FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 1-5631
WATKINS-JOHNSON COMPANY
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94-1402710
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3333 Hillview Avenue, Palo Alto, California 94304-1223
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Address of principal executive offices) (Zip Code)
(650) 493-4141
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
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Common stock, no par value, outstanding as of September 24, 1999 6,627,000
shares
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Item 6. Exhibits and Reports on Form 8-K
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a) Part II Item 6(a) is hereby amended to add Exhibit to
add Exhibit 10-35.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WATKINS-JOHNSON COMPANY
(Registrant)
Date November 15, 1999 By: /s/ W. Keith Kennedy, Jr.
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W. Keith Kennedy, Jr.
President and Chief Executive Officer
Date November 15, 1999 By: /s/ Scott G. Buchanan
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Scott G. Buchanan
Executive Vice President,
Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
The Exhibits below are numbered according to Item 601 of Regulation S-K.
Exhibit
Number Exhibit
- ------ -------
3.1 * Articles of Incorporation of Watkins-Johnson Company, as amended May
8, 1989
3.2 * By-Laws of Watkins-Johnson Company, as amended and restated on
December 10, 1998 (Exhibit 3(ii) to Form 8-K filed on December 14,
1998, Commission File No. 1-5631).
4.1 * Shareowners' Rights Agreement dated as of September 30, 1996 Between
Watkins-Johnson Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (Report on Form 8-K, filed on October 1,
1996, Commission File No.1-5631).
4.2 * Amendment No. 1 to Rights Agreement, dated as of December 10, 1998,
to Rights Agreement, dated as of September 30, 1996, between
Watkins-Johnson Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent. (Filed as Exhibit 4.1 to Form 8-K filed on
December 14, 1998, Commission File No. 1-5631).
10 Material Contracts
10.1 * Lease and Agreement between Lindco Properties Company and
Watkins-Johnson Company commencing May 1, 1969 (Exhibit (b) I to
Form 10-K for 1969, Commission File No. 2-22436).
10.2 * Lease and Agreement between Morrco Properties Company and
Watkins-Johnson Company dated October 31, 1975 (Exhibit 2(c) to Form
10-K for 1976, Commission File No. 1-5631).
10.3 * Watkins-Johnson Company 1976 Stock Option Plan, as amended September
28, 1987 (Appendix A to the company's definitive proxy statement
dated March 1, 1988 filed with the Commission pursuant to Regulation
14A).
10.4 * Watkins-Johnson Company 1989 Stock Option Plan for nonemployee
directors (Appendix A to the company's definitive proxy statement
dated February 28, 1990 filed with the Commission pursuant to
Regulation 14A).
10.5 * Watkins-Johnson Company 1976 Stock Option Plan amended and renamed
as the 1991 Stock Option and Incentive plan (Appendix A to the
company's definitive proxy statement dated February 28, 1991 filed
with the commission pursuant to Regulation 14A).
10.6 Deleted
10.7 Deleted
10.8 Deleted
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Exhibit
Number Exhibit
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10.9 Deleted
10.10 Deleted
10.11 * Stock Purchase Agreement dated as of August 29, 1997 by and among
Registrant and SMS and TSMD Acquisition Corp. (original agreement
filed as Exhibit 99.1 of Report on Form 8-K, filed on November 14,
1997, reporting the disposition of assets effective October 31,
1997, Commission File No. 1-5631).
10.12 * Watkins-Johnson Company Unaudited Pro Forma Condensed Consolidated
Financial Information filed as an amendment to Report on Form 8-K,
filed on November 14, 1997, reporting the disposition of assets
effective October 31, 1997 and Stock Purchase Agreement dated as of
August 29, 1997 by and among Registrant and SMS and TSMD Acquisition
Corp., Commission File No. 1-5631 (Exhibit 10-x originally filed as
Report on Form 8-K/A, filed on January 13, 1998, Commission File No.
1-5631).
10.13 * Asset Purchase Agreement between Watkins-Johnson Company and Samsung
Semiconductor, Inc. dated as of December 31, 1997. (Filed as Exhibit
10-y to the 1997 Form 10-K, Commission File No. 1-5631).
