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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
REMEC, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
75954310 1
CUSIP Number
Victor A. Hebert
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
(415) 772-6000
(Name, address and telephone number
of person authorized to receive
notices and communications)
August 26, 1996
(Date of Event which requires
filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: / /
Check the following box if a fee is being paid with this statement: /X/
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. See (Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment
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containing information which would alter disclosures provided in a prior cover
page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
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1) Name of Reporting Persons: JOSEPH T. LEE
S.S. or I.R.S. Identification No. of above person
___________________________________________________
(2) Check the Appropriate Box if a Member of a Group*
(a) / / _____________________________________________
(b) / / _____________________________________________
3) SEC Use Only _________________________________
4) Source of Funds* : 00
5) / / Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e)
6) Citizenship or Place of Organization: UNITED
STATES OF AMERICA
7) Sole Voting Power
507,437
Number
of 8) Shared Voting Power
Shares
Beneficially 0
Owned
by 9) Sole Dispositive Power
Each
Reporting 507,437
Person
With 10) Shared Dispositive Power
0
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 509,785
12) / / Check if the Aggregate Amount in Row (11)
Excludes Certain Shares*
13) Percent of Class Represented by amount in Row (11):
5.7%
14) Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") relates to Common
Stock, $.01 par value per share (the "Common Stock"), of REMEC, Inc., a
California corporation (the "Issuer"). The address of the principal executive
offices of the Issuer is 9404 Chesapeake Drive, San Diego, California 92123.
Item 2. Identity and Background.
(a) Name of Person filing this Statement: Joseph T.
Lee (the "Reporting Person").
(b) Business Address of Reporting Person: 1990
Concourse Drive, San Jose, California 95131.
(c) Occupation of Reporting Person: Chief Executive
Officer of Magnum Microwave Corporation, 1990
Concourse Dive, San Jose, California 95131;
(d) Criminal Proceedings: During the last five years,
the Reporting Person has not been concicted in a
criminal proceeding (excluding traffic violations
or similar misdemeanors).
(e) Civil Proceedings: During the last five years,
the Reporting Person has not been a party to a
civil proceeding of a judicial or adminitratvive
body of competent jursidiction that subjected the
Reporting Person to a judgment, decree or final
order enjoining future violation of, or
prohibiting or mandating activities subject to,
Federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship: United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to an Agreement and Plan of Reorganization and Merger,
dated May 16, 1996, as amended by Amendment No. 1 thereto dated July 25, 1996,
by and among Magnum Microwave Corporation, a California corporation ("Magnum"),
REMEC Acquisition Corporation, a California corporation and wholly-owned
subsidiary of the Issuer ("RAC"), effective August 26, 1996, RAC was merged (the
"Merger") with and into Magnum. As a result of the Merger, all of the issued and
outstanding shares of Magnum Common Stock were converted into Common Stock of
the Issuer, RAC ceased to exist and Magnum became a wholly-owned subsidiary of
the Issuer. In connection with the Merger, the 10,855,932 shares of Magnum
Common Stock owned by the Reporting Person (including 50,000 shares of Magnum
Common Stock owned by the spouse of the Reporting Person) were converted into
509,785 shares of Common Stock of the Issuer.
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Item 4. Purpose of Transaction.
The Reporting Person acquired the Common Stock of the Issuer in
connection with the Merger. See Item 3 above.
Other than the proposed appointment of the Reporting Person as an
Executive Vice President of the Issuer on or about September 25, 1996, the
Reporting Person has no plans or proposals that relate to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present Board of Directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the Board of Directors of the Issuer;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or
corporate structure;
(g) any other material change in the Issuer's charter, bylaws or
instruments corresponding thereto or other actions which may
impede the acquisition of control of the Issuer by any person;
(h) causing the Common Stock to cease to be authorized to be
quoted on the Nasdaq National Market;
(i) the Common Stock becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(j) any action similar to any of those actions set forth above.
Item 5. Interest in Securities of the Issuer.
