name on Exhibit
      A,
      multiplied by the “net invoice price.” “Net
      invoice price”
shall
      mean the total price at which an order is invoiced to the customer including
      any
      increase or decrease in the total amount of the order (even though such increase
      or decrease takes place after the end of the Representation Term), but excluding
      shipping and mailing costs, taxes, insurance, COD charges, NRE, Tooling Charges,
      Testing, returned products for any reason and any commercially reasonable
      allowances or discounts granted to such customer by American Standard,
      consistent with historical practice. 

    

    (b)  Commissions
      are due and payable the first week of the month following thirty (30) days
      after
      shipment of the respective products. On a monthly basis, American Standard
      will
      send M-Wave a detailed commission statement showing the computation of all
      commissions earned. If the customer fails to pay American Standard within 90
      days following the invoice date (a “Delinquent Account”), then the current
      commission payment due to M-Wave will be debited for commissions paid with
      respect to the Delinquent Account; provided, however, M-Wave’s commission
      account shall be credited to the extent any payments on any such Delinquent
      Account(s) are ultimately received, and American Standard shall use commercially
      reasonably efforts to collect any Delinquent Account, and provided, further,
      the
      commissions otherwise due on products shipped during the last 90 days of this
      Agreement shall be paid on said monthly basis following the month in which
      said
      invoices are paid by the customer.

    

    (c)  M-Wave
      will coordinate all RFQ’s with American Standard’s sales department. All
      purchase orders are subject to acceptance or rejection by an authorized officer
      of American Standard and to the approval of American Standard’s credit
      department. American Standard shall be solely responsible for all credit risks
      and collections. If American Standard notifies any customer set forth on the
      Customer List in writing of its acceptance or rejection of a purchase order,
      a
      copy of such written notification shall be simultaneously transmitted to M-Wave.
      At least once every month, American Standard shall supply M-Wave with copies
      of
      all paid invoices and each of the customer purchase orders for the current
      month. 

    

    (d)  All
      sales
      shall be at prices and upon terms established by American Standard and it shall
      have the right, in its sole discretion, from time to time, to establish, change,
      alter, or amend prices and other terms and conditions of sale. M-Wave shall
      not
      accept orders in American Standard’s name or make price quotations or delivery
      promises without American Standard’s prior approval.

    

    Limitation
      Upon Representation.
      During
      the Representation Term, M-Wave shall not provide representation on behalf
      of a
      Competing Supplier to any customer set forth on the Customer List for which
      American Standard continues to actively supply RF products. A “Competing
      Supplier”
means
      any other domestic or foreign supplier of RF products similar to those RF
      products manufactured by American Standard and actively sold to customers set
      forth on the Customer List. 

    
      
         

        
        

      

      
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    In
      the
      event that M-Wave receives orders and/or quotations for RF Products
      from prior RF Customers who are not on the Customer List it shall refer all
      such orders and/or quotations to American Standard.  In the event that
      M-Wave receives orders and/or quotations for RF products from Digital Customers
      it will provide American Standard with a “first right of refusal” on these
      product requests.  ASC will be a supplier to M-Wave in this situation
      provided they are competitive.

    

    M-Wave
      shall not directly or indirectly for itself or any third party engage in the
      business of manufacturing RF products during the term of this Agreement and
      any
      extensions of it.

     

    5.  Accounts
      Receivable.
      All
      accounts receivable outstanding in connection with products shipped on or prior
      to the Effective Date shall remain the sole and exclusive property of M-Wave.
      Any accounts receivable created in connection with customer purchase orders
      shipped after the Effective Date shall be the sole and exclusive property of
      American Standard. Any payment received by M-Wave for products shipped after
      the
      Effective Date to customers on the Customer List shall be remitted directly
      to
      American Standard within two (2) days after M-Wave’s receipt of each such
      payment. Notwithstanding anything to the contrary set forth herein, M-Wave
      shall
      have the right to retain, and to offset, any payments received by it on behalf
      of American Standard to the extent of any commissions that have been earned,
      but
      which have not yet been paid.

    

    6.  Transition
      Assistance.
      Following the Effective Date, and with respect to those customers on the
      Customer List, M-Wave shall provide commercially reasonable assistance in the
      transition of customer information and customer relations, including the
      conversion of all open purchase orders and sharing of pricing information and
      notifying customers that American Standard is the party manufacturing and
      selling the product for the Customer in lieu of M-Wave.

    

    7.  Packaging
      and Labeling.
      American Standard will package and include Labels, at its own expense, on or
      with all of its products and packaging as required. As used herein,
“Label(s)”
shall
      mean all (a) labels and other written, printed or graphic matter placed upon
      any
      products, (b) containers and/or wrappers used with the products including,
      without limitation, product inserts which bear the trademarks or trade dress
      of
      American Standard, and (c) other matters designated in any purchase orders,
      by
      any customer or on approved prototypes/samples.

    

    8.  Shipments.
      American Standard shall ship all products to customers, at its own expense,
      in
      accordance with the applicable requirements specified in each relevant purchase
      order.

    

    9.  Customer
      Complaints.
      As of
      and following the Effective Date, American Standard shall handle all customer
      complaints, Return Material Authorizations and technical problems relating
      to
      products shipped to customers; provided however, during the Representation
      Term,
      American Standard may request that M-Wave provide a reasonable level of
      additional customer service or logistical coordination in connection with any
      customer complaints or technical problems relating to products sold to customers
      listed on the Customer List and shipped prior to the Effective Date. M-Wave
      will
      have no liability, and shall incur no additional cost, in providing any of
      the
      foregoing limited customer support.

    
      
         

        
        

      

      
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    10.  Transition
      Issues.

    

    (a)  Engineering.
      M-Wave
      will pay American Standard $50 per hour for engineering services requested
      by
      M-Wave and provided by American Standard employees.

    

    (b)  Digital
      Product Procurement.
      M-Wave
      shall provide American Standard with a “first right of refusal” on all Digital
      product requests for quotes whereby, prior to ordering any Digital product(s)
      from any other domestic supplier, M-Wave shall provide American Standard an
      opportunity to see the pricing and material terms of other bids (but not the
      name of such supplier(s)) and make a competitive offer with regard to such
      products.

    

    12.  M-Wave
      Options.
      M-Wave
      has previously granted Gordhan Patel (“Patel”)
      options to purchase 104,167 shares of M-Wave’s common stock (the “Options”)
      at an
      exercise price of $1.35 per share for a term of four (4) years from the date
      of
      the SOA Agreement. The Options were fully vested as of December 31, 2004 and
      shall remain exercisable in full in accordance with the terms hereof; provided
      that Patel shall not exercise any portion thereof prior to December 31, 2007
      until M-Wave has filed the appropriate S-8 registration statement.

    

    13.  Intellectual
      Property.
      Unless
      specifically and expressly granted herein and notwithstanding a party’s use
      thereof, no license or rights under either party’s intellectual property rights
      including, without limitation, copyrights, trademarks, trade names, trade
      secrets, patent or any other proprietary rights issued, honored and/or
      enforceable under any applicable laws, are implied or granted in this Agreement.
      Except as otherwise provided herein, each Party shall retain full ownership
      of
      all of its intellectual property. M-Wave hereby grants to American Standard,
      for
      the life of the patents, a royalty-free, non-exclusive license with regard
      to
      any patents held by M-Wave on the Effective Date that are required to be used
      by
      American Standard in its production of RF products.

    

    14.  Regulatory
      Matters.

    

    (a)  American
      Standard represents and warrants that it currently has all material licenses
      and
      permits necessary for the operation of its business as currently
      conducted.

    

    (b)  American
      Standard will be responsible for any reporting of matters regarding the
      manufacture or products, as applicable, to relevant regulatory authorities,
      in
      accordance with pertinent laws and regulations and shall notify M-Wave of any
      occurrence or information that arises out of its manufacturing activities that
      has adverse regulatory compliance and/or reporting consequences concerning
      a
      product.