10.14 * Assignment of Lease Agreement by and between Taylor Woodrow Property
Company, Inc. ("Assignor") and Watkins-Johnson Company ("Assignee")
dated as of December 30, 1997. (Filed as Exhibit 10-z to the 1997
Form 10-K, Commission File No. 1-5631).
10.15 * Form 8-K filed on September 10, 1998. The report contains
disclosures regarding the company's announcement of restructuring
plans and related third quarter 1998 charges. (Commission File No.
1-5631).
10.16 * Form 8-K filed on December 14, 1998. The report contains disclosures
regarding the December 10, 1998 Board of Director approval to amend
and restate the company By-Laws and to amend the Rights Agreement,
dated September 30, 1996, between the company and ChaseMellon.
(Commission File No. 1-5631).
10.17 * Form 8-A/A filed on December 14, 1998. Form 8-A/A was filed for the
registration of the amended common stock purchase rights approved by
the Board of Directors on December 10, 1998 (Commission File No.
1-5631).
10.18 ** Purchase and Sale Agreement, dated May 2, 1997, by and among
Watkins-Johnson Company and CarrAmerica Realty for sale of
undeveloped land in San Jose, California, including the August 15,
1997 First Amendment to and Reaffirmation of Purchase and Sale
Agreement.
10.19 ** Resolution of the Board of Directors of Watkins-Johnson, effective
December 31, 1998, for the termination of the company's 1994 Top
Management Deferred Compensation Plan and the company's Top
Management Incentive Bonus Plan.
10.20 ** Form of Severance Agreement, dated September 28, 1998, by and
between Watkins-Johnson Company and the following officers of the
company: Dr. Patrick J. Brady, Malcolm J. Caraballo, and Robert G.
Hiller.
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Exhibit
Number Exhibit
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10.21 ** Amended and Restated Employment Agreement made as of March 2, 1998
and amended and restated in its entirety effective as of January 25,
1999 by and between W. Keith Kennedy and Watkins-Johnson Company.
10.22 ** Form of employment Agreement, dated February 22, 1999, by and
between Watkins-Johnson Company and the following officers of the
company: Scott G. Buchanan, Dr. Frank E. Emery, Darryl T. Quan and
Claudia D. Kelly.
10.24 ** Amended and Restated Severance Agreement originally dated September
28, 1998 and amended and restated in its entirety effective as of
January 25, 1999 by and between Watkins-Johnson Company and Scott G.
Buchanan.
10.25 ** Terms of Employee Rentention Program dated March 1, 1999.
10.26 Form of Amended and Restated Severance Agreement originally dated
September 28, 1998 and amended and restated in its entirety
effective January 25, 1999 and July 9, 1999 by and between
Watkins-Johnson Company and the following officers of the company:
Dr. Frank E. Emery, Darryl T. Quan and Claudia Kelly.
10.27 Amended and Restated Severance Agreement originally dated September
28, 1998 and amended and restated in its entirety effective January
25, 1999 and July 9, 1999 by and between Watkins-Johnson Company and
Scott G. Buchanan.
10.28 Remediation Agreement entered into on July 13, 1999 by and between
SECOR International Incorporated ("SECOR"), a Delaware corporation
and Watkins-Johnson Company, for professional environmental services
for 3333 Hillview Avenue, Palo Alto, California.
10.29 Purchase and Sale Agreement entered into August 21, 1999 by and
between Watkins-Johnson Company and Lincoln Property Company
Commercial Inc for the sale of land and building at 2525 North First
Street, San Jose, California.
10.30 Agreement for Assignment of Leasehold Interest, Sublease of
Property, Leaseback of Real Property, and Joint Escrow Instructions
entered into on September 30, 1999 by and between the Board of
Trustees of the Leland Stanford Junior University and
Watkins-Johnson company for buildings 3, 4 and 5 located at 3333
Hillview Avenue, Palo Alto, California.
10.31 * Watkins-Johnson Company Unaudited ProForma Condensed Consolidated
Financial Information on Form 8-K, filed on July 21, 1999 reporting
the completion of the divestiture of the company's Semiconductor
Equipment Group business on July 6, 1999 and related amendment to
the Securities Purchase Agreement dated April 30, 1999 between
Silicon Valley Group, Inc. and Watkins-Johnson Company (Commission
File No. 1-5631).