(a) As of August 26, 1996, the Reporting Person was the beneficial
owner of an aggregate of 509,785 shares of Common Stock of the Issuer (including
2,348 shares of Common Stock of the Issuer held in the name of the spouse of
the Reporting
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Person) representing 5.7% of the shares of such class of stock outstanding on
such date (the "Beneficially Owned Shares").
(b) Of the Beneficially Owned Shares, the Reporting Person holds
sole voting and dispositive power over 507,437 of such shares. Of the
Beneficially Owned Shares, the Issuer's spouse held sole voting power and
dispositive power over 2,348 shares.
(c) No transactions in the Common Stock of the Issuer have been
effected during the past 60 days by the Reporting Person.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
There are no contracts, arrangements, understandings or
relationships between or among the Reporting Person and any other person with
respect to any securities of the Issuer other than (i) that certain Employment
and Non-Competition Agreement dated August 26, 1996 by and between Magnum, the
Issuer and the Reporting Person, which provides, among other things, for the
grant by the Issuer to the Reporting Person of an option to purchase 30,000
shares of Common Stock of the Issuer, and (ii) that certain Affiliate's
Agreement dated August 26, 1996 between the Reporting Person and the Issuer,
which provides, among other things, that the Reporting Person shall comply with
Rule 145 of the Securities and Exchange Commission in all sales or dispositions
of the Common Stock of the Issuer held by the Reporting Person.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Employment and Non-Competition Agreement dated August
26, 1996 by and between Magnum, the Issuer and the Reporting Person.
Exhibit 2 - Affiliate's Agreement dated August 26, 1996 between the
Reporting Person and the Issuer.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete and
correct.
Dated: September 3, 1996
By: /s/ JOSEPH T. LEE
----------------------------
JOSEPH T. LEE
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EXHIBIT 1
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement") is made
and entered into as of August 26, 1996, by and between MAGNUM MICROWAVE
CORPORATION, a California corporation ("Magnum"), REMEC, Inc., a California
corporation ("REMEC") and Joseph T. Lee ("Employee").
BACKGROUND
This Agreement is being executed in connection with the merger (the
"Merger") of REMEC Acquisition Corporation, a California corporation ("RAC"), a
wholly-owned subsidiary of REMEC with and into Magnum, pursuant to an Agreement
and Plan of Reorganization dated May 16, 1996 by and among REMEC, RAC and
Magnum. Employee owns a majority of the capital stock of Magnum prior to the
Merger which stock is being converted into shares of Common Stock of REMEC in
connection with the Merger. Prior to the Merger, Employee has been employed by
Magnum as its President and Chief Executive Officer. As part of the Acquisition,
Magnum will become a wholly-owned subsidiary of REMEC. REMEC has asked Employee
to continue his employment with Magnum as a subsidiary of REMEC after the Merger
to provide, for the term of this Agreement, the continued benefit of Employee's
experience in the business acquired in the Merger and to become an Executive
Vice President of REMEC.
AGREEMENT
THE PARTIES AGREE AS FOLLOWS:
1. DUTIES. (a) During the term of this Agreement, Employee shall be
employed by and shall serve Magnum as its President and Chief Executive Officer
and REMEC as an Executive Vice President and Magnum and REMEC agree to employ
and retain Employee in such capacity or in such other capacity as Magnum and the
Board of Directors of REMEC may from time to time elect in the future provided,
however, Employee's duties may not be materially diminished or changed without
his consent. Employee shall be employed full time in such capacity and shall
devote all of Employee's business time, energy, and skill to the affairs of
Magnum and REMEC. During the term of this Agreement, Employee shall report
directly to Ronald E. Ragland or Errol Ekaireb. Said duties shall be performed
at such place or places within Santa Clara County as Magnum shall reasonably
designate or as shall be reasonably appropriate and necessary to the discharge
of Employee's duties. Employee will duly, punctually and faithfully observe the
general employment policies and practices of Magnum and REMEC, including,
without limitation, any and all rules, regulations, policies and/or procedures
which Magnum and REMEC may now or hereafter establish governing the conduct of
its employees generally. It is the intention of the parties hereto that, so long
as Employee is employed as an executive officer of REMEC, he shall be nominated
as a director of REMEC.
