<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 26, 1997
MAY 9, 1997
VERTEX COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
TEXAS 0-15277 75-1982974
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of Incorporation)
2600 NORTH LONGVIEW STREET, KILGORE, TEXAS 75662
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (903) 984-0555
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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<PAGE> 2
VERTEX COMMUNICATIONS CORPORATION
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
================================================================================
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) ACQUISITION OF TIW SYSTEMS, INC. In accordance with the terms
and provisions of a definitive Agreement and Plan of Reorganization (the
"Reorganization Agreement"), dated May 9, 1997, by and among the Registrant
(the "Registrant" or "Vertex"), Vertex Acquisition Corporation ("VAC"), a
Nevada corporation and a wholly-owned subsidiary of the Registrant, TIW
Systems, Inc. ("TIW"), a California corporation, and certain principal
shareholders of TIW (the "Principal Shareholders"), on June 11, 1997, the
Registrant consummated the Reorganization Agreement and the transactions
contemplated thereby and acquired all of the outstanding stock of TIW pursuant
to the merger (the "Merger") of TIW with and into VAC, whereby VAC (i) is the
surviving corporation in the Merger, (ii) will continue thereafter as a
wholly-owned subsidiary of the Registrant and (iii) incidental to and as a part
of the Merger changed its name to "TIW Systems, Inc." The Registrant will
account for the acquisition under the purchase method of accounting.
The Registrant consummated the Merger for aggregate consideration of
approximately $19.5 million, consisting of (i) cash at closing (from the
Registrant's general corporate funds available therefor) of approximately $7.9
million (the "Cash Portion of the Consideration"), (ii) an aggregate of 574,349
shares of the Registrant's authorized but previously unissued common stock,
$.10 par value per share (the "Vertex Exchange Shares"), valued at $19.50 per
share, as adjusted for payment of fractional shares in cash, and (iii) direct
acquisition costs of approximately $.4 million. Such consideration was
determined between the Registrant, TIW and the Principal Shareholders through
arms-length, good faith bargaining.
Upon consummation of the Merger, (i) the separate corporate existence
of TIW ceased and all of the properties, rights, privileges, powers and
franchises of TIW vested in VAC, and all of the debts, liabilities and duties
of TIW attached to VAC, and (ii) all of the shares of TIW common stock, no par
value per share (the "TIW Common Stock"), outstanding immediately prior to the
effective time of the Merger were converted into the right to receive the Cash
Portion of the Consideration and the Vertex Exchange Shares, subject to certain
adjustments. The Reorganization Agreement, including the related Merger, was
approved by the holders of the requisite majority of the shares of TIW Common
Stock entitled to vote thereon and the other conditions to the Merger were
timely satisfied or waived.
Prior to the Merger, neither the Registrant nor any of its affiliates,
any director or officer of the Registrant, nor any associate of any such
director or officer of the Registrant had any material relationship with TIW or
the Principal Shareholders thereof or any of their respective affiliates or
associates.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
2.1(1)-- Agreement and Plan of Reorganization, dated May 9,
1997, by and among TIW Systems, Inc., a California
corporation, Vertex Communications Corporation, a
Texas corporation, Vertex Acquisition Corporation, a
Nevada corporation, and Heldur Tonisson, Rein Luik,
and TIW Systems, Incorporated Employee Stock
Ownership Trust, Principal Shareholders of TIW
Systems, Inc.
2.2(2)-- Articles of Merger of TIW Systems, Inc., a
California corporation, with and into Vertex
Acquisition Corporation, a Nevada corporation, dated
June 11, 1997, including the Plan of Merger, dated
June 11, 1997, by and among TIW Systems, Inc.,
Vertex Acquisition Corporation, and Vertex
Communications Corporation, a Texas corporation.
99.1(2)-- Executive Employment Agreement, dated June 11, 1997,
by and between Rein Luik and TIW Systems, Inc., a
Nevada corporation.
99.2(2)-- Executive Employment Agreement, dated June 11, 1997,
by and between Louis Becker and TIW Systems, Inc., a
Nevada corporation.
99.3(2)-- Noncompetition Agreement, dated June 11, 1997, by
and among Rein Luik, Vertex Communications
Corporation and Vertex Acquisition Corporation (now
known as TIW Systems, Inc., a Nevada corporation).
99.4(2)-- Noncompetition Agreement, dated June 11, 1997, by
and among Louis Becker, Vertex Communications
Corporation and Vertex Acquisition Corporation (now
known as TIW Systems, Inc., a Nevada corporation).
---------------
(1) Filed as an Exhibit to the Registrant's Current Report
on Form 8-K dated May 14, 1997 (Date of Earliest Event
Reported: May 9, 1997; Commission File No. 0-15277),
which Exhibit is incorporated herein by reference.
(2) Filed herewith.
-2-
<PAGE> 4
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 hereunto duly authorized.
VERTEX COMMUNICATIONS CORPORATION
(Registrant)
By: /s/ James D. Carter
-------------------------------------------
James D. Carter
Vice President and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and Accounting Officer)
Date: June 26, 1997
-3-
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
------- ---------------------- ----
<S> <C> <C>
2.2(1) Agreement and Plan of Reorganization, dated May 9, 1997, by
and among TIW Systems, Inc., a California corporation,
Vertex Communications Corporation, a Texas corporation,
Vertex Acquisition Corporation, a Nevada corporation, and
Heldur Tonisson, Rein Luik, and TIW Systems, Incorporated
Employee Stock Ownership Trust, Principal Shareholders of
TIW Systems, Inc.