    
      
         

        
        

      

      
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    (c)  American
      Standard shall be responsible for handling and responding to any governmental
      agency inspections with respect to manufacturing of products and shall provide
      to M-Wave copies of any information requested by any governmental agency in
      connection with any governmental inspection related to the
      products.

    

    15.  Product
      Warranty.
      M-Wave
      will continue to honor its product warranty obligations to those customers
      set
      forth on the Customer List for products shipped prior to the Effective Date;
      provided, however, that American Standard will bear all costs of repairing
      any
      defective product, any products that were determined not to be in accordance
      with the applicable specifications, and any shortages in shipments of products.
      M-Wave’s obligation under this Section 15 are subject to and conditioned upon
      American Standard’s compliance with its obligations under this Section 15
      hereof.

    

    16.  Records
      and Audit.
      

    

    (a)  During
      the Representation Term and for a period of one year thereafter, each party
      shall keep complete and accurate accounts, notes, data and records of all work
      performed in connection with purchase orders received during the Representation
      Term from customers on the Customer List and of all work performed under the
      SOA
      Agreement (collectively, the “Records”).
      American Standard shall maintain complete and adequate records pertaining to
      the
      methods and facilities used by it for the manufacture, processing, testing,
      packing, labeling, pricing and distribution of the products in accordance with
      the applicable regulations in the United States and other countries, if
      applicable.

    

    (b)  During
      the Representation Term and for a period of one year thereafter, each party
      shall be permitted, at the expense of the requesting party, to audit and make
      copies of the Records of the other party to verify the proper allocation and
      payment of revenue and expenses under this Agreement or the SOA Agreement.
      Any
      Confidential Information (as defined below) provided pursuant to this Section
      shall be subject to the provisions of Section 17 below, provided that a party
      may disclose such Confidential Information to its advisors and attorneys, as
      necessary to complete the audit described in this Section. Each audit will
      be
      conducted only during normal business hours of the audited party.

    

    17.  Confidentiality.
      

    

    (a)  Each
      party acknowledges that any and all Confidential Information disclosed (at
      any
      time) or submitted by one party (the “Disclosing
      Party”)
      to the
      other (the “Receiving
      Party”)
      hereunder, including under Section 16 hereof, or previously provided under
      the
      SOA Agreement or otherwise, (i) shall be received and maintained by the
      Receiving Party with at least the same degree of care to avoid disclosure of
      such Confidential Information as it uses with respect to its own Confidential
      Information, and (ii) shall not be used for any purposes other than those
      expressly permitted under this Agreement and shall not be disclosed to any
      third
      party without the prior written consent of the Disclosing Party.

    

    (b)  For
      the
      purposes of this Agreement, “Confidential
      Information”
shall
      mean any information or material that is special, unique, proprietary, or gives
      such party or its affiliates a competitive advantage and/or enhances such
      party’s or its affiliates' goodwill, whether such information or material is
      designated “confidential” or not, and whether such information or material is
      written or oral, or obtained by viewing such party’s premises, data or files,
      including, but not limited to, formulae or revisions thereto, processes and
      methods, business plans, financial data, customers, product development plans,
      marketing plans or strategies, distributor or representative lists,
      manufacturing methodologies, and research data, except to the extent that it
      can
      be established by the Receiving Party by competent proof that such Confidential
      Information: (i) was already known to the Receiving Party, other than under
      an
      obligation of confidentiality, at the time of disclosure by the Disclosing
      Party; (ii) was generally available to the public or otherwise part of the
      public domain at the time of its disclosure to the Receiving Party; (iii) became
      generally available to the public or otherwise part of the public domain after
      its disclosure and other than through any act or omission of the Receiving
      Party
      in breach of this Agreement; or (iv) was disclosed to the Receiving Party,
      other
      than under an obligation of confidentiality, by a third party who, to the
      knowledge of the Receiving Party, had no obligation to the Disclosing Party
      not
      to disclose such information to others.

    
      
         

        
        

      

      
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    (c)  Each
      party may disclose the other's Confidential Information to the extent such
      disclosure is reasonably necessary in complying with applicable law, rule,
      court
      order, governmental regulations or, with respect to M-Wave, by rules of the
      NASDAQ Stock Market, provided that if a party is required to make any such
      disclosure of the other party’s Confidential Information it will give reasonable
      advance notice to the other party of such disclosure requirement, and will
      use
      commercially reasonable efforts to secure confidential treatment of such
      Confidential Information required to be disclosed.

    

    (d)  All
      Confidential Information disclosed by a Disclosing Party to a Receiving Party
      shall be and shall remain the property of the Disclosing Party, regardless
      of
      such disclosure and regardless of the use of such Confidential Information
      by
      the Receiving Party.

    

    (e)  It
      is
      further understood and agreed that money damages would not be a sufficient
      remedy for any breach of this Section 17 and that the Disclosing Party shall
      be
      entitled to injunctive relief, including specific performance, as a remedy
      for
      any such breach by the Receiving Party. Such remedy shall not be deemed to
      be
      the exclusive remedy for breach of this Section 17 but shall be in addition
      to
      all other remedies available at law or equity.

    

    18.  Non-Solicitation
      of Customers and Employees.

    

    (a)  Customers.
      Unless
      given prior written consent, each party acknowledges and agrees that, during
      the
      Representation Term, neither party shall directly or indirectly induce or
      attempt to induce any customer of the other party to purchase products or
      services directly or indirectly from any other party (whether a party to this
      Agreement or not) or to cease doing business with the other party, or in any
      way
      interfere with the relationship between any such customer and the other party,
      except to the extent performed by such party with the intent of fulfilling
      its
      rights, obligations and duties hereunder.

     

    (b)  Employees.
      During
      the Representation Term and for six (6) months thereafter, provided the other
      party has not ceased business operations, each party shall not directly or
      indirectly through another entity (i) induce or attempt to induce any employee
      of the other party to leave the employ of the other party, or in any way
      interfere with the relationship between the other party and any employee
      thereof, or (ii) hire any person who was an employee of the other party at
      any
      time during the Representation Term (unless such employee was terminated by
      the
      other party).

    
      
         

        
        

      

      
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    (c)  Blue
      Pencil Doctrine.
      If, at
      the time of enforcement of this Section 18, a court shall hold that the
      duration, scope or area restrictions stated herein are unreasonable under
      circumstances then existing, the parties agree that the maximum duration, scope
      or area reasonable under such circumstances shall be substituted for the stated
      duration, scope or area and that the court shall be allowed to revise the
      restrictions contained herein to cover the maximum period, scope and area
      permitted by law. Each Party agrees that the restrictions contained in this
      Section 18 are reasonable.

    

    (d)  Breach.
      In the
      event of the breach or a threatened breach by a party of any of the provisions
      of this Section 18, the other party, in addition and supplementary to other
      rights and remedies existing in its favor, may apply to any court of law or
      equity of competent jurisdiction for specific performance and/or injunctive
      or
      other relief in order to enforce or prevent any violations of the provisions
      hereof (without posting a bond or other security).

    

    19.  Press
      Releases.
      Except
      as and to the extent required by law, rule or regulation or, with respect to
      M-Wave, by rules of the NASDAQ Stock Market, neither party shall permit its
      representatives to make any public communication or press release regarding
      the
      transactions contemplated in this Agreement without the prior written consent
      of
      the other party. If M-Wave determines that a public press release is
      appropriate, the parties shall first agree, in writing, on the text of such
      release, such approval not to be unreasonably withheld. Notwithstanding the
      foregoing, M-Wave may make any and all communications, releases and disclosures
      that it reasonably determines to be required or desirable under any securities
      laws, rules or regulations or rules and regulations of the NASDAQ Stock Market.
      Either party shall provide the other party with a complete copy of any press
      release it issued, within 24 hours following issuance.