(b) If Employee is elected or appointed a director of Magnum or REMEC or an
officer or director of any other subsidiary or affiliate of REMEC for any
periods during the term of this Agreement, Employee will serve in such
capacities without compensation in addition to that specified in Sections 2 and
3 hereof.
2. TERM OF EMPLOYMENT.
2.1 Basic Term. The term of employment of Employee shall commence on the
thirtieth day after the date first above written and shall continue until March
31, 1998 unless terminated as provided in this Section 2. Employee shall
continue to be an employee of Magnum or REMEC after termination of this
Agreement on substantially the same terms set forth in this Agreement on an "At
Will" basis.
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2.2 Termination by Reason of Disability. In the event that, during the term
of this Agreement, Employee should become Disabled (as defined below), Magnum
and REMEC shall have the right to terminate Employee's employment hereunder by
giving at least thirty (30) days' written notification to Employee and payment
to Employee of all accrued salary, pro-rated bonus, vested deferred compensation
(other than pension plan or profit sharing plan benefits, which will be paid in
accordance with the applicable plan), and all accrued vacation pay, all to the
date of termination, but no other compensation or reimbursement of any kind.
For purposes of this Agreement, "Disabled" shall mean the absence of
Employee performing Employee's duties with Magnum and REMEC on a full-time basis
for a period of sixty (60) consecutive business days, or for shorter periods
aggregating ninety (90) or more business days in any twelve (12) month period,
as a result of incapacity due to mental or physical illness which is determined
by a physician selected by Magnum or REMEC or their insurers, who is reasonably
acceptable to Employee.
2.3 Death. In the event of Employee's death during the term of this
Agreement, Employee's employment shall be deemed to have terminated as of the
last day of the calendar month following the calendar month during which
Employee's death occurred, and Magnum or REMEC shall pay to Employee's estate
accrued salary, pro-rated bonus, vested deferred compensation (other than
pension plan or profit sharing plan benefits, which will be paid in accordance
with the applicable plan), and all accrued vacation pay, all to the date of
termination, but no other compensation or reimbursement of any kind.
2.4 Termination For Cause. Termination For Cause (defined below) may be
effected by Magnum and REMEC at any time during the term of this Agreement and
shall be effected by written notification to Employee. Upon Termination For
Cause, Employee shall be immediately paid all accrued salary, incentive
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits, which shall be paid in accordance
with the applicable plan), and all accrued vacation pay, all to the date of
termination, but Employee shall not be entitled to any other compensation or
reimbursement of any kind. Termination For Cause shall mean termination by
Magnum and REMEC of Employee's employment by reason of Employee's (i) dishonesty
towards, fraud upon, Magnum or REMEC; (ii) continued (following written notice)
refusal to obey reasonable and lawful orders or directions of Magnum or REMEC;
or (iii) continued (following written notice) willful breach or habitual neglect
of duty.
2.5 Termination Without Cause. Notwithstanding any other provision of this
Section 2, Magnum and REMEC shall have the right to terminate Employee's
employment without Cause at any time, but any such termination, other than as
expressly provided in Section 2.1 through 2.4 herein, shall be without prejudice
to Employee's rights to receive (in addition to all amounts due Employee in
connection with Termination For Cause) the Base Salary for the remainder of the
term and a pro-rated bonus pursuant to Section 2.6 for the year of termination.
In addition, upon a termination without Cause, the Option (as defined in Section
3.3) shall immediately become fully exerciseable with respect to all shares
covered thereby. If Employee is terminated without Cause, Employee may elect to
receive a lump sum payment representing the present value of the aggregate
unpaid Base Salary discounted to present value at a rate of five percent (5%)
per annum in lieu of the Employee's right to receive the base salary for the
remainder of the Term. Without limitation of any other provision hereof, the
appointment of any officer of Magnum senior to Employee, any requirement that
Employee report to any person other than Ronald E. Ragland or Errol Ekaireb, any
requirement that Employee relocate or spend the majority of his business time
outside the San Francisco Bay Area, any material reduction in Employee's
compensation, duties or responsibilities, or REMEC's failure to hold at least a
majority of the outstanding capital stock of Magnum shall constitute, upon
Employee's resignation within six months of such appointment, or imposition of
such requirement, as the case may be, a termination without Cause.