2.2(2) Articles of Merger of TIW Systems, Inc., a California
corporation, with and into Vertex Acquisition Corporation, a
Nevada corporation, dated June 11, 1997, including the Plan
of Merger, dated June 11, 1997, by and among TIW Systems,
Inc., Vertex Acquisition Corporation, and Vertex
Communications Corporation, a Texas corporation
99.1(2) Executive Employment Agreement, dated June 11, 1997, by and
between Rein Luik and TIW Systems, Inc., a Nevada
corporation
99.2(2) Executive Employment Agreement, dated June 11, 1997, by and
between Louis Becker and TIW Systems, Inc., a Nevada
corporation
99.3(2) Noncompetition Agreement, dated June 11, 1997, by and among
Rein Luik, Vertex Communications Corporation and Vertex
Acquisition Corporation (now known as TIW Systems, Inc., a
Nevada corporation)
99.4(2) Noncompetition Agreement, dated June 11, 1997, by and among
Louis Becker, Vertex Communications Corporation and Vertex
Acquisition Corporation (now known as TIW Systems, Inc., a
Nevada corporation)
</TABLE>
- ----------------------
(1) Filed as an Exhibit to the Registrant's Current Report on Form 8-K
dated May 14, 1997 (Date of Earliest Event Reported: May 9, 1997;
Commission File No. 0-15277), which Exhibit is incorporated herein
by reference.
(2) Filed herewith.
<PAGE> 1
EXHIBIT 2.2
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VERTEX COMMUNICATIONS CORPORATION
EXHIBIT 2.2
TO
CURRENT REPORTED ON FORM 8-K/A
Date of Report (Date of Earliest Event Reported): May 9, 1997
================================================================================
<PAGE> 2
ARTICLES OF MERGER
OF
TIW SYSTEMS, INC.
(A CALIFORNIA CORPORATION)
WITH AND INTO
VERTEX ACQUISITION CORPORATION
(A NEVADA CORPORATION)
Pursuant to the provisions of Article 92A.200 of the Nevada General
Corporation Law, the undersigned corporation, VERTEX ACQUISITION CORPORATION, a
Nevada Corporation ("VAC"), as the surviving corporation in the merger of TIW
Systems, Inc., a California corporation ("TIW") with and into VAC hereby adopts
and submits the following Articles of Merger for the purpose of effecting a
merger of TIW with and into VAC in accordance with the provisions of the Nevada
General Corporation Law.
1. The name of each of the constituent corporations and the laws
under which such corporation was organized and the governing law of each are:
<TABLE>
<CAPTION>
State of
Name of Corporation Organization Governing Law
- ------------------- ------------ -------------
<S> <C> <C>
TIW Systems, Inc. California California
Vertex Acquisition Corporation Nevada Nevada
Vertex Communications Corporation Texas Texas
</TABLE>
2. A Plan of Merger has been adopted by each of the constituent
corporations. A copy of the Plan of Merger is attached hereto as Exhibit "A"
and incorporated herein by this reference as if fully copied and set forth at
length herein.
3. Although the common stock of VAC's parent corporation, Vertex
Communications Corporation, a Texas corporation ("Vertex"), will be issued
pursuant to the terms and conditions set forth in the Plan of Merger adopted by
each of the constituent corporations, no vote of the shareholders of Vertex is
required to approve the Plan of Merger, to authorize the issuance of the
securities issued by Vertex pursuant to the Plan of Merger or to otherwise
approve the consummation of the transactions contemplated by the Plan of
Merger.
4. As to each of the constituent corporations, the approval of
whose shareholders is required, the number of outstanding shares of each class
or series of stock of such corporation entitled to vote, with other shares or
as a class, on the Plan of Merger are as follows:
ARTICLES OF MERGER - Page 1
<PAGE> 3
<TABLE>
<CAPTION>
Number of Shares
Number of Entitled to Vote as a
Name of Corporation Shares Outstanding Designation of Class Class or Series
- ------------------- ------------------ -------------------- ---------------------
<S> <C> <C> <C>
TIW Systems, Inc. 6,457,935 Common N/A
Vertex Acquisition 1,000 Common N/A
Corporation
</TABLE>
5. The Plan of Merger was approved by the unanimous consent of the
sole shareholder of VAC. As to TIW, the approval of whose shareholders is
required, the number of shares not entitled to vote only as a class, voted for
and against the Plan of Merger, respectively, and, if the shares of any class
or series are entitled to vote as a class, the number of shares of each such
class or series voted for and against the Plan of Merger, are as follows:
<TABLE>
<CAPTION>
Total Number of
Voted Shares Entitled
Total Total Not to
Name of Corporation Voted For Against Voted Class Vote as a Class
------------------- --------- ------- ----- ----- ---------------
Voted Voted
For Against
--- -------
<S> <C> <C> <C> <C> <C> <C>
TIW Systems, Inc. 6,432,314 1,191 24,430 Common N/A N/A
</TABLE>
6. The Articles of Incorporation of VAC shall continue in full
force and effect as the Articles of Incorporation of the surviving corporation
until altered or amended, as provided by law, with the exception that the name
of VAC shall be changed to TIW Systems, Inc. pursuant to an amendment of
Article One of the Articles of Incorporation of VAC, which Article One is
hereby amended to read in its entirety as follows:
ARTICLE ONE
NAME
The name of the corporation is TIW SYSTEMS, INC. (the
"Corporation").