    

    20.  Indemnification
      and Release.

    

    (a)  Indemnification
      by American Standard.
      American Standard agrees to indemnify, defend and hold harmless M-Wave and
      its
      officers, directors, shareholders, representatives, agents and employees (the
      “M-Wave
      Indemnitees”),
      from
      and against any and all losses, liabilities, damages, costs, fees and expenses,
      including reasonable legal costs and attorneys’ fees (“Losses”)
      resulting from (i) American Standard’s breach of any representation, warranty,
      covenant or agreement contained in this Agreement; (ii) any third-party claim,
      suit or action based upon, attributable to or caused by the acts or omissions
      of
      American Standard; or (iii) the negligent or intentional wrongful act or
      omission of American Standard.

    

    (b)  Indemnification
      by M-Wave.
      M-Wave
      agrees to indemnify, defend and hold harmless American Standard and its
      officers, directors, shareholders, representatives, agents and employees (the
      “American
      Standard Indemnitees”),
      from
      and against any and all Losses (as defined above) resulting from (i) M-Wave’s
      breach of any representation, warranty, covenant or agreement contained in
      this
      Agreement; (ii) any third-party claim, suit or action based upon, attributable
      to or caused by the acts or omissions of M-Wave; or (iii) the negligent or
      intentional wrongful act or omission of M-Wave.

    
      
         

        
        

      

      
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    (c)  Indemnification
      for Bank Relationship.
      In
      connection with certain transactions contemplated under the SOA Agreement,
      the
      parties thereto and other affiliated parties entered into (i) that certain
      Purchase Agreement (the “LLC
      Transfer Agreement”),
      pursuant to which, among other things, M-Wave
      transferred its interest in AM-Wave, LLC to American Standard, which in turn
      released M-Wave from all continuing liabilities regarding AM-Wave, LLC, (ii)
      an
      amendment of the Lease, and (iii) other agreements. The Leased Premises remains
      subject to a mortgage and an assignment of rents granted by the landlord in
      favor of American Chartered Bank to secure indebtedness, and certain equipment
      is subject to a first lien security interest granted by AM-Wave, LLC in favor
      of
      American Chartered Bank to secure indebtedness (and there is an intercreditor
      agreement in respect thereof between Poly Circuits, Inc. (as predecessor in
      interest to M-Wave) and American Chartered Bank). The foregoing agreements
      and
      documents are referred to collectively in this paragraph as the “Loan-Related
      Documents.”
As
      a
      result of the LLC Transfer Agreement, American Standard is the sole owner of
      all
      interests in AM-Wave, LLC. American Standard represents, warrants, covenants
      and
      agrees that M-Wave is in no way responsible for any obligations of AMI Partners,
      LLC, AM-Wave, LLC and/or American Standard to American Chartered Bank and that
      solely American Standard, AMI Partners, LLC and/or AM-Wave, LLC was responsible
      therefore and for procuring any consent required from American Chartered Bank
      to
      the execution and performance of the SOA Agreement and the documents executed
      concurrent therewith, and that American Standard has procured any such necessary
      consent. American Standard agrees that it shall indemnify and hold harmless
      M-Wave, its owners (direct and remote), their respective directors, officers,
      agents and employees, and the legal representatives and assigns of each and
      all
      of them (collectively, the “M-Wave
      Protected Parties”)
      of an
      from any and all liabilities, losses, suits, actions, judgments, costs, expenses
      (including without limitation reasonable attorneys’ fees), claims and demands
      whatsoever made against or incurred or suffered by any one or more of the M-Wave
      Protected Parties by or on behalf of American Chartered Bank in respect of
      any
      one or more of the Loan-Related Documents and/or the SOA Agreement.

    

    (d)  Indemnity
      Procedure.
      In the
      event that a party (the “Indemnified
      Party”)
      is
      seeking indemnification under this Section 20, it shall provide prompt written
      notice to the other party (the “Indemnifying
      Party”)
      as
      soon as reasonably practicable after it receives notice of the claim, provided
      that the failure to so notify the Indemnifying Party shall not relieve the
      Indemnifying Party of its obligations hereunder except to the extent such
      failure shall have prejudiced the Indemnifying Party. The Indemnified Party
      shall permit the Indemnifying Party to assume direction and control of the
      defense of the claim (including the right to settle the claim solely for
      monetary consideration), and, at the Indemnifying Party's expense, shall
      cooperate as reasonably requested in the defense of the claim; provided that
      the
      Indemnifying Party may not assume direction and control of the defense of the
      claim if (i) the claim seeks non-monetary relief against the Indemnified Party,
      (ii) the claim involves criminal allegations against the Indemnified Party,
      or
      (iii) the Indemnified Party reasonably determines that the Indemnifying Party
      has failed or is failing to vigorously defend against such claim. The
      Indemnified Party shall have the right to retain its own counsel, and the fees
      and expenses of the Indemnified Party’s counsel will be paid by the Indemnifying
      Party if representation of the Indemnified Party by the counsel retained by
      Indemnifying Party would be inappropriate due to an actual or potential conflict
      of interest. The Indemnifying Party may not settle such action or claim, or
      otherwise consent to an adverse judgment in such action or claim, without the
      express written consent of the Indemnified Party if such settlement or adverse
      judgment diminishes the rights or interests of the Indemnified
      Party.

    
      
         

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    (e)  Release.
      Except
      as otherwise provided herein, as of the Effective Date, each party hereto,
      for
      itself, its affiliates, divisions, subsidiaries, successors, assigns, and
      representatives, as applicable, does hereby fully and finally release and
      forever discharge, the other party hereto, and its respective successors,
      assigns, directors, employees, officers, agents and representatives, from any
      and all sums of money, causes of action, claims, suits, contracts,
      controversies, agreements, costs, damages, judgments, disputes, demands, duties
      or obligations whatsoever, present or future, whether known or unknown, under,
      arising in or out of, or in any other way in respect of, the SOA Agreement,
      provided, however, M-Wave is not released from any amounts it now owes American
      Standard for merchandise manufactured by American Standard for M-Wave or for
      any
      other reason.

    

    21.  Miscellaneous.

    

    (a)  Assignment
      and Succession.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors, assigns and representatives. Neither party shall
      have the right to assign or otherwise transfer its rights or obligations under
      this Agreement except with the prior written consent of the other party, not
      to
      be unreasonably withheld.

    

    (b)  Force
      Majeure.
      In the
      event that either party is prevented from performing or is unable to perform
      any
      of its obligations under this Agreement due to any act of God, fire, casualty,
      flood, earthquake, war, strike, lockout, epidemic, destruction of production
      facilities, riot, insurrection, material unavailability, or any other cause
      beyond the reasonable control of the party invoking this Section 21(b)
      (“Force
      Majeure”),
      and
      if such party shall have used its commercially reasonable efforts to mitigate
      its effects, such party shall give prompt written notice to the other party,
      its
      performance shall be excused, and the time for the performance shall be extended
      for the period of delay or inability to perform due to such
      occurrences.

    

    (c)  Notices.
      All
      notices, requests, consents, and other communications under this Agreement
      shall
      be in writing and shall be delivered by hand, sent via overnight courier sent
      by
      facsimile, or mailed by first class certified or registered mail, return receipt
      requested, postage prepaid:

    

    If
      to
      American Standard:

    

    American
      Standard Circuits, Inc.

    3615
      Wolf
      Road

    Franklin
      Park, IL 60131-1425

    Attention:
      Gordhan Patel

    Fax:
      (847) 455-1518

    
      
         

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    With
      a
      copy to:

    Marvin
      W.
      Temple, Esq.

    555
      North
      Skokie Boulevard, Suite 595

    Northbrook,
      Illinois

    Fax:
      (847) 480-1414

    If
      to
      M- Wave:

    

    M-Wave,
      Inc.