2.6 Payment of Prorated Bonus. If Employee's employment is terminated under
Sections 2.2, 2.3 or 2.5 then (i) the Employee shall only be entitled to
receive, on a pro-rated basis, the bonus described in Section 3.2 and amounts
under any other bonus plan applicable to Employee, and (ii) if the amount of
bonus payments due are not determinable until a future date (e.g., the end of
the fiscal quarter or year), then, notwithstanding
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any provisions hereof to the contrary, the payment of any such prorated amounts
of the bonus shall be made by Magnum or REMEC promptly upon the determination of
such amounts.
3. SALARY, BENEFITS, AND INCENTIVE COMPENSATION.
3.1 Base Salary. As payment for the services to be rendered by Employee as
provided in Section 1 and subject to the terms and conditions of Section 2,
Magnum or REMEC agrees to pay to Employee a base salary at the rate of Two
Hundred Thousand Dollars ($200,000) per year, payable at the times and places as
Magnum or REMEC pays its payroll in general. Employee's salary shall be reviewed
(but may not be decreased) by the Board of Directors of REMEC on an annual
basis.
3.2 Bonus and Fringe Benefits. For the purposes of bonuses and fringe
benefits, Employee shall be deemed to be in the same compensation group (the
"Senior Management Group") as the Chief Executive Officer of REMEC, President of
REMEC, any and all Executive Vice Presidents of REMEC and other officers of
REMEC or its subsidiaries designated as members of the Senior Management Group
by the Board of Directors of REMEC. REMEC agrees that all members of the Senior
Management Group shall receive identical annual bonuses and fringe benefits
including without limitation, with respect to health, hospitalization, dental
and life insurance benefits, availability and amount of car allowance and
vacation, sick-time and leave policies, provided, however, that should all
members of the Senior Management Group not receive identical annual bonuses and
fringe benefits, Employee shall, during the term hereof, be entitled to (i) an
annual bonus equal to that received by the member of the Senior Management Group
receiving the highest annual bonus, and (ii) with respect to each category of
fringe benefits provided by REMEC or its subsidiaries to members of the Senior
Management Group, Employee shall be entitled to the most favorable benefits in
such category provided to any other member of the Senior Management Group.
Except as provided in Section 2.6 hereof, bonuses shall not be prorated. After
Employee is no longer employed by Magnum or REMEC, Employee may, at his election
and at his cost, elect to continue to be covered by the health, hospitalization,
dental, vision and long term disability and life insurance benefit plans of the
Senior Management Group.
3.3 Stock Option. Employee shall be granted a stock option (the "Option")
to purchase 30,000 shares of REMEC Common Stock, the price to be $15.125 per
share which is the closing price of REMEC Common Stock listed on the NASDAQ
National Market System on August 26, 1996. The stock option will be an
incentive stock option and shall be governed by the terms of REMEC's Incentive
Stock Option Agreement to be provided to employee ("Option Documentation").
3.4 Relocation Expenses. Notwithstanding any other provision of this
Agreement, Magnum and REMEC may not require Employee to relocate his permanent
office outside of the San Francisco Bay Area. However, if Magnum or REMEC
requests that Employee relocate and Employee consents, in his sole and absolute
discretion, to such request, then Magnum or REMEC shall reimburse Employee for:
(i) all expenses actually incurred by Employee in connection with his
relocation, including travel, moving and storage expenses for Employee and his
immediate family and their household effects; and (ii) real estate commissions
incurred by Employee in connection with, at Employee's option, either the sale
of his current residence or the purchase of a new residence.
4. COVENANT NOT TO COMPETE.
4.1 Definitions. For the purposes of this Section 4, the following terms
shall have the following meanings:
"Business" means the design, manufacture and sale of Products,
including the business of Magnum as currently conducted.
"Products" shall mean microwave components, including voltage control
oscillators, dielectric resonator oscillators and mixers or any
substantially similar products.
"Restriction Period" shall mean the period commencing upon the date of
this Agreement and ending on March 31, 1998.