10.32 * Purchase Agreement, dated August 18, 1999, between Watkins-Johnson
Company and Tracor, Inc. providing for the sale of the company's
Telecommunications Group (filed as Exhibit 2.1 to Form 8-K filed on
August 18, 1999, Commission File No. 1-5631).
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Exhibit
Number Exhibit
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10.33 *Amended and Restated Purchase Agreement, dated August 18, 1999,
between Watkins-Johnson Company and Tracor, Inc., with Marconi
Aerospace Electronics Systems, Inc. as Assignee of the rights and
obligations of Tracor, Inc. (filed as Exhibit 10.1 to Form 8-K filed on
October 7, 1999, Commission File No. 1-5631).
10.34 Resolution passed by the Board of Directors on July 2, 1999 to provide
compensation to retired directors.
10.35 Amended and Restated Employment Agreement originally dated March 2,
1998 and amended and restated in its entirety effective January 25,
1999 and July 9, 1999 by and between Watkins-Johnson Company and W.
Keith Kennedy.
27.1 Financial Data Schedule for the quarter ended September 24, 1999
27.2 Restated Financial Data Schedule for the quarter ended September 25,
1998.
27.3 Restated Financial Data Schedule for the year ended December 31, 1998.
27.4 Restated Financial Data Schedule for the year ended December 31, 1997.
27.5 Restated Financial Data Schedule for the year ended December 31, 1996.
* Incorporated by reference to exhibits indicated for each item.
** Incorporated by reference to the company's Form 10K/A filed on
November 2, 1999 for the fiscal year ended December 31, 1998.
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Exhibit 10.35
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made as of March 2, 1998, and amended and restated in its entirety effective as
of January 25, 1999, and July 9, 1999, by and between W. Keith Kennedy
(hereinafter called "Employee") and WATKINS-JOHNSON COMPANY, a California
corporation (hereinafter called the "Company").
In consideration of the mutual covenants herein contained the parties
hereto agree as follows:
1. Term and Scope of Employment.
(a) The Company agrees to employ Employee in Palo Alto,
California for a period of thirty-six (36) months, commencing March 9, 1998, and
ending March 9, 2001, for the purpose of rendering services in connection with
the Company's business. Employee agrees to accept employment with the Company
for such purpose. In performing his duties hereunder, Employee shall observe and
comply with all directions given by the Board of Directors of the Company or by
his superiors.
(b) Employee shall devote his full time, attention, and effort
to the business of the Company, and shall not during the term of this Agreement
engage in any other business (whether
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as an employee, partner, consultant or otherwise) without the consent of the
Company; but this shall not be construed as preventing Employee from investing
his assets in such form or manner as will not interfere with the services he
agreed to render to the Company hereunder.
(c) Employee agrees to inform the Board of Directors of the
Company, or his superiors, of all of his work and transactions on behalf of the
Company, and to disclose to them his knowledge of the Company's business and
affairs.
2. Salary.
For his services the Company agrees to pay Employee an annual
salary of not less than Four Hundred and Sixty-Five Thousand Dollars ($465,000)
payable in equal biweekly installments. In addition to the above amount, at the
sole discretion of the Board of Directors, Employee may be granted bonuses or
other compensation in an amount to be determined in accordance with Board
policy.
3. Termination.
(a) For Cause. During the term of this Agreement, Employee's
employment may be terminated by the Company for Cause (as defined below),
effective immediately upon the day it sends Notice of Termination (as required
by Section 10(b)) to Employee, at which time compensation will cease. "Cause"
for this purpose,
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shall mean fraud, misappropriation, embezzlement or willful engagement by
Employee in misconduct which is demonstrably and materially injurious to the
Company and its subsidiaries taken as a whole. An act or omission of Employee
shall not be considered "willful" unless done, or omitted to be done, by
Employee without good faith and a reasonable belief that the act or omission was
in the best interests of the Company and its subsidiaries. Employee may not be
terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by affirmative vote of not less
than three-quarters of the entire membership of the Company's Board of Directors
at a meeting of the Board called and held for that purpose (after reasonable
notice to Employee and an opportunity for Employee, together with Employee's
counsel, to be heard before the Board), finding Employee was guilty of the
conduct set forth in the first sentence of this Section 3(a), and specifying the
particulars thereof in detail. Notwithstanding the foregoing, Employee shall
have the right to contest such termination for Cause (for purposes of this
Agreement) by arbitration in accordance with the provisions of Section 9.