7. The merger will become effective upon the issuance of the
certificate of merger by the Secretary of State in accordance with the
provisions of Articles 92A.240 of the Nevada General Corporation Law.
ARTICLES OF MERGER - Page 2
<PAGE> 4
Dated June 11, 1997.
VERTEX ACQUISITION CORPORATION
By: /s/ J. Rex Vardeman
------------------------------------
J. REX VARDEMAN,
President
By: /s/ James D. Carter
------------------------------------
JAMES D. CARTER,
Secretary
THE STATE OF TEXAS )
)
COUNTY OF GREGG )
This instrument was acknowledged before me on the 11th day of June,
1997, by J. REX VARDEMAN and JAMES D. CARTER, known to me to be the President
and the Secretary, respectively, of Vertex Acquisition Corporation, a Nevada
corporation, on behalf of and as the act of said corporation.
/s/ Evalee B. Brown
-----------------------------------------
Notary Public, State of Texas
ARTICLES OF MERGER - Page 3
<PAGE> 5
PLAN OF MERGER
THIS PLAN OF MERGER (the "Agreement") is made and entered into in
Kilgore, Gregg County, Texas by, between and among TIW SYSTEMS, INC., a
California corporation having its principal place of business in Santa Clara
County, California (the "Company"), VERTEX ACQUISITION CORPORATION, a Nevada
corporation ("VAC"), and VERTEX COMMUNICATIONS CORPORATION, a Texas corporation
having its principal place of business in Gregg County, Texas ("Vertex") on
this the 11th day of June, 1997 (the "Execution Date").
RECITALS
WHEREAS, the Company is currently engaged in the business of
manufacturing earth station satellite communications antenna, radio telescopes
and associated components (the "Acquired Business");
WHEREAS, as of the Execution Date, Heldur Tonisson ("Tonisson") and
Rein Luik ("Luik") own approximately 45% and 21%. respectively, of all of the
issued and outstanding capital stock of the Company, subject to the community
property rights of their respective spouses, if any, and with respect to Luik,
excluding any beneficial ownership of any such shares arising from Luik being a
participant or beneficiary of the TIW Systems Incorporated Employee Stock
Ownership Trust (the "ESOT");
WHEREAS, Tonisson and Luik are each hereinafter individually referred
to as a "Controlling Shareholder" and collectively as the "Controlling
Shareholders";
WHEREAS, the remaining shares of the issued and outstanding capital
stock of the Company are owned by 18 shareholders (the "Minority
Shareholders");
WHEREAS, the Controlling Shareholders and the Minority Shareholders
are sometimes referred to herein as the "Shareholders";
WHEREAS, VAC is a wholly-owned subsidiary of Vertex;
WHEREAS, the respective Boards of Directors of the Company, Vertex and
VAC have determined that the transactions contemplated by this Agreement are
desirable and in the best interests of such entities and their respective
shareholders;
WHEREAS, the respective Board of Directors of the Company, Vertex and
VAC have approved the merger of the Company with and into VAC as a forward
triangular merger in accordance with the provisions of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"),
Articles 92A.005 et seq. of the Nevada General Corporation Law (the "NGCL"),
and Sections 1100 et seq. of the California General Corporation Law (the
"CGCL") upon the terms and conditions set forth in this Agreement (the
"Merger");
WHEREAS, the parties intend that the Merger shall constitute for
United States federal income tax purposes a reorganization under the Code; and
PLAN OF MERGER - Page 1
<PAGE> 6
WHEREAS, the parties desire to set forth the terms and conditions of
the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements herein contained, and for the purpose of
stating the terms and conditions of the Merger and the mode of effectuating the
same, the parties hereto have agreed, and do hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
ARTICLE 1
TERMS OF MERGER
1.1 Name, Address and Governing Law. The name, address, place of
organization and governing law of each constituent corporation are as follows:
<TABLE>
<CAPTION>
Place of
Organization and
Name Address Governing Law
- ---- ------- --------------
<S> <C> <C>
TIW Systems, Inc. 2211 Lawson Avenue California
Santa Clara, CA 95054
Vertex Acquisition Corporation One East First Street Nevada
Reno, Nevada 89501
Vertex Communications Corporation 2600 N. Longview Street Texas
Kilgore, Texas 75662
</TABLE>
The name, place of organization and governing law of VAC as the
surviving corporation shall be as stated above.
1.2 Merger. On the Effective Date (as hereinafter defined), in
accordance with the provisions of Articles 92A.005 et seq. of the NGCL,
Sections 1100 et seq. of the CGCL and Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code, the Company shall be merged with and into VAC, which shall be
sometimes referred to herein as the "Surviving Corporation," upon the terms and
subject to the conditions set forth in the subsequent provisions of this
Agreement.