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4.2 Non-Competition. Employee covenants to REMEC that during the
Restriction Period, and except as provided in Section 4.3 below, he shall not
(i) engage in the Business, directly or indirectly, as a principal,
owner, shareholder, partner, officer, director or employee throughout all
geographical areas in which Magnum now conducts the Business and especially
in the California counties of Alameda, Contra Costa, Los Angeles, Marin,
Orange, Riverside, San Diego, San Francisco, San Mateo, Santa Clara, Santa
Cruz, Solano and Ventura;
(ii) induce or attempt to induce, directly or indirectly, any
customer, supplier or distributor of REMEC or Magnum to terminate its
relationship with REMEC or Magnum in order to enter into any such
relationship with Employee or with any other person in competition with the
Business; or
(iii) solicit or induce or attempt to solicit or induce, directly or
indirectly, any employee of REMEC or Magnum, to terminate such employee's
employment relationship with REMEC or Magnum in order to enter into any
such relationship with Employee or with any other person in competition
with the Business, whether or not such person would commit a breach of any
employment agreement by reason of leaving service.
4.3 Exceptions. Notwithstanding the provisions of Section 4.2 above,
nothing shall prevent Employee from owning less than 5% of the outstanding
shares of any corporation traded on a recognized securities exchange or the
NASDAQ Stock Market.
4.4 Notice. Employee shall notify REMEC of any proposed activity that
might be prohibited by this Agreement and shall describe the proposed activity
in reasonable detail in such notice.
4.5 Payment for Non-Competition Covenants. In consideration of the
non-competition and non-solicitation covenants contained in Sections 4.1 through
4.4 of this Agreement, Magnum or REMEC shall pay to Employee, on the date of
execution hereof the sum of $50,000. The payments to Employee under this Section
4 shall be in addition to any payments pursuant to other provisions of this
Agreement.
5. SEVERABILITY. The scope and effect of the covenants contained in this
Agreement shall be as broad as may be permitted under the provisions of
applicable law. To the extent that the language of such covenants may restrict
competition to a greater degree than permitted by such applicable law, that
portion thereof shall be ineffective, but the provisions of the covenants shall
nevertheless remain effective with respect to such portions as shall be
permitted by applicable law.
6. REGISTRATION RIGHTS. Employee shall be granted the registration rights
described in Exhibit A to this Agreement.
7. MISCELLANEOUS.
7.1 Confidentiality. Employee shall enter into a customary Invention and
Confidential Disclosure Agreement in a form agreed upon by Employee, Magnum and
REMEC.
7.2 Waiver. The waiver of the breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of the
same or other provision hereof.
7.3 Entire Agreement; Modifications. Except as otherwise provided herein,
this Agreement and the Option Documentation, taken together, represent the
entire understanding among the parties with respect to the subject matter
hereof, and this Agreement and the Option Documentation, taken together,
supersedes any and all prior understandings, agreements, plans, and
negotiations, whether written or oral, with respect to the subject matter
hereof, including without limitation, any understandings, agreements, or
obligations respecting any past or future compensation, bonuses, reimbursements,
or other payments to Employee from Magnum and REMEC. All modifications to the
Agreement must be in writing and signed by the party against whom enforcement of
such modification is sought.
7.4 Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by personal delivery or by telegraph or
first class mail, certified or registered with return receipt
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requested, and shall be deemed to have been duly given upon receipt if
personally delivered, three days after mailing, if mailed, or 24 hours after
transmission, if delivered by telegram, to the respective persons named below:
<TABLE>
<S> <C>
If to Magnum: MAGNUM MICROWAVE CORPORATION
1990 Concourse Drive
San Jose, California 95131
If to REMEC: REMEC, Inc.
9404 Chesapeake Drive
San Diego, California 92123
Attention: President
If to Employee: Joseph T. Lee
45 Bel Aire Court
Hillsborough, CA 94010
</TABLE>
Any party may change such party's address for notices by notice duly given
pursuant to this Section.
7.5 Headings. The Section headings herein are intended for reference and
shall not be used in the construction or interpretation of this Agreement.