(b) Without Cause. Company may terminate Employee's employment
without Cause. In the event Company terminates Employee's employment without
Cause, in addition to the entire compensation provided for hereunder for the
remainder of the term specified in Section 1(a) (which shall be paid in a lump
sum),
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Employee shall be entitled to receive upon such termination without Cause (in a
lump sum) severance compensation equal to six (6) month's base salary, less all
amounts required by law to be withheld and deducted; provided, however, that if
the Company terminates Employee's employment other than for death, Disability or
Cause, or Employee terminates his Employment for Good Reason, prior to the date
of occurrence of a Change in Control if such termination is effected by the
Company (or the actions or decisions giving rise to Employee's termination for
Good Reason are taken or made by the Company) in anticipation of a Change of
Control such termination shall for all purposes hereunder have the same
consequences as a termination by Employee under subparagraph (c) of this Section
3 (any such termination, action or decision effected, taken or made within 90
days prior to the date of any such Change in Control shall be conclusively
deemed to be in anticipation of a Change in Control).
(c) Change in Control. This Agreement shall not be terminated
upon a Change in Control, as defined in subparagraph (d) of this Section 3. In
the event of a Change in Control, the provisions of this Agreement shall be
binding on and shall inure to the benefit of the surviving or resulting
corporation, or (in the case of a Change in Control of the kind referred to in
Section 3(c)(i)(z)) the corporation to which the applicable assets of the
Company have been transferred; provided, however, that (a) Employee may treat
the occurrence of a Change
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in Control as a material breach of this Agreement and may terminate this
Agreement upon written notice given (in accordance with Section 10(b)) within
120 days of the occurrence of a Change in Control, unless Employee's employment
has theretofore been terminated in accordance with any other provisions of this
Agreement, and (b) Employee may terminate this Agreement for Good Reason at any
time following the occurrence of a Change in Control and during the remainder of
the term of this Agreement as specified in Section 1(a). Upon such termination,
or upon a termination of Employee by the Company without Cause at any time
following the occurrence of a Change in Control, the Company shall:
(i) pay to Employee as severance pay in a lump sum,
in cash, on the fifth day following the Date of Termination (as defined in
subparagraph (g) of this Section 3), an amount equal to the aggregate of (x)
299.999% of Employee's "Base Compensation" (as defined below), plus (y) an
amount equal to (A) the amount previously determined by the Board as Employee's
target bonus for the calendar year in which Notice of Termination is given by
Employee or the Company, as the case may be, multiplied by (B) a fraction, the
numerator of which shall be the number of days that have elapsed during such
calendar year, through and including the date on which such Notice of
Termination is given, and the denominator of which shall be 365; provided,
however, that if the lump sum severance payment under
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this Section 3, either alone or together with other payments (or the value of
other benefits) which Employee has the right to receive from the Company in
connection with a Change in Control, would not be deductible (in whole or in
part) by the Company as a result of such lump sum payment constituting a
"parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986, as amended (collectively, the "Code")), such lump sum severance payment
(or, at Employee's election, such other payments and/or benefits, or a
combination of such other payments and/or benefits and such lump sum severance
payment) shall be reduced to the largest amount as will result in no portion of
the lump sum severance payment under this Section 3 not being fully deductible
by the Company as a result of Section 280G of the Code. The determination of the
amount of any such required reduction pursuant to the foregoing provision, and
the valuation of any non-cash benefits for purposes of such determination, shall
be made exclusively by the firm that was acting as the Company's auditors prior
to the Change in Control (whose fees and expenses shall be borne by the
Company), and such determination shall be conclusive and binding. The term "Base
Compensation" shall mean an average of the annual cash compensation paid to
Employee by the Company and any of its subsidiaries in the form of salary or
bonuses (including any amount that is the subject of an elective deferral by
Employee) during the five taxable years immediately preceding the Change in
Control which was includable
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in gross income (or would have been so included but for any such elective
deferral) by Employee for federal income tax reporting purposes; and
(ii) arrange to provide Employee, for a thirty-six
month period (or such shorter period as Employee may elect), with disability,
accident, group life, medical and dental insurance, all of which shall be
prepaid, substantially similar to those insurance benefits which Employee is
receiving immediately prior to a termination by Employee under this Section
3(c). Benefits otherwise receivable by Employee pursuant to this Section 3(c)
shall be reduced to the extent comparable benefits are actually received by
Employee during such thirty-six month period (or such shorter period elected by
Employee), and any such benefits actually received by Employee shall be reported
by Employee to the Company.