1.3 Effect of Merger. VAC, as the Surviving Corporation in the
Merger, will continue to be governed by the laws of the State of Nevada and the
separate corporate existence of VAC and all of its rights, privileges,
immunities and franchises, public or private, and all of its duties and
liabilities as a corporation organized under the NGCL will continue unaffected
and unimpaired by the Merger. At the close of business on the Effective Date
the existence of the Company as a distinct entity shall cease. At that time
all rights, franchises and interests of the Company in and to every type of
property, whether real, personal or mixed, and chooses in action shall be
transferred to and vested in VAC by virtue of the Merger without any deed or
other transfer. VAC, without any order or other action on the part of any
court or otherwise, shall possess all and singular the rights, privileges,
powers and franchises, and shall
PLAN OF MERGER - Page 2
<PAGE> 7
be subject to all the restrictions, disabilities and duties of the Company and
VAC, and all property, whether real, personal or mixed, of the Company and VAC,
and as to third parties all debts due to the Company or VAC on whatever
account, and all other things in action or belonging to each of said
corporations, shall be vested in VAC. All property, rights, privileges, powers
and franchises, and all and every other interest of the Company or VAC as of
the Effective Date shall thereafter be the property of VAC to the same extent
and effect as such was of said constituent corporations prior to the Effective
Date, and the title to any real estate vested by deed or otherwise in the
Company and VAC shall not revert or be in any way impaired by reason of the
Merger; provided, however, that as to third parties all rights of creditors and
all liens upon any property of the Company or VAC shall thenceforth attach to
VAC and may be enforced against it to the same extent as if said debts,
liabilities, and duties had been incurred or contracted by VAC. VAC shall
carry on business with the assets of the Company and VAC. The established
offices and facilities of VAC and the Company immediately prior to the Merger
shall become the established offices and facilities of VAC. Notwithstanding
the preceding, as between the Controlling Shareholders and VAC, the Controlling
Shareholders shall be liable for any Retained Liabilities (as defined in
Section 1.11 hereof) of the Company that are not discharged by the Company or
the Controlling Shareholders prior to the Effective Date in accordance with the
provisions of Section 1.11 hereof.
1.4 Effective Date of Merger. As soon as practicable following
the fulfillment or waiver of the conditions precedent to the Merger set forth
in Article 2 hereof, and provided that this Agreement has not been terminated
or abandoned pursuant to the applicable provisions of Article 3 hereof, the
Company and VAC will cause the Articles of Merger along with any other required
document to be filed with the Secretary of State of Nevada and the Secretary of
State of California pursuant to Article 92A.200 of the NGCL and Sections 1103
and 1108 of the CGCL, respectively. The Merger shall become effective upon the
date (the "Effective Date") which is the later of the date of (i) the filing of
Articles of Merger with, and issuance of a Certificate of Merger by, the
Secretary of State of Nevada pursuant to Article 92A.200 of the NGCL, and (ii)
the filing of Articles of Merger with, and issuance of a Certificate of Merger
by, the Secretary of State of California pursuant to Sections 1103 and 1108 of
the CGCL (the "Effective Time").
1.5 Disposition and Conversion of Shares. Subject to the
provisions of this Section, at the Effective Time, by virtue of the Merger and
without any action on the part of VAC, Vertex, the Company or the shareholders
of any of the foregoing, the shares of the constituent corporations shall be
converted as follows:
(a) VAC Shares. Each share of the common stock, $.10 par
value, of VAC issued and outstanding immediately prior to the
Effective Time shall continue unchanged and remain issued and
outstanding and shall be retained by the shareholders of VAC as shares
of the Surviving Corporation.
(b) Vertex Shares. Each share of the common stock, $.10
par value, of Vertex (the "Vertex Common Stock") issued and
outstanding immediately prior to the Effective Time shall continue
unchanged and remain issued and outstanding and retained by the
holders thereof.
(c) Company Shares. All of the shares of the issued and
outstanding common stock, without par value, of the Company (the "TIW
Common Stock"), other than any shares held by any Company Subsidiary
(as hereinafter defined), shall be converted into, and become
PLAN OF MERGER - Page 3
<PAGE> 8
exchangeable for (i) an aggregate amount of 574,359 shares of Vertex
Common Stock (the "Vertex Exchange Shares"), and (ii) cash in the
aggregate amount of $7,892,824.00 (the "Cash Portion of the Merger
Consideration"), subject to (x) the payment of cash for fractional
shares or dissenting shares and (y) the payment of certain Retained
Liabilities. Any shares of the TIW Common Stock held by any Company
Subsidiary shall be cancelled and extinguished without any conversion
thereof and no payment of any kind shall be made with respect thereto.
The number of the Vertex Exchange Shares shall not be adjusted for any
increase or decrease in the market price of the Vertex Common Stock as
reported on the Nasdaq Stock Market National Market System, subject to
the provisions of Section 1.5(d) hereof. The Vertex Exchange Shares
and the Cash Portion of the Merger Consideration, subject to (i) the
payment of cash for fractional shares or dissenting shares and (ii)
the payment of the Retained Liabilities, shall be allocated to the
Shareholders in proportion to their stock ownership in the Company.
(d) No Dilution. If, on or before the Effective Date,
Vertex (i) declares any dividend payable in shares of Vertex Common
Stock, or (ii) splits or combines or reclassifies the outstanding
shares of Vertex Common Stock, the number of shares (or fraction of a
share subject to the provisions of Section 1.5(e)(4) hereof) of Vertex
Common Stock to be exchanged for each share of the outstanding TIW
Common Stock will be appropriately adjusted.