7.6 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
applicable to contracts entered into and wholly to be performed within the State
of California by California residents. Employee hereby submits to the exclusive
jurisdiction and venue of the Superior Court of the State of California for the
County of Santa Clara or the United States District Court for the Northern
District of California for purposes of any legal action. Employee agrees that
service upon Employee in any such action may be made by first class mail,
certified or registered, in the manner provided for delivery of notices in this
agreement.
7.7 Assignment/Sale. The rights and obligations of Magnum and REMEC under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Magnum and REMEC and any subsequent assignee. No
assignment of this Agreement by Magnum or REMEC shall relieve them of their
obligations hereunder, including any assignment by sale, merger, consolidation,
liquidation or otherwise. Employee may not assign his rights and obligations
under this Agreement.
7.8 Supersedes Prior Agreements. This agreement supersedes and replaces all
employment contract rights Employee may have had with Magnum prior to the Merger
including, without limitation, Employee's rights under that certain Amended and
Restated Severance Agreement between Magnum and Employee dated May 5, 1988,
which is hereby terminated. Employee acknowledges that all of Employee's rights
under any employment contract(s) with Magnum prior to the Merger have been
satisfied.
7.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
7.10 Withholding. All sums payable to Employee hereunder shall be reduced
by all federal, state, local, and other withholding and similar taxes and
payments required by applicable law.
7.11 Enforcement. If any portion of this Agreement is determined to be
invalid or unenforceable, such portion shall be adjusted, rather than voided, to
achieve the intent of the parties to the extent possible, and the remainder
shall be enforced to the maximum extent possible.
7.12 Arbitration. Any dispute, controversy or claim arising out of or in
respect to this Agreement (or its validity, interpretation or enforcement), the
employment relationship or the subject matter hereof shall at the request of
either party be submitted to and settled by arbitration conducted before a
single arbitrator in Santa Clara County, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration of such issues, including the determination of any amount of damages
suffered, shall be final and binding upon the parties to the maximum extent
permitted by law. The arbitrator in such
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action shall not be authorized to change or modify any provision of this
Agreement. Judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction thereof. The arbitrator shall award reasonable
expenses and attorneys fees (including reimbursement of the assigned arbitration
costs) to the prevailing party upon application therefor.
7.13 Injunctive Relief. The parties expressly acknowledge that the
services by Employee to Magnum and REMEC are of a special, unique, unusual,
extraordinary, or intellectual character, and that it is not feasible to
adequately compensate Magnum and REMEC in damages in an action at law for the
failure of Employee to perform his obligations hereunder. Accordingly, in the
event of any breach hereunder, Magnum and REMEC shall be entitled, from a court
of competent jurisdiction and without posting bond, to full and complete relief
as a court of equity can then afford, in addition to all other relief and
remedies otherwise available.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MAGNUM MICROWAVE CORPORATION
By: /s/ JOSEPH T. LEE
----------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
REMEC, INC.
By: /s/ ERROL EKAIREB
----------------------------------------
Title: President
-------------------------------------
EMPLOYEE
/s/ JOSEPH T. LEE
-------------------------------------------
Joseph T. Lee
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EXHIBIT 2
AFFILIATES AGREEMENT
August 26, 1996
REMEC, Inc.
9404 Chesapeake Drive
San Diego, California 92123
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Reorganization and
Merger dated as of May 16, 1996 (the "Merger Agreement") made and entered into
among Magnum Microwave Corporation, a California corporation ("Magnum"), REMEC,
Inc., a California corporation ("REMEC"), and REMEC Acquisition Corporation, a
California corporation and a wholly-owned subsidiary of REMEC ("RAC"). The
Merger Agreement provides for the merger of RAC with and into Magnum (the
"Merger") in a transaction in which shares of Magnum Common Stock ("Magnum
Common") will be exchanged and converted into shares of REMEC Common Stock
("REMEC Common").