    475
      Industrial Drive

    West
      Chicago, IL 60185

    Attention:
      Joseph Turek

    Fax:
      (630) 562-2430

    

    With
      a
      copy to:

    Jeff
      Mattson

    Freeborn
      and Peters, LLP

    311
      South
      Wacker Drive, Suite 3000

    Chicago,
      IL 60606

    Fax:
      (312) 360-6570

    

    or
      to
      such other person or entity or at such other address as any party shall
      designate by notice to the other in accordance with this Section 21(c). Notices
      provided in accordance with this Section 21(c) shall be deemed delivered (i)
      upon personal delivery with signature required; (ii) one (1) business day after
      they have been sent to the recipient by reputable overnight courier service
      (charges prepaid and signature required); (iii) upon confirmation, answer back
      received, of successful transmission of a facsimile message containing such
      notice if sent between 9:00 a.m. and 5:00 p.m., local time of the recipient,
      on
      any Business Day, and as of 9:00 a.m. local time of the recipient on the next
      business day if sent at any other time; or (iv) three (3) business days after
      deposit in the U.S. Registered or certified mail, return receipt
      requested.

    

    (d)  Waiver.
      Except
      as specifically provided for herein, the waiver from time to time by either
      of
      the parties of any of their rights or their failure to exercise any remedy
      shall
      not operate or be construed as a continuing waiver of same or of any other
      of
      such party’s rights or remedies provided in this Agreement.

    

    (e)  Severability.
      If any
      term, covenant or condition of this Agreement or the application thereof to
      any
      party or circumstance shall, to any extent, be held to be invalid or
      unenforceable, then the remainder of this Agreement, or the application of
      such
      term, covenant or condition to parties or circumstances other than those as
      to
      which it is held invalid or unenforceable, shall not be affected thereby and
      each term, covenant or condition of this Agreement shall be valid and be
      enforced to the fullest extent permitted by law.

    

    (f)  Entire
      Agreement.
      Except
      as otherwise provided herein, this Agreement and the documents executed in
      connection herewith set forth all the covenants, promises, agreements,
      warranties, representations, conditions and understandings between the parties
      hereto with regard to the subject matter discussed herein and supersede and
      terminate all prior agreements and understandings between the parties with
      regard to the subject matter discussed herein. There are no covenants, promises,
      agreements, warranties, representations conditions or understandings, either
      oral or written, between the parties with regard to the subject matter discussed
      herein other than as set forth in this Agreement.

    
      
         

        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    (g)  Independent
      Contractor.
      Neither
      party shall, for any purpose, be deemed to be an agent or partner of the other
      party and the relationship between the parties shall only be that of independent
      contractors. Neither party shall have any right or authority to assume or create
      any obligations or to make any representations or warranties on behalf of the
      other party, whether express or implied, or to bind the other party in any
      respect whatsoever.

    

    (h)  Governing
      Law and Venue.
      This
      Agreement shall be governed by and construed under the laws of the State of
      Illinois, excluding its choice of law principles. For any claim or proceeding
      arising under or out of this Agreement (“Proceeding”),
      each
      party agrees to submit to the exclusive jurisdiction of the state and federal
      courts located in the State of Illinois and hereby waives any objection it
      may
      now or hereafter have to venue or to convenience of forum, agrees that all
      claims in respect of the Proceeding shall be heard and determined only in any
      such court and agrees not to bring any Proceeding arising out of or relating
      to
      this Agreement or any contemplated transaction in any other court. The parties
      agree that either or both of them may file a copy of this paragraph with any
      court as written evidence of the knowing, voluntary and bargained agreement
      between the parties irrevocably to waive any objections to venue or to
      convenience of forum.

    

    (i)  Injunctive
      Relief.
      Notwithstanding the foregoing, the parties acknowledge and agree that money
      damages may not be an adequate remedy for any breach or threatened breach of
      this Agreement, and that, in such event, any party may, in addition to any
      other
      rights and remedies existing in its favor, bring an action in any court of
      competent jurisdiction situated in Cook, County, Illinois for specific
      performance or injunctive relief or for other provisional relief to compel
      another party hereto to comply with its obligations under this Agreement whether
      or not any arbitration proceedings have been initiated.

    

    (j)  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which will
      be
      deemed to be an original, but all of which together will constitute one and
      the
      same agreement. Facsimile signature pages shall have the same force and effect
      as originally executed signature pages.

    

    (k)  Authorization.
      M-Wave and American Standard each represents to the other that this Agreement
      has been duly authorized and approved by resolutions unanimously adopted by
      their respective Boards of Directors.

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
         

        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      on the day and year first above written.

    

    
      	 	
              M-WAVE,
                INC.  

            
	 	 	 	 
	 	
              By:

            	
                
                

            	  

	 	 	
              Name:

            	
               
                

            
	 	 	
              Title:

            	
               
                

            
	 	 	 	 
	 	 	 	 
	 	
              AMERICAN
                STANDARD CIRCUIT, INC.  

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
                
                

            	   

	 	 	
              Name:

            	
               

            
	 	 	
              Title:

            	
               

            

    

     

    
      
         

        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    CUSTOMER
      LIST

    

    

    
      	
              Customer

            	
              Address

            	
              City

            	
              State

            	
              Zip
                Code

            	
              Commission

            
	
              Adcomm

            	
              89
                LEUNING STREET

            	
              SOUTH
                HACKENSACK

            	
              NJ

            	
              07606

            	
              10%

            
	
              Anaren

            	
              6635
                KIRKVILLE ROAD

            	
              EAST
                SYRACUSE

            	
              NY

            	
              13057

            	
              10%

            
	
              Celestica
                Elec.(Agilent)

            	
              3RD
                FLOOR SHANGHAI AP WAIGAOQIAO

            	 	
              CHINA

            	 	
              10%

            
	
              CMC
                Electronics

            	
              600
                BOUL.DR.-FREDERIK PHILIPS,

            	
              ST-LAURENT,
                QUEBEC

            	 	 	
              10%

            
	
              Harris

            	
              1000
                CHARLES J. HERBERT DRIVE, BLDG 21A

            	
              PALM
                CITY

            	
              FL

            	
              32905

            	
              10%

            
	
              Herley
                Com

            	
              9
                WHIPPANY ROAD

            	
              WHIPPANY

            	
              NJ

            	
              07981

            	
              10%

            
	
              Integrated
                Assembly

            	
              375
                VALLEY BROOK ROAD, SUITE 107

            	
              MC
                MURRAY

            	
              PA

            	
              15317

            	
              10%

            
	
              Kay
                Elemetrics

            	
              2
                BRIDGEWATER LANE

            	
              LINCOLN
                PARK

            	
              NJ

            	
              07035-1488

            	
              10%

            
	
              M/A
                Com Tech

            	
              PO
                BOX 69011

            	
              HARRISBURG

            	
              PA

            	
              17106

            	
              10%

            
	
              Microlab/FXR

            	
              25
                EASTMANS ROAD

            	
              PARSIPPANY

            	
              NJ

            	
              07054-3702

            	
              10%

            
	
              Mid
                Atlantic RF Systems

            	
              105
                E. JARRETTSIVILLE ROAD, PO BOX 745

            	
              FOREST
                HILL

            	
              MD

            	
              21050

            	
              10%

            
	
              Miteq

            	
              100
                DAVIDS DRIVE

            	
              HAUPPAUGE

            	
              NY

            	
              11788

            	
              10%

            
	
              Motorola

            	
              PO
                BOX 68429

            	
              SCHAUMBURG

            	
              IL

            	
              60168-0429

            	
              10%

            
	
              Radio
                Frequency Systems

            	
              200
                POND VIEW DRIVE

            	
              MERIDEN

            	
              CT

            	
              06450

            	
              10%

            
	
              Rockwell
                Collins

            	
              400
                COLLINS ROAD NE

            	
              CEDAR
                RAPIDS

            	
              IA

            	
              52498

            	
              10%

            

    

     

    
      
         

        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    PROMISSORY
      NOTE

    

    
      	
              Principal
                Amount: $205,000.00

            	 	 	
              October
                21, 2005

            
	 	 	 	
              Chicago,
                Illinois

            

    

    

    

    PROMISSORY
      NOTE

    

    FOR
      VALUE RECEIVED,
      the
      undersigned, American Standard Circuits, Inc. (“Maker”), an Illinois
      corporation, promises to pay, to the order of M-Wave, Inc. (“Lender”), a
      Delaware corporation or holder hereof, the principal sum of TWO
      HUNDRED FIVE THOUSAND
      DOLLARS
      ($205,000.00). Such indebtedness and interest and other obligations under this
      instrument (the “Note”) are referred to collectively as the “Loan.”