(e) Exchange of Company Capital Stock Certificates.
(1) Delivery of Vertex Exchange Shares. On or
prior to the Closing Date, Vertex or VAC shall make available
to ChaseMellon Shareholder Services, L.L.C., as the transfer
agent of Vertex (the "Transfer Agent"), the certificates
representing the Vertex Exchange Shares along with the Cash
Portion of the Merger Consideration required to effect the
exchange referred to in Section 1.5(c) above. The Vertex
Exchange Shares and the Cash Portion of the Merger
Consideration are hereinafter collectively referred to as the
"Merger Consideration."
(2) Exchange of TIW Common Stock Certificates.
At the Effective Time, the stock transfer books of the Company
shall be closed as to the holders of the TIW Common Stock and
no transfer of the TIW Common Stock shall thereafter be made
or recognized. At the Closing (or as soon as reasonably
practicable thereafter), the Shareholders shall surrender the
certificate or certificates representing the TIW Common Stock
issued and outstanding at the Effective Time (the "TIW
Certificates") to the Transfer Agent or to Vertex. Upon the
surrender to the Transfer Agent or to Vertex of each TIW
Certificate and related stock power duly completed and
executed, the Transfer Agent or Vertex shall pay the holder of
such TIW Certificate the applicable Merger Consideration in
exchange therefor, and such TIW Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such TIW
Certificate shall represent solely the right to receive the
applicable allocable share of the Merger Consideration
therefor and any amounts to which the holder thereof is
entitled pursuant to Sections 1.5(e)(3) and 1.5(e)(4) hereof.
No interest shall be paid or accrued on the Merger
Consideration. If the allocable share of the Merger
Consideration (or any portion thereof) is to be delivered to
any person other than the person in whose name the TIW
Certificate surrendered in exchange therefor is registered, it
shall be a condition to such exchange that (i) the TIW
Certificate so surrendered shall be properly endorsed or
PLAN OF MERGER - Page 4
<PAGE> 9
otherwise be in proper form for transfer and (ii) the person
requesting such exchange shall pay to the Transfer Agent any
transfer or other taxes required by reason of the payment of
the allocable share of the Merger Consideration to a person
other than the registered holder of the TIW Certificate
surrendered or establish to the satisfaction of the Transfer
Agent that such tax has been paid or is not applicable.
Vertex may impose such other reasonable conditions upon the
exchange of TIW Certificates as it may deem necessary or
desirable and as are consistent with the provisions of this
Agreement. The Vertex Common Stock into which the TIW Common
Stock shall be converted pursuant to this Agreement and the
Merger shall be deemed to have been issued at the Effective
Time; provided, however, that, subject to applicable law, no
holder of an unsurrendered TIW Certificate shall be entitled,
until the surrender of such TIW Certificate, to vote the
shares of the Vertex Common Stock into which such holder's TIW
Common Stock shall have been converted.
(3) Restriction on Receipt of Dividends. Unless
and until a TIW Certificate is surrendered, dividends payable
to the holders of record of the Vertex Common Stock shall not
be paid to the holder of such TIW Certificate in respect of
the Vertex Common Stock represented thereby, but, subject to
applicable abandoned property, escheat, and similar laws,
there shall be paid to the holder thereof (i) upon surrender
of such TIW Certificate, the amount of any dividends, the
record date for the determination of the holders entitled to
which shall be after the Effective Time, which theretofore
shall have become payable with respect to the whole shares of
Vertex Common Stock represented by such TIW Certificate and
issued in exchange upon its surrender, but without interest on
such dividends, and (ii) after surrender of such TIW
Certificate, the amount of any dividends with respect to such
whole shares of Vertex Common Stock, the record date for the
determination of the holders entitled to which shall be after
the Effective Time but prior to the surrender of such TIW
Certificate, and the payment date of which shall be subsequent
to such surrender, such amount to be paid on such payment
date.
(4) Fractional Shares. No certificates or scrip
representing fractional shares of Vertex Common Stock shall be
issued upon the surrender for exchange of any TIW Certificate.
In lieu of any such fractional share of Vertex Common Stock,
each holder of a TIW Certificate whose aggregate number of
shares of TIW Common Stock are not convertible into a whole
number of shares of Vertex Common Stock shall be entitled to
receive from the Transfer Agent or Vertex, upon surrender of
such holder's TIW Certificates for exchange as provided above,
an amount of cash rounded to the nearest cent (without
interest) determined by multiplying such fractional interest
by $19.50. After the Execution Date, Vertex shall deposit
with the Transfer Agent, as and when required, cash sufficient
for the Transfer Agent to make payment of cash in lieu of
fractional shares in accordance with this Section 1.5(e)(4).
(5) Termination of Transfer Agent's Obligations.