I have been informed that the shares of REMEC Common which I will
acquire in connection with the Merger will be registered under the Securities
Act of 1933, as amended (the "Securities Act"); that the Merger constitutes a
transaction covered by Rule 145 of the Rules and Regulations of the Securities
and Exchange Commission (the "Commission") under the Securities Act; that I may
be deemed to be an "affiliate" of Magnum within the meaning of Rule 145; that
the Merger will be accounted for using the "pooling-of-interests" method of
accounting and is intended to be a "reorganization" for federal income tax
purposes; and that, accordingly, the shares of REMEC Common which I will acquire
in connection with the Merger may only be disposed of in conformity with the
Securities Act and the other limitations described herein. I have been informed
that the treatment of the Merger as a pooling-of-interests for financial
accounting purposes is dependent upon the accuracy of certain of the
representations and warranties and the compliance with certain of the agreements
set forth herein.
I further understand that the representations, warranties and
agreements set forth herein will be relied upon by counsel for REMEC and Magnum
in rendering opinions regarding tax and other legal consequences of the Merger.
1. I represent, warrant and agree as follows:
(a) I have full power to execute this letter and to make the
representations, warranties and agreements herein and to perform my
obligations hereunder.
<PAGE> 15
REMEC, Inc.
August 26, 1996
(b) Appendix A attached hereto sets forth all shares of Magnum
Common owned by me, including all options or other rights to acquire
Magnum Common and all equity securities (including any shares of preferred
stock) of Magnum as to which I have sole or shared voting or investment
power.
(c) I will not sell, transfer or dispose of any shares of
REMEC Common that I may acquire in connection with the Merger in exchange
for the shares of Magnum Common owned by me, or any securities which may
be paid as a dividend or otherwise distributed thereon or with respect
thereto or issued or delivered in exchange or substitution therefor or
upon conversion thereof (all such shares and other securities being herein
sometimes collectively referred to as "Acquired Securities"), or any
option, right or other interest with respect to any Acquired Securities,
unless such sale, transfer or disposition is effected as provided in
Section 3 hereof.
(d) Notwithstanding any other provision of this Affiliate's
Agreement to the contrary: (i) none of the securities of Magnum I own will
be sold, transferred or disposed of, and I will not in any way reduce my
risk of ownership or investment in any securities of Magnum, in the 30-day
period prior to the effective time (the "Effective Time") of the Merger
(which Effective Time I understand is expected to be on or about August
23, 1996); and (ii) none of the Acquired Securities or other securities of
REMEC I own will be sold, transferred or otherwise disposed of, and I will
not in any other way reduce my risk of ownership or investment in any of
such REMEC securities, until a financial report including the combined
sales and net income of REMEC and Magnum covering a period of at least
thirty (30) days of combined operations following the Effective Time of
the Merger (the "Combined Financials Report") has been publicly released
by REMEC.
2. By countersigning below, REMEC agrees that it will: (i) exercise
its best efforts to publicly release the Combined Financials Report as soon as
possible after the Effective Time; (ii) until the second anniversary of the
Effective Time, file all reports required to be filed under the Exchange Act of
1934, as amended, within the time period permitted; and (iii) after the second
anniversary of the Effective Time, use its best efforts to file all reports and
data with the Commission necessary to permit me to sell Acquired Securities
pursuant to and otherwise in conformity with Rule 145(d) under the Securities
Act. I understand that REMEC is under no obligation to register the sale,
transfer or other disposition of any Acquired Securities by or on behalf of me
or to take any other action necessary in order to make compliance with an
exception from registration available to me, other than as set forth herein.
3. I understand that the provisions of Rule 145 restrict public
resales of Acquired Securities. I understand that I may publicly sell my
Acquired Securities as follows:
(a) Pursuant to Rule 145(d)(1):
I understand Rule 145(d)(1) permits public resales of Acquired
Securities only (a) while REMEC meets the public information requirements
of Rule 144(c), (b) in broker's transactions, and (c) where the aggregate
number of Acquired Securities sold at any time together with all sales of
REMEC Common
2
<PAGE> 16
REMEC, Inc.
August 26, 1996
sold for my account during the preceding three-month period does not
exceed the greater of: (i) one percent of the REMEC Common outstanding; or
(ii) the average weekly volume of trading in REMEC Common on all national
securities exchanges and/or reported through the automated quotation
system of a registered securities association, during the four calendar
week period preceding any such sale.