    

    Until
      the
      Maturity Date (as defined below), the outstanding balance of the principal
      amount of the Loan shall bear interest at an annual rate of four and eight
      one-hundredths of a percent (4.08%) per year compounded annually (the “Loan
      Rate”). 

    

    Interest
      on the outstanding principal shall accrue from month-to-month and be payable
      upon the Maturity Date, unless otherwise waived as provided herein. Principal
      shall be paid in monthly installments of $6,833.33 on the tenth day of each
      month beginning November 10, 2005, until the Maturity Date, at which time the
      unpaid balance of principal under this Note, plus all accrued interest thereon,
      shall be due and payable unless otherwise waived by Lender as provided herein.
      Maker may offset any such payment against any amounts due by Lender to Maker.
      

    

    Lender
      and Maker have entered into that certain Asset Sale and Transition Agreement
      of
      even date herewith (the “Agreement”) which provides that Maker shall pay Lender
      an amount up to the principal amount of this Note, plus all accrued interest,
      which represents certain purchase credits which remain due and outstanding.
      

    

    The
      Maturity Date of the Loan shall be the first to occur of (i) December 31, 2006,
      (ii) the occurrence of an Event of Default, or (iii) the sale of substantially
      all of the assets of Maker. The entire outstanding principal balance of the
      Loan, and all interest accrued thereupon, shall be paid not later than the
      Maturity Date, unless otherwise waived as provided herein. The Loan payments
      shall be made at 475 Industrial Drive, West Chicago, Illinois 60185, or such
      other place as the holder of this Note may from time to time direct in
      writing.

    

    The
      Loan
      may be freely prepaid, in whole or in part, by Maker at any time and the amount
      of any such prepayment shall be applied first to any accrued but unpaid interest
      and second to the outstanding principal balance.

    

    After
      the
      Maturity Date, or the earlier acceleration of the indebtedness evidenced by
      this
      Note by reason of an Event of Default hereunder, and during any period in which
      an Event of Default exists under this Note, Maker shall pay interest on the
      balance of principal remaining unpaid during any such period at an annual rate
      (the “Default Rate”) equal to twelve percent (12.0%). The interest accruing
      under this paragraph shall be immediately due and payable by Maker to the holder
      of this Note and shall be additional indebtedness evidenced by this
      Note.

    
      
         

        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    The
      occurrence of any one or more of the following events shall constitute an “Event
      of Default” under this Note:

    

    (a)  the
      failure by Maker to make a payment on the Loan within fifteen (15) days of
      such
      time when required to do so hereunder; 

    

    (b)  the
      making of an assignment by the undersigned for the benefit of creditors, filing
      by the undersigned of a voluntary petition for bankruptcy, or the filing of
      a
      petition for bankruptcy against Maker to which it consents or which is not
      dismissed within 30 days; and 

    

    (c)  any
      material breach of the Maker’s covenants and obligations under the Agreement,
      which breach shall continue without being cured for a period of thirty (30)
      days, as described in the Agreement.

    

    At
      the
      election of the holder hereof, and without notice, the principal balance
      remaining unpaid under this Note, and all unpaid interest accrued thereon,
      shall
      be and become immediately due and payable in full in the case of the occurrence
      of any Event of Default. Failure to exercise this election shall not constitute
      a waiver of the right to exercise same in the event of any subsequent Event
      of
      Default. No holder hereof shall, by any act of omission or commission, be deemed
      to waive any of its rights, remedies or powers hereunder or otherwise unless
      such waiver is in writing and signed by the holder hereof, and then only to
      the
      extent specifically set forth therein. The rights, remedies and powers of the
      holder hereof, as provided in this Note, are cumulative and concurrent, and
      may
      be pursued singly, successively or together against the Maker, all at the sole
      discretion of the holder hereof. If following an Event of Default any suit
      or
      action is instituted or attorneys are employed to collect this Note or any
      part
      thereof, Maker promises and agrees to pay all actual and reasonable costs of
      collection, including reasonable attorneys’ fees, expenses and court
      costs.

    

    Maker:
      (i) waives and renounces any and all redemption and exemption rights and the
      benefit of all valuation and appraisement privileges against the indebtedness
      evidenced by this Note or by any extension or renewal hereof; (ii) waives
      presentment and demand for payment, notices of nonpayment and of dishonor,
      protest of dishonor, and notice of protest; (iii) waives any and all notices
      in
      connection with the delivery and acceptance hereof and all other notices in
      connection with the performance, default, or enforcement of the payment hereof
      or hereunder; (iv) waives any and all lack of diligence and delays in the
      enforcement of the payment hereof; and (v) consents to any and all extensions
      of
      time, renewals, waivers, or modifications that may be granted by Lender with
      respect to the payment or other provisions hereof.

    

    In
      no
      event shall the interest payable hereunder exceed the highest amount permitted
      by applicable law. If the interest stated hereunder exceeds the maximum amount
      permitted by law with respect to Maker, the interest rate shall only be abated
      with respect to the Maker to which the interest rate is limited by applicable
      law. 

    
      
         

        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    Time
      is
      of the essence hereof.

    

    This
      Note
      is governed and controlled as to validity, enforcement, interpretation,
      construction, effect and in all other respects by the statutes, laws and
      decisions of the State of Illinois. Maker irrevocably agrees and consents to
      jurisdiction and venue in the Circuit Court of Cook County, Chicago, Illinois.
      This Note may not be changed or amended orally but only by an instrument in
      writing signed by the party against whom enforcement of the change or amendment
      is sought. Pursuant to the Agreement, Maker with respect to, and agrees and
      acknowledges its absolute obligation to pay, the principal balance and accrued
      interest under this Note; provided, however, on December 31, 2006, if Maker
      has
      paid all outstanding commission payments due under the Agreement, and an Event
      of Default has not occurred, Lender shall forgive the unpaid balance of any
      principal and accrued interest due under this Note. 

    

    The
      obligations and liabilities of Maker hereunder shall be binding upon and
      enforceable against Maker. This Note shall inure to the benefit of and may
      be
      enforced by Lender, its successors and assigns. 

    

    In
      the
      event one or more of the provisions contained in this Note shall for any reason
      be held to be invalid, illegal or unenforceable in any respect by a court of
      competent jurisdiction, such invalidity, illegality or unenforceability shall
      not affect any other provision of this Note, and such provision may be revised
      by any court having competent jurisdiction, with regard to the enforcement
      of
      this Note, to the least extent necessary to make such provision
      enforceable.

    

    Any
      notice or communication to Maker by the holder hereof may by made to Maker
      at
      the address below Maker’s signature on this Note unless Maker advises holder
      hereof in writing of such other address.