In the event that all the TIW Common Stock has not been
surrendered for exchange as stated herein by the first
anniversary of the Effective Date, then promptly following the
date which is one year after the Effective Date, the Transfer
Agent shall deliver to Vertex all cash, certificates, and
other documents and instruments in its possession relating to
the transactions described in this Agreement, and the Transfer
Agent's duties with respect thereto shall
PLAN OF MERGER - Page 5
<PAGE> 10
terminate. Thereafter, each holder of a TIW Certificate may
surrender such TIW Certificate directly to Vertex and (subject
to applicable abandoned property, escheat, and similar laws)
receive in exchange the applicable allocable share of the
Merger Consideration therefor and any amounts to which such
holder is entitled pursuant to Sections 1.5(e)(3) and
1.5(e)(4) hereof, but such holder shall have no greater rights
against Vertex than may be accorded to general creditors of
Vertex under applicable law. Notwithstanding anything in this
Agreement to the contrary, neither the Transfer Agent nor any
party hereto shall be liable to a holder of shares of TIW
Common Stock for any cash or other property delivered to a
public official pursuant to applicable abandoned property,
escheat, or similar laws.
(6) Lost TIW Certificates. In the event any TIW
Certificate shall have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact by the person claiming
such TIW Certificate to be lost, stolen, or destroyed, Vertex
shall issue or cause to be issued in exchange for such lost,
stolen, or destroyed TIW Certificate the allocable share of
the Merger Consideration deliverable in respect thereof as
determined in accordance with Section 1.5(c). When
authorizing the issue of such allocable share of the Merger
Consideration in exchange therefor, Vertex may, in its
discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed
TIW Certificate to give Vertex a bond in such sum as it may
direct as indemnity against any claim that may be made against
Vertex or the Surviving Corporation with respect to the TIW
Certificate alleged to have been lost, stolen, or destroyed.
(7) Withholding. Vertex shall be entitled to
deduct and withhold from the allocable share of the Merger
Consideration otherwise payable pursuant to this Agreement to
any holder of a TIW Certificate such amounts as Vertex is
required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local,
or foreign tax law. To the extent that amounts are so
withheld by Vertex, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the
holder of the TIW Certificate in respect of which such
deduction and withholding was made by Vertex.
(f) Inspection of Books and Records. The Shareholders
shall have the right, at the expense of the Shareholders, to inspect
the books and records of Vertex to verify any adjustment required to
be made pursuant to the foregoing provisions of this Section 1.5 in
the number of shares of the Vertex Common Stock owned by the
Shareholders during the normal business hours of Vertex upon
reasonable request to Vertex.
1.6 Cancellation of Options and Warrants. At the Effective Time,
each outstanding and unexercised stock option and warrant to acquire shares of
TIW Common Stock to the extent not previously exercised shall automatically
terminate and be of no further force or effect, and the holder thereof shall
not be entitled to receive any compensation for such terminated stock option or
warrant.
1.7 Articles of Incorporation of Surviving Corporation. The
Articles of Incorporation of VAC, as existing on the Effective Date, shall
continue in full force and effect as the Articles of Incorporation of the
Surviving Corporation until altered or amended as provided by law, with the
exception that as part of the Articles of Merger the name of VAC shall be
changed to TIW Systems, Inc.
PLAN OF MERGER - Page 6
<PAGE> 11
1.8 Bylaws of Surviving Corporation. The Bylaws of VAC, as
existing on the Effective Date, shall continue in full force and effect as the
Bylaws of the Surviving Corporation until altered, amended or repealed as
provided in such Bylaws or as provided by law.
1.9 Directors of Surviving Corporation. The directors of the
Surviving Corporation as of the Effective Date shall be and become J. Rex
Vardeman, James D. Carter, and Rein Luik, until their successors shall be duly
elected and qualified or until their sooner death, resignation or removal.
Vertex as the sole shareholder of VAC hereby agrees to vote its shares of VAC
so that the foregoing individuals shall be elected as the directors of VAC
until the first annual or special meeting of the shareholders of VAC after the
Effective Date.
1.10 Officers of Surviving Corporation. The officers of the
Surviving Corporation as of the Effective Date shall be as follows:
<TABLE>
<S> <C>
J. Rex Vardeman . . . . . . . . . . . . . Chairman of the Board
Rein Luik . . . . . . . . . . . . . . . . President and Chief Executive Officer
Louis Becker . . . . . . . . . . . . . . Executive Vice President
Edward F. Kurz . . . . . . . . . . . . . Vice President and Chief Financial Officer
James D. Carter . . . . . . . . . . . . . Secretary and Treasurer
</TABLE>
Such individuals shall serve in such capacities until their successors shall be
duly elected and qualified or until their sooner death, resignation or removal.
1.11 Retained Liabilities. Notwithstanding the provisions of
Section 1.3 hereof, as between the Company, the Controlling Shareholders and
VAC, VAC will not assume, and will not discharge or otherwise be liable for the
Retained Liabilities and as between the Company, the Controlling Shareholders
and VAC none of the Assets acquired as a result of the Merger shall be or
become obligated or subject to any Retained Liability. As used herein, the
term Retained Liabilities shall mean only the following liabilities:
(a) The liabilities or obligations of the Company for
periods prior to the Effective Date other than (i) those identified in
the Company's Consolidated Balance Sheet, dated December 31, 1996, as
audited and certified by the Company's independent auditors, Deloitte
& Touche LLP (the "1996 TIW Balance Sheet") to the extent set forth
therein, (ii) those identified in writing to VAC prior to the
Execution Date to the extent set forth therein, and (iii) those
incurred by the Company since the date of the 1996 TIW Balance Sheet
in the Ordinary Course of Business;
(b) Federal, state or local tax liabilities or
obligations of the Company, including, without limitation, any income
tax, any tax recapture, and any FICA, withholding tax, workers'
compensation and any and all other taxes accrued on or before the
Effective Date other than those identified in the 1996 TIW Balance
Sheet to the extent set forth therein and fully funded by a reserve
therefor;
PLAN OF MERGER - Page 7
<PAGE> 12
(c) Liabilities or obligations of the Company or the
Shareholders for brokerage or other commissions, if any, relating to
the Merger, this Agreement or to the transactions contemplated
hereunder; and
(d) The legal fees incurred by the Company in connection
with the transactions contemplated by this Agreement to the extent
that such legal fees exceed the sum of $65,000.00.