(b) Pursuant to Rule 145(d)(2):
I understand I may make unrestricted resales of Acquired
Securities pursuant to Rule 145(d)(2) if I have beneficially owned the
Acquired Securities for at least 2 years and am not an affiliate of REMEC
and REMEC meets the public information requirements of Rule 144(c).
(c) Pursuant to Rule 145(d)(3):
I understand I may make unrestricted resales of Acquired
Securities pursuant to Rule 145(d)(3) if I have beneficially owned the
Acquired Securities for at least three years and am not, and have not been
for at least three months, an affiliate of REMEC.
By its countersignature below REMEC acknowledges that the provisions
of Section 1(c) of this Affiliate's Agreement will be satisfied, as to any sale
by me of Acquired Securities: (i) pursuant to Rule 145(d) under the Securities
Act while REMEC meets the public information requirements of Rule 144(c), by a
broker's letter with respect to that sale stating that each of the
above-described requirements of Rule 145(d)(1) has been met or is inapplicable
by virtue of Rule 145(d)(2) or Rule 145(d)(3); or (ii) in a transaction
otherwise exempt from the Securities Act; provided, however, that if counsel for
REMEC reasonably believes that the provisions of Rule 145(d) or the Securities
Act have not been complied with, and if requested by REMEC in connection with a
proposed disposition other than pursuant to a registered offering, I will
furnish to REMEC a copy of a "no action" letter or other communication from the
staff of the SEC, or an opinion of counsel in form and substance satisfactory to
REMEC and its counsel, to the effect that all of the applicable requirements of
Rule 145(d) under the Securities Act have been complied with or that the
disposition may be otherwise effected in the manner requested in compliance with
the Securities Act.
4. I also understand that stop transfer instructions will be given
to REMEC's transfer agent with respect to certificates evidencing the Acquired
Securities and that there will be placed on the certificates evidencing the
Acquired Securities a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN THE REGISTERED HOLDER
THEREOF AND REMEC, INC. THE AGREEMENT PROVIDES THAT (A) THE SHARES
MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF UNTIL A FINANCIAL REPORT
INCLUDING THE COMBINED SALES AND NET INCOME OF REMEC, INC. AND
MAGNUM MICROWAVE CORPORATION COVERING A PERIOD OF AT
3
<PAGE> 17
REMEC, Inc.
August 26, 1996
LEAST 30 DAYS OF COMBINED OPERATIONS FOLLOWING AUGUST 23, 1996 HAS
BEEN PUBLICLY RELEASED BY REMEC, INC. AND (B) THE SHARES MAY NOT BE
SOLD, TRANSFERRED OR DISPOSED OF UNLESS SUCH SALE, TRANSFER OR
DISPOSITION MEETS THE REQUIREMENTS OF RULE 145 UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") OR IS OTHERWISE EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF THE COMPANY.
By countersigning below REMEC agrees that such stop transfer
instruction and legend will be removed promptly if the provisions of this letter
are complied with or, upon request by the undersigned, after the third
anniversary of the Effective Time; provided, however, that REMEC reserves the
right to impose stop transfer instructions and legends on certificates with
respect to shares held by affiliates of REMEC to insure compliance with Rule 144
under the Securities Act in the manner that REMEC generally takes such measures
with respect to shares held by its affiliates.
5. Once countersigned by REMEC, this letter shall be binding upon
and enforceable against me and my administrators, executors, representatives,
heirs, legatees and devisees and any pledgee holding Acquired Securities as
collateral.
6. I have carefully read this letter and have discussed its
requirements and other applicable limitations upon the sale, transfer, or other
disposition of the Acquired Securities and other REMEC securities owned by me
with my counsel to the extent I felt necessary.
Very truly yours,
JOSEPH T. LEE
-----------------------------------
(Print name of shareholder)
By: /s/ Joseph T. Lee
____________________________________
Title: Chairman and Chief Executive Officer
------------------------------------
Agreed to and accepted:
REMEC, INC.
By: /s/ Errol Ekaireb
-----------------------------
Errol Ekaireb, President
4
<PAGE> 18
APPENDIX A
TO
AFFILIATE'S AGREEMENT
10,805,932 Common Stock