    

    

    
      	 	 	
              Maker:

            
	 	 	 
	 	 	 
	 	 	
              AMERICAN
                STANDARD 

            
	 	 	
              CIRCUITS,
                INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	   

	 	
              Name:

            	
              Gordhan
                Patel

            
	 	
              Its:

            	
              President
                

            
	 	 	 
	 	
              Address:

            	
              3615
                Wolf Road

            
	 	 	
              Franklin
                Park, Illinois 60131

            

    

     

    
      
         

        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    INVENTORY

    

    
      
        	
                RF
                  Inventory at M-Wave as of 10-21-05

              	 	 	 	 
	 	 	 	 	 
	
                Item
                  Desc

              	
                Part
                  #

              	
                QTY
                  On Hand

              	
                Current
                  Cost

              	
                Ext.
                  Cost

              
	 	 	 	 	 
	
                ADCOMM-PCB-SEAT
                  SOLDER

              	
                DRASSY204780B.A

              	
                50

              	
                $28.86
                  

              	
                $1,443.00
                  

              
	
                ADCOMM-PCB-SEAT
                  SOLDER Total

              	
                 

              	
                 

              	
                 

              	
                $1,443.00
                  

              
	 	 	 	 	 
	
                ADCOMM-PCB-SWEAT
                  SOLDER

              	
                DRASSY204752B.C

              	
                125

              	
                $21.73
                  

              	
                $2,716.25
                  

              
	
                ADCOMM-PCB-SWEAT
                  SOLDER

              	
                DRASSY204756B.C

              	
                125

              	
                $21.73
                  

              	
                $2,716.25
                  

              
	
                ADCOMM-PCB-SWEAT
                  SOLDER Total

              	
                 

              	
                 

              	
                 

              	
                $5,432.50
                  

              
	 	 	 	 	 
	
                ADCOMM-PCB-SWEATSOLDER

              	
                DRASSY204794B.-

              	
                125

              	
                $27.30
                  

              	
                $3,412.50
                  

              
	
                ADCOMM-PCB-SWEATSOLDER
                  Total

              	
                 

              	
                 

              	
                 

              	
                $3,412.50
                  

              
	 	 	 	 	 
	
                ANAREN-PCB

              	
                RFP-4143-03.Q

              	
                72,000

              	
                $0.51
                  

              	
                $36,720.00
                  

              
	
                ANAREN-PCB

              	
                RFP-4154-03.L

              	
                1,014

              	
                $1.26
                  

              	
                $1,277.64
                  

              
	
                ANAREN-PCB

              	
                RFP-4190-03.L

              	
                8,004

              	
                $1.11
                  

              	
                $8,884.44
                  

              
	
                ANAREN-PCB

              	
                RFP-4191-03.G

              	
                4,000

              	
                $0.51
                  

              	
                $2,040.00
                  

              
	
                ANAREN-PCB

              	
                RFP-4204-03.D

              	
                998

              	
                $0.51
                  

              	
                $508.98
                  

              
	
                ANAREN-PCB

              	
                RFP-4271-03.B

              	
                3,500

              	
                $1.26
                  

              	
                $4,410.00
                  

              
	
                ANAREN-PCB

              	
                RFP-4380-03.G

              	
                2,841

              	
                $0.34
                  

              	
                $965.94
                  

              
	
                ANAREN-PCB

              	
                RFP-4424-03.E

              	
                8,413

              	
                $1.26
                  

              	
                $10,600.38
                  

              
	
                ANAREN-PCB

              	
                RFP-4432-03.D

              	
                4,181

              	
                $1.25
                  

              	
                $5,226.25
                  

              
	
                ANAREN-PCB

              	
                RFP-4433-03.E

              	
                19,693

              	
                $1.26
                  

              	
                $24,813.18
                  

              
	
                ANAREN-PCB

              	
                RFP-4434-03.D

              	
                5,104

              	
                $1.26
                  

              	
                $6,431.04
                  

              
	
                ANAREN-PCB

              	
                RFP-6094-03.D

              	
                859

              	
                $1.15
                  

              	
                $987.85
                  

              
	
                ANAREN-PCB

              	
                RFP-6115-03.C

              	
                994

              	
                $1.15
                  

              	
                $1,143.10
                  

              
	
                ANAREN-PCB

              	
                RFP-6198-03.D

              	
                2,609

              	
                $1.25
                  

              	
                $3,261.25
                  

              
	
                ANAREN-PCB
                  Total

              	
                 

              	
                 

              	
                 

              	
                $107,270.05
                  

              
	 	 	 	 	 
	
                CANADIAN
                  MARCONI-CARRIER

              	
                636-810622-CAR.B

              	
                5

              	
                $18.51
                  

              	
                $92.55
                  

              
	
                CANADIAN
                  MARCONI-CARRIER Total

              	
                 

              	
                 

              	
                 

              	
                $92.55
                  

              
	 	 	 	 	 
	
                CANADIAN
                  MARCONI-PCB

              	
                636-810622-PWB.B

              	
                9

              	
                $0.00
                  

              	
                $0.00
                  

              
	
                CANADIAN
                  MARCONI-PCB Total

              	
                 

              	
                 

              	
                 

              	
                $0.00
                  

              
	 	 	 	 	 
	
                CANADIAN
                  MARCONI-PCB-FLEXLINK II

              	
                636-810622-000.C

              	
                334

              	
                $72.52
                  

              	
                $24,221.68
                  

              
	
                CANADIAN
                  MARCONI-PCB-FLEXLINK II

              	
                636-810624-000.D

              	
                516

              	
                $40.13
                  

              	
                $20,707.08
                  

              
	
                CANADIAN
                  MARCONI-PCB-FLEXLINK II Total

              	
                 

              	
                 

              	
                $44,928.76
                  

              
	 	 	 	 	 
	
                CELESTICA
                  ELECTRONIC/AGILENT TECHNOLOGIES-PCB

              	
                83485-20010.A

              	
                29

              	
                $2.44
                  

              	
                $70.76
                  

              
	
                CELESTICA
                  ELECTRONIC/AGILENT TECHNOLOGIES-PCB

              	
                85024-20001.A

              	
                179

              	
                $1.46
                  

              	
                $261.34
                  

              

      

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	
                CELESTICA
                  ELECTRONIC/AGILENT TECHNOLOGIES-PCB Total

              	
                 

              	
                $332.10
                  

              
	 	 	 	 	 
	
                HARRIS
                  CORP-CARRIER

              	
                A3188171-006-CAR.K

              	
                1

              	
                $98.36
                  

              	
                $98.36
                  

              
	
                HARRIS
                  CORP-CARRIER Total

              	
                 

              	
                 

              	
                 

              	
                $98.36
                  

              
	 	 	 	 	 
	
                HARRIS
                  CORP-FOAM-R5204, 12X24 0.0645" THICK

              	
                ROHACELL-51-IG-.0645.

              	
                6

              	
                $0.00
                  

              	
                $0.00
                  

              
	
                HARRIS
                  CORP-FOAM-R5204, 12X24 0.0645" THICK Total

              	
                 

              	
                 

              	
                $0.00
                  

              
	 	 	 	 	 
	
                HERLEY-COMM
                  TECH-CARRIER

              	
                17273-1CAR.B

              	
                1

              	
                $4.05
                  

              	
                $4.05
                  

              
	
                HERLEY-COMM
                  TECH-CARRIER Total

              	
                 

              	
                 

              	
                 

              	
                $4.05
                  

              
	 	 	 	 	 
	
                INTEGRATED
                  ASSEMBLY SYSTEMS-PCB

              	
                AX-PCB016.-

              	
                4

              	
                $48.41
                  

              	
                $193.64
                  

              
	
                INTEGRATED
                  ASSEMBLY SYSTEMS-PCB Total

              	
                 

              	
                 

              	
                $193.64
                  

              
	 	 	 	 	 
	
                KAY
                  ELEMETRICS-PCB

              	
                7166-3300.