The Retained Liabilities identified in subparagraphs (a), (b)
and (c) above shall be discharged by the Company prior to the
Effective Date out of the assets of the Company. The Retained
Liability identified in subparagraph (d) above shall be satisfied by
the Controlling Shareholders prior to the Closing Date (as hereinafter
defined). Any Retained Liability not satisfied as stated above shall
be and remain the sole responsibility of the Controlling Shareholders
and as between the Controlling Shareholders and VAC, VAC shall have no
responsibility or liability for the payment of such Retained
Liabilities.
ARTICLE 2
CONDITIONS PRECEDENT TO MERGER
2.1 Conditions Precedent to Obligations of VAC and Vertex. The
obligations of VAC and Vertex hereunder are, at the option of VAC or Vertex, as
applicable, subject to and conditioned upon the satisfaction and fulfillment by
the Company and the Shareholders, as applicable, on or prior to the Closing
Date, of each of the following conditions, unless waived by VAC or Vertex as
provided herein:
(a) Absence of Litigation. No order, stay, judgment, or
decree shall have been issued by any court or any governmental entity
restraining or prohibiting the consummation of the transactions
contemplated by this Agreement. No action or proceeding before a
court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the consummation of
the transactions herein contemplated or which would in any material
way adversely affect the assets, business or prospects of the Company
or any Company Subsidiary (as hereinafter defined), and no
governmental agency or body shall have taken any other action or made
any request of the Company, VAC or Vertex which would have a material
adverse effect on the transactions contemplated hereby. As used
herein, the term "Company Subsidiaries" shall mean all those
corporations, associations or other business entities of which the
entity in question either (i) owns or controls 50% or more of the
outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding
securities is owned directly or indirectly by its parent (provided,
there shall not be included any such entity the equity securities of
which are owned or controlled in a fiduciary capacity), or (ii) in the
case of partnerships or joint venturers, serves as a general partner
or a joint venturer.
(b) No Adverse Change. No material adverse change in the
results of operations, financial condition or business of the Company
and the Company Subsidiaries shall have occurred, and neither the
Company nor the Company Subsidiaries shall have suffered any material
change, loss or damage to the assets, business or prospects of such
entity, whether or not covered by insurance, since the date of the
1996 TIW Balance Sheet.
PLAN OF MERGER - Page 8
<PAGE> 13
(c) Due Diligence Review. The due diligence review to be
conducted by Vertex prior to the Closing (as hereinafter defined) with
respect to the assets, business, operations, income, prospects or
condition (financial or otherwise) of the Company and the Company
Subsidiaries and the representations, warranties and covenants of the
Company and the Controlling Shareholders set forth in that certain
Agreement and Plan of Reorganization dated May __, 1997 among Vertex,
VAC, the Company, the Controlling Shareholders and the ESOT (the
"Reorganization Agreement") shall be completed and the results thereof
shall not have caused Vertex or its representatives to become aware of
any material facts relating thereto, which, in the good faith judgment
of Vertex, makes it inadvisable for Vertex to proceed with the
transactions contemplated hereby.
(d) Dissenting Shareholders. Shareholders owning not
less than ninety-two percent (92%) of the issued and outstanding
capital stock of the Company shall have approved the Reorganization
Agreement and the Merger, so that the dissenting shareholders, if any,
shall not own more than eight percent (8%) of the issued and
outstanding capital stock of the Company.
(e) Minimum Value of Vertex Exchange Shares. The
aggregate fair market value of the Vertex Exchange Shares on the
Effective Date, based upon the closing sales price of a share of
Vertex Common Stock as listed on the Nasdaq Stock Market, National
Market System, shall not be less than 40% of the aggregate fair market
value of the Merger Consideration as of the Effective Date. In
addition, the aggregate fair market value of the Vertex Exchange
Shares on the Effective Date, based upon the closing sales price of a
share of Vertex Common Stock as listed on the Nasdaq Stock Market,
National Market System, received by the holders of the Historic Shares
of the Company (as hereinafter defined) shall not be less than 40% of
the aggregate fair market value of the Vertex Common Stock and cash
received, or deemed received, by the Shareholders or the Company after
taking into consideration (i) any decrease in the fair market value of
a share of Vertex Common Stock as of the Effective Date from the fair
market value of a share of Vertex Common Stock as of January 21, 1997,
said date being the date the Letter of Intent pertaining to the
transactions contemplated by this Agreement was executed by the
parties hereto, (ii) any cash paid to a Shareholder in lieu of a
fractional share of Vertex Common Stock, (iii) the aggregate amount of
that part of the Merger Consideration payable to any record or
beneficial owner of TIW Common Stock who voted against the Merger, and
(iv) the fair market value of the unallocated shares of TIW Common
Stock owned by the ESOT which were surrendered by the ESOT to the
Company after the Execution Date in payment of the outstanding
indebtedness of the ESOT to the Company. For purposes of this
Agreement, the Historic Shares of the Company shall mean all shares of
TIW Common Stock outstanding at any time after the Execution Date
other than the following: (i) the 50,000 shares of TIW Common Stock
acquired by Robert Wallace by exercising a stock option previously
granted to him by the Company, (ii) the 25,000 shares of TIW Common
Stock acquired by John Griffiths by exercising a stock option
previously granted to him by the Company, (iii) the allocated but
unvested shares of TIW Common Stock held of record by the ESOT, and
(iv) the unallocated shares of TIW Common Stock surrendered by the
ESOT after the Execution Date as payment against the outstanding
indebtedness of the ESOT to the Company.