(d) Definition of Change in Control. A Change in Control shall
be deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation, (y) any other consolidation or merger to
which the Company is a party, regardless of whether shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the
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same proportionate ownership of common stock (or the equivalent fully voting
securities) of the surviving corporation or other entity immediately after the
merger, or (z) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of the Company, or (ii) the Company consummates (in one or a series of
transactions) the disposition of substantially all of its business operations,
or (iii) any "person" (as defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, shall become the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30% or
more of the Company's outstanding Common Stock, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors of the Company shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) Disability. If, as a result of Employee's incapacity due
to physical or mental illness, Employee shall have been absent from his duties
with the Company on a full-time basis for six consecutive months and within 30
days after written Notice of Termination is thereafter given by the Company
Employee
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shall not have returned to the full-time performance of Employee's duties, the
Company may terminate this Agreement for "Disability."
(f) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (without Employee's express written consent):
(A) the assignment to Employee by the Company of
duties inconsistent with, or a substantial alteration in the nature or status
of, Employee's responsibilities immediately prior to a Change in Control other
than any such alteration primarily attributable to the fact that the Company's
securities are no longer publicly traded;
(B) a reduction by the Company in Employee's base
salary in effect on the date of a Change in Control or as the same may be
increased from time to time during the term of this Agreement;
(C) failure by the Company to continue in effect
without substantial change any compensation, incentive, welfare or benefit plan
or arrangement, as well as any plan or arrangement whereby Employee may acquire
securities, in which Employee is participating at the time of a Change in
Control (or any other plans providing Employee with substantially similar
benefits, hereinafter referred to as "Benefit Plans"), or the
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taking of any action by the Company which would adversely affect Employee's
participation in or materially reduce Employee's benefits under any such Benefit
Plan or deprive Employee of any material fringe benefit enjoyed by Employee at
the time of a Change in Control; unless an equitable substitute arrangement
(embodied in an ongoing substitute or alternative Benefit Plan) has been made
for the benefit of Employee with respect to the Benefit Plan in question. For
purposes of the foregoing, Benefit Plans shall include, but not be limited to,
the Company's Employee Stock Ownership Plan, Employees' Profit Sharing and
Investment Plan, Deferred Compensation (401K) Plan, 1991 Stock Option and
Incentive Plan, Top Management Incentive Bonus Plan, and/or any other plan or
arrangement to receive and exercise stock options or stock appreciation rights,
incentive, bonus or other award plans, group life insurance plans, medical,
dental, accident and disability plans;
(D) a relocation of the Company's principal executive
offices to a location outside the San Francisco-Oakland-San Jose Bay Area, or
Employee's relocation to any place other than the principal executive offices of
the Company, except for required travel by Employee on Company business to an
extent substantially consistent with Employee's business travel obligations at
the time of a Change in Control;
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(E) any material breach by the Company of any
provision of this Agreement;
(F) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company as
required in Section 7; or
(G) any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 10(b) below. For purposes of this Agreement, no such
purported termination shall be effective.
(g) Date of Termination. "Date of Termination" shall
mean (a) for Disability, 30 days after Notice of Termination is given to
Employee (provided Employee has not returned to the performance of Employee's
duties on a full-time basis during such 30-day period), or (b) if Employee's
employment is terminated for any other reason, the date on which Notice of
Termination is given by the Company or Employee, as the case may be.