              	
                70

              	
                $9.14
                  

              	
                $639.80
                  

              
	
                KAY
                  ELEMETRICS-PCB Total

              	
                 

              	
                 

              	
                 

              	
                $639.80
                  

              
	 	 	 	 	 
	
                MICROLAB/FXR-PCB

              	
                BK-20D-01.4

              	
                8

              	
                $6.35
                  

              	
                $50.80
                  

              
	
                MICROLAB/FXR-PCB
                  Total

              	
                 

              	
                 

              	
                 

              	
                $50.80
                  

              
	 	 	 	 	 
	
                MOTOROLA-PCB

              	
                8483485T03.B

              	
                4,809

              	
                $1.04
                  

              	
                $5,001.36
                  

              
	
                MOTOROLA-PCB
                  Total

              	
                 

              	
                 

              	
                 

              	
                $5,001.36
                  

              
	 	 	 	 	 
	
                RADIO
                  FREQUENCY SYSTEMS-PCB

              	
                572230.0

              	
                5

              	
                $4.17
                  

              	
                $20.85
                  

              
	
                RADIO
                  FREQUENCY SYSTEMS-PCB Total

              	
                 

              	
                 

              	
                $20.85
                  

              
	 	 	 	 	 
	
                ROCKWELL
                  COLLINS-PCB

              	
                653-3833-001.E

              	
                58

              	
                $231.36
                  

              	
                $13,418.88
                  

              
	
                ROCKWELL
                  COLLINS-PCB Total

              	
                 

              	
                 

              	
                 

              	
                $13,418.88
                  

              
	 	 	 	 	 
	
                Grand
                  Total

              	
                 

              	
                 

              	
                 

              	
                $182,339.20
                  

              

      

    

     

    19APPENDIX
        21.1: PIGGYBACK REGISTRATION

      

      This
        Appendix 21.1 contains the terms of the registration rights granted to the
        Investor Member pursuant to section 21.1 of the Investment Agreement (the
        “Agreement”). Defined Terms used but not defined herein shall have the meanings
        assigned in the Agreement:

      

      
        	
                1.

              	
                Definitions

              

      

      

      1.01 As
        set
        forth in this Appendix:

      

      (a) the
        term
“Holders” means all Holders of Registrable Securities, including each Investor
        Member.

      

      (b) the
        term
“Registrable Securities” means (i) the Preferred A Shares issued pursuant to and
        in accordance with the Agreement; (ii) any Ordinary Shares into which the
        Preferred A Shares have been converted; and (iii) any additional securities
        of
        the Company issued or issuable to Holders with respect to such shares by
        way of
        dividends, bonus shares, share splits, share conversions or exercises of
        options
        or warrants. As to any particular Registrable Securities, such securities
        will
        cease to be Registrable Securities when they have been effectively registered
        under the Securities Act or Upon the expiration of the term of this Appendix
        as
        provided in Section 7.

      

      (c) the
        term
“Securities Act” means the U.S. Securities Act of 1933, as amended.

      

      (d) the
        term
“Registration Expenses” shall mean all expenses incurred by the Company in
        compliance with terms hereof, including, without limitation, all registration
        and filing fees, printing expenses, fees and disbursements of counsel for
        the
        Company, blue sky fees and expenses, and the reasonable fees for one special
        counsel for all Holders chosen by the Holders of a majority of the securities
        included in such registration, provided that all Holders participating in
        the
        registration agree to be represented by such counsel, and the expense of
        any
        special audits incident to or required by any such registration (but excluding
        the compensation of regular employees of the Company, which shall be paid
        in any
        event by the Company).

      

      (e) the
        term
“registration” means registration under the Securities Act.

      

      (f) the
        term
“Selling Expenses” shall mean all transfer taxes, underwriting discounts and
        selling commissions applicable to the sale of Registrable Securities, and
        all
        fees and disbursements of counsel for any Holder.

      

      
        	
                2.

              	
                Piggyback
                  Registrations

              

      

      

      2.01 Right
        to Piggyback
        Whenever
        the Company proposes to register any of its securities under the Securities
        Act
        (excluding registration statements relating to employee benefit plans or
        with
        respect to corporate reorganizations or other transactions under Rule 145
        of the
        Securities Act), and the registration form to be used is suitable for the
        registration of the Registrable Securities (a “Piggyback Registration”)(it being
        understood that Form S-4 and Form S-8 may not be used for such purposes),
        the
        Company will each such time promptly give written notice to each Holder of
        its
        intention to effect such a registration, setting for the approximate date
        on
        which the Company proposes to file such registration, which date shall be
        no
        earlier than thirty (30) days from the date of such notice, and advising
        each
        Holder of its right to have its Registrable Shares included in such
        registration. Such notice shall state the intended method of disposition
        of the
        Registrable Securities by such Holders of Registrable Securities. Subject
        to the
        priority provisions of Section 2.02 and except to the extent prohibited by
        applicable laws, rules, regulation, orders, judgments and decrees, the Company
        will include in such registration all of the Registrable Securities with
        respect
        to which the Company has received written requests for inclusion therein
        within
        15 days after the Company gives such notice.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.02 Priority
        on Piggyback Registrations. If
        a
        Piggyback Registration is an underwritten offering of the Company’s securities
        and the managing underwriters advise the Company in writing that, in their
        opinion, marketing factors require a limitation of the number of shares to
        be
        underwritten, the Company will include in such registration: (i) first, the
        Company’s securities and (ii) second, the number of Registrable Securities held
        by Holders that requested to be included in the registration that, in the
        opinion of such underwriters, can be sold, allocated pro
        rata
        among
        the Holders on the basis of the number of such Registrable Securities then
        owned
        by each such Holder.

      

      2.03 Notwithstanding
        the provisions of Section 2.01 above the Board of Directors of the Company
        shall
        have the right not to permit any piggyback registration if the Board determines
        in good faith that the registration would be detrimental to the
        Company.

      

      
        	
                3)

              	
                Registration
                  Expenses

              

      

      

      3.01 The
        Company shall be responsible for Registration Expenses in connection with
        any
        registration. The Selling Expenses shall be borne by the Holders of the
        Registrable Securities so registered pro rata on the basis of the Registrable
        Securities so registered.

      

      
        	
                4)

              	
                Preconditions
                  to Participation in Underwritten
                  Registrations

              

      

      

      4.01 No
        Holder
        of Registrable Securities may participate in any underwritten registration
        hereunder unless the Holder (i) agrees to sell its Registrable Securities
        on the
        basis of the terms provided in any customary underwriting arrangement and
        (ii)
        provides all relevant information and completes and executes all questionnaires,
        powers of attorney, indemnities, underwriting agreements, and other documents
        required under the terms of such underwriting arrangement.

      

      
        	
                5)

              	
                Registration
                  Procedures

              

      

      

      5.01 In
        the
        case of each registration effected by the Company pursuant to Section 2,
        the
        Company will keep each Holder advised in writing as to the initiation of
        each
        registration and as to the completion thereof. At its expense, the Company
        will:

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (a) furnish
        to each Holder of Registrable Shares covered by such registration statement
        and
        each underwriter thereof, if any, such number of conformed copies of such
        registration statement and of each such amendment and supplement thereto
        (in
        each case including all exhibits such number of copies of the prospectus
        contained in such registration statement filed under Rule 424 under the
        Securities Act, and such other documents, as such Holder and underwriter
        may
        reasonably request in order to facilitate the public sale or other disposition
        of such Registrable Shares;

      

      (b) Use
        commercially reasonable efforts to register or qualify the Registrable
        Securities under the securities or blue sky laws of such jurisdictions as
        any
        Holder may request;

      

      (c) Use
        commercially reasonable efforts to cause the Ordinary Shares to be listed
        on a
        national securities exchange or NASDAQ National Market System;

      

      (d) Notify
        each Holder of Registrable Shares covered by such registration statement
        and
        each underwriter thereof, if any, at any time when a prospectus relating
        thereto
        is required to be delivered under the Securities Act, upon the Company’s
        discovery that, or upon the happening of any event of which the Company has
        knowledge as a result of which, the prospectus included in the registration
        statement, as then in effect, includes an untrue statement of material fact
        or
        omits to state any material facts required to be stated therein or necessary
        to
        make the statements therein not misleading in the light of the circumstances
        then existing, and at the request of any such Holder of such underwriter
        promptly prepare and furnish to such Holder or such underwriter if any, a
        reasonable number of copies of a prospectus supplemented or amended so that
        as
        thereafter delivered to the purchaser of such Registrable Securities, such
        prospectus shall not include an untrue statement of a material fact required
        to
        be stated therein or necessary to make the statements therein not misleading
        in
        the light of the circumstances then existing.