Notwithstanding any other provision of this Agreement, if during the term of
this Agreement and while Employee is employed by Company, any persons shall
enter into any agreement one of the purposes of which is to effect a transaction
or transactions (the "Transaction") that would constitute, or be part of, a
Change in
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Control, the Company shall be obligated unconditionally to pay or provide to
Employee the severance pay in Section 3(c)(i) and the benefits in Section
3(c)(ii) on the date of the consumation of the Transaction (whether or not
Employee is then employed by the Company and without regard to the reason for
any termination of Employee's employment, provided that such payments and
benefits shall not be paid or provided if Employee is terminated for cause prior
to the consumation of the Transaction) and such funds shall be deposited in an
escrow account seven calendar days prior to the consumation of the Transaction
with irrevocable instructions to pay such funds to Employee on the consumation
of the Transaction.
4. Nondisclosure and Assignment of Rights in Company Data. "Company
Data" is hereby defined to mean for purposes of this Agreement, programs,
improvements, records, ideas, files, drawings, documents, customer lists,
investment opportunities, sales and marketing techniques and devices, formulae,
specifications, research, studies, investigations, processes, data, and
information disclosed to or known by Employee as a consequence, whether directly
or indirectly, of his employment by Company which is not generally known in the
industry in which the Company is or may become engaged and which involves
special techniques or know-how in connection with the industry in which the
Company is or may become engaged, and, without limiting the generality of the
foregoing, anything not within the public
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domain and public knowledge, whether or not patentable or copyrightable. The
parties hereto acknowledge that in the course of his employment, Employee will
himself, or with others, have access to, use, come in contact with, obtain,
make, evolve or conceive Company Data. As further consideration for Company's
entering into this Agreement, Employee hereby sells, assigns and transfers to
Company all right, title, and interest he has or at any time may have to Company
Data, and to any and all other Company Data at any time used in the business of
Company in which Employee may have a right, title, or interest, and such Company
Data shall be the sole and exclusive property of Company.
5. Assignment. The rights and obligations of Employee hereunder shall
not be assignable and any attempted assignment shall be void. The rights and
obligations of Company hereunder may be assigned as a part of any transaction
which includes the transfer of all or substantially all of the assets of the
Company, whether such transfer is made pursuant to a sale of assets or stock, or
a merger, reorganization, or otherwise.
6. No Obligation to Mitigate Damages. Employee shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by
Employee as a result of employment by another employer or by retirement
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benefits after the Date of Termination, or otherwise, except to the extent
provided in Section 3 above.
7. Successor to the Company. The Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor or
assign to its business and/or assets which executes and delivers the agreement
provided for in this Section 7 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
8. Heirs of Employee. This Agreement shall inure to the benefit of and
be enforceable by Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Employee's
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devisees, legatee, or other designee or, if there be no such designee, to
Employee's estate.
9. Arbitration. Any dispute, controversy or claim arising under or in
connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then in effect. Judgment upon the award
rendered by Arbitrator(s) may be entered in any court having jurisdiction
thereof. Any arbitration held pursuant to this Section 9 shall take place in San
Francisco, California.
10. Notice.
(a) General. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Watkins-Johnson Company
3333 Hillview Avenue
Palo Alto, California 94304
Attention: Corporate Secretary
If to Employee:
W. Keith Kennedy
26955 Orchard Hill Lane
Los Altos Hills, California 94022
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or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of address shall be effective only
upon receipt.
(b) Notice of Termination. Any purported termination of
employment shall be communicated by a written Notice of Termination to Employee
in accordance with paragraph (a) of this Section 10, and shall state the
specific termination provisions in this Agreement relied upon, and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment.
11. Nonwaiver, Complete Agreement, Governing Law. No provisions of this
Agreement may be modified, waived or discharged unless in writing signed by both
parties. No waiver by either party hereto at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of
the State of California.
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12. Legal Fees and Expenses. The Company shall pay all reasonable legal
fees and expenses which Employee may incur as a result of the Company's
contesting the validity, enforceability or Employee's good faith interpretation
of, or good faith determinations under, this Agreement; provided, however, that
the Company shall not pay any legal fees and expenses incurred by Employee in
contesting the termination of Employee's employment for Cause if, as a result of
such contest, it is determined that Employee was in fact terminated for Cause.
13. Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WATKINS-JOHNSON COMPANY
By /s/ Dean A. Watkins
-------------------------------
Chairman of the Board
/s/ W. Keith Kennedy
-------------------------------
W. Keith Kennedy
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