      

      
        	6)	
                Indemnification
                  and Contribution

              

      

      

      6.01 Company
        Indemnity The
        Company shall indemnify and hold harmless each Holder of Registrable Securities
        and each of such Holder’s officers, directors, partners, employees, legal
        counsel and accountants and each party controlling (within the meaning of
        the
        Securities Act) such as Holder, and each underwriter, if any, and each party
        who
        controls (within the meaning of the Securities Act) such underwriter from
        and
        against any and all losses, claims, damages, liabilities, and charges, joint
        or
        several (“Claims”), to which any of them may be subject under the Securities Act
        or any other statute (whether U.S. or Israeli) or at a common law, insofar
        as
        such claims arise out of, are based upon, or are in connection with (i) any
        untrue statement (or alleged untrue statement) of any material fact contained
        in
        any registration statement or prospectus under which such securities were
        sold,
        or (ii) ( any omission (or alleged omission) to state therein a material
        fact
        required to be stated therein or necessary to make the statements therein
        not
        misleading, or (iii) any other violation by the Company of the Securities
        Act or
        any state or foreign jurisdiction securities laws in connection with each
        such
        registration, and shall reimburse each such Holder of Registrable Securities
        and
        each of such Holder’s officers, directors, partners, employees, legal counsel
        and accountants and each party controlling such Holder, and each underwriter,
        if
        any, and each party who controls such underwriter entitled to indemnification
        for any legal or other expenses reasonably incurred in connection with
        investigating or defending any such Claim as and when such expenses are
        incurred; provided, however, that the Company shall not be liable in any
        such
        case to the extent that any such Claim arises out of or is based upon any
        untrue
        statement or omission made in such registration statement or prospectus in
        reliance upon and in conformity with written information furnished to the
        Company by such Holder or underwriter, as the case may be, and/or any person
        acting on its behalf, and stated to be specifically for use
        therein.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6.02 Holder
        Indemnity Each
        Holder of Registrable Securities shall severally indemnify and hold harmless
        the
        Company, each of its officers, directors, partners, employees, legal counsel,
        and accountants and each party controlling (within the meaning of the Securities
        Act) the Company, and each underwriter, if any, and each party who controls
        (within the meaning of Securities Act) such underwriter from and against
        any and
        all Claims, to which any of them may be subject under the Securities Act
        or any
        other statute (whether U.S. or Israeli) or at common law, insofar as such
        Claims
        arise out of, are based upon, or are in connection with (i) any untrue statement
        (or alleged untrue statement) of any material fact contained in any registration
        statement or prospectus under which Securities are sold; (ii) any omission
        or
        alleged omission) to state therein a material fact required to be stated
        therein
        or necessary to make the statements therein not misleading; or (iii) any
        other
        violation by the Company of the Securities Act or any state or foreign
        jurisdiction securities laws in connection with such registration, and shall
        reimburse the Company, each of its officers, directors, partners, employees,
        legal counsel, and accountants, and each underwriter, if any, and each party
        who
        controls such underwriter entitled to indemnification for any legal or other
        expenses reasonably incurred by such person in connection with investigating
        or
        defending any such Claim, as and when such expenses are incurred; provided,
        however, that the aforesaid indemnity shall only apply where such Claim or
        violation results from and/or reliance upon and in conformity with written
        information furnished to the Company by such Holder of Registrable Securities
        and/or any person acting on its or their behalf and stated to be specifically
        for use therein.

      

      6.03 Indemnity
        Procedure Promptly
        after receipt by a Holder or by the Company of notice of the commencement
        of any
        action, proceeding or investigation in respect of which indemnity may be
        sought
        as provided above, such party (the “Indemnitee”) shall notify the party from
        which indemnification is claimed (the “Indemnitor”). The Indemnitor shall
        promptly assume the defense of the Indemnitee with counsel reasonably
        satisfactory to such Indemnitee, and the fees and the expenses of such counsel
        shall be at the sole cost and expense of the Indemnitor. The Indemnitee will
        cooperate with the Indemnitor in the defense of any action, proceeding or
        investigation for which the Indemnitee assumes the defense. The Indemnitor
        shall
        not be liable for the settlement by the Indemnitee of any action, proceeding
        or
        investigation effected without its consent, which consent shall not be
        unreasonably withheld. The Indemnitor shall not enter into any settlement
        in any
        action, suit or proceeding to which the Indemnitee is a party, unless such
        settlement includes a general release of the Indemnitee with no payment by
        the
        Indemnitee of consideration and without an admission of liability.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6.04 Notice The
        parties agree promptly to notify each other of the commencement of any
        litigation or proceedings against the Company or any of its officers or
        directors in connection with the sale of any Registrable Securities or any
        preliminary prospectus or registration statement relating to any sale of
        any
        Registrable Securities, or of any other litigation or proceedings to which
        this
        Section 5 is applicable of which they became aware.

      

      
        	7)	
                Term

              

      

      

      7.01 Subsequent
        to a registration in which the Investor Member could have participated, the
        registration rights contained in Section 2 above shall expire as to the Investor
        Member when each such Investor Member ahs sold in the aggregate not less
        than
        90% of his, hers or its Registrable Shares owned as of the date
        hereof.

      

      7.02 The
        Company shall have the right to terminate or withdraw any registration initiated
        by it under Section 2 prior to the effectiveness of such registration whether
        or
        not any Holder has elected to include securities in such
        registration.

      

      
        	8)	
                Rule
                  144 Reporting

              

      

      

      8.01   With
        a
        view to making available the benefits of certain rules and regulations of
        the
        Securities and Exchange Commission which may permit the sale of the Registrable
        Securities to the public without registration, the Company agrees
        to:

      

      (a)
        Make
        and keep public information available, as those terms are understood and
        defined
        in Rule 144 under the Securities Act, at all times from and after ninety
        (90)
        days following the effective date of the first registration under the Securities
        Act filed by the Company for an offering of its securities to the general
        public;

      

      (b)
        Use
        its best efforts to file with the Commission in a timely manner all reports
        and
        other documents required of the Company under the Securities Act and the
        Exchange Act at any time after it has become subject to such reporting
        requirements; and

      

      (c)
        Furnish to the Holders forthwith upon request a written statement by the
        Company
        as to its compliance with the reporting requirements of Rule 144 and of the
        Securities Act and the Securities Exchange Act of 1934 (at any time after
        it has
        become subject to such reporting requirements), a copy of the most recent
        annual
        or quarterly report of the Company, and such other reports and documents
        so
        filed as a Holder may reasonably request in availing itself of any rule or
        regulation of the Commission allowing a Holder to sell any such securities
        without registration.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	
                9)

              	
                Lock-Up

              

      

      

      9.01
         In
        any
        underwritten registration of the Company’s Ordinary Shares, all Holders of
        Registrable Shares agree that any sales of Registrable Shares may be subject
        to
        a “lock-up” period restricting such sales for up to 90 days (subject to
        requirement by underwriters for a period not to exceed 180 days). All Holders
        agree to abide by a customary “lock-up” period of up to 90 days (subject to
        requirement by underwriters for a period not to exceed 180 days) as is required
        by the underwriter in a registration under section 2.02 of this
        Agreement.

      

      Notwithstanding
        the foregoing provisions of this Section 9.01 (a) the Holders will be subject
        to
        the lock-up restrictions for an offering only if the Company’s executive
        officers, directors and shareholders holding a comparable number of shares
        are
        similarly locked-up for such offering and (b) all of the restrictions of
        this
        Section 9.01, including any lock-up periods, shall expire and be of no further
        force or effect on the one year anniversary of the effective date of the
        Company’s initial public offering (in whatever country it occurs).

      

      
        	10)	
                New
                  Registration Rights

              

      

      

      10.01 
        For the
        removal of any doubt, nothing in this Appendix shall limit the Company’s ability
        to register additional of its securities, including those issued to employees,
        consultants and service-providers.

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