(f) Payment of ESOP Loan. Vertex shall have received
evidence from the Company that the outstanding indebtedness
(principal, plus all accrued interest thereon to date of payment) of
the ESOT to the Company has been paid in full by the ESOT.
PLAN OF MERGER - Page 9
<PAGE> 14
2.2 Conditions Precedent to Obligations of the Company. The
obligations of the Company and the Shareholders hereunder are, at the option of
the Company and the Shareholders, subject to and conditioned upon the
satisfaction and fulfillment by VAC or Vertex, as applicable, on or prior to
the Closing Date, of each of the following conditions, unless waived by the
Company as provided herein:
(a) Delivery of Merger Consideration. VAC or Vertex
shall have delivered to either the Transfer Agent, Luik or counsel to
the Company a duly executed stock certificate or certificates
evidencing the Vertex Exchange Shares to be issued to the Shareholders
in accordance with the provisions of Section 1.5 hereof along with
certified or cashier's checks or wire transfers in the aggregate
amount of the Cash Portion of the Merger Consideration and a letter of
instructions directing either the Transfer Agent, Luik or counsel to
the Company, as applicable, to deliver the certificates evidencing the
ownership of the Vertex Exchange Shares and the Cash Portion of the
Merger Consideration to the respective Shareholders in accordance with
the provisions of Section 1.5 hereof. VAC shall have delivered a copy
of the aforesaid letter of instructions to the Controlling
Shareholders.
(b) Absence of Litigation. No order, stay, judgment or
decree shall have been issued by any court or governmental entity
restraining or prohibiting the consummation of the transactions
contemplated by this Agreement. No action or proceeding before a
court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the consummation of
the transactions herein contemplated or which would in any material
way adversely affect the assets, business or prospects of Vertex, and
no governmental agency or body shall have taken any other action or
made any request of the Company, VAC or Vertex which would have a
material adverse effect on the transactions contemplated hereby.
(c) No Adverse Change. No material adverse change in the
results of operations, financial condition or business of VAC or
Vertex shall have occurred, and VAC and Vertex shall not have suffered
any material change, loss or damage to their respective assets,
whether or not covered by insurance, since March 17, 1997 (the date of
organization of VAC) in the case of VAC and since September 30, 1996
in the case of Vertex.
(d) Shareholder Approval. The Reorganization Agreement
and the Merger shall have been duly and validly adopted and approved
by the requisite vote of the holders of the TIW Common Stock in
accordance with the Articles of Incorporation and Bylaws of the
Company.
(e) Minimum Value of Vertex Exchange Shares. The
aggregate fair market value of the Vertex Exchange Shares on the
Effective Date, based upon the closing sales price of a share of
Vertex Common Stock as listed on the Nasdaq Stock Market, National
Market System, shall not be less than 40% of the aggregate fair market
value of the Merger Consideration as of the Effective Date. In
addition, the aggregate fair market value of the Vertex Exchange
Shares on the Effective Date, based upon the closing sales price of a
share of Vertex Common Stock as listed on the Nasdaq Stock Market,
National Market System, received by the holders of the Historic Shares
of the Company (as hereinafter defined) shall not be less than 40% of
the aggregate fair market value of the Vertex Common Stock and cash
received, or deemed received, by the Shareholders or the Company after
taking into consideration (i) any decrease in the fair market value of
a share of Vertex Common Stock as of the Effective Date from the fair
market value of a share of Vertex Common Stock as of January 21, 1997,
said date being the date the
PLAN OF MERGER - Page 10
<PAGE> 15
Letter of Intent pertaining to the transactions contemplated by this
Agreement was executed by the parties hereto, (ii) any cash paid to a
Shareholder in lieu of a fractional share of Vertex Common Stock,
(iii) the aggregate amount of that part of the Merger Consideration
payable to any record or beneficial owner of TIW Common Stock who
voted against the Merger, and (iv) the fair market value of the
unallocated shares of TIW Common Stock owned by the ESOT which were
surrendered by the ESOT to the Company after the Execution Date in
payment of the outstanding indebtedness of the ESOT to the Company.
For purposes of this Agreement, the Historic Shares of the Company
shall mean all shares of TIW Common Stock outstanding at any time
after the Execution Date other than the following: (i) the 50,000
shares of TIW Common Stock acquired by Robert Wallace by exercising a
stock option previously granted to him by the Company, (ii) the 25,000
shares of TIW Common Stock acquired by John Griffiths by exercising a
stock option previously granted to him by the Company, (iii) the
allocated but unvested shares of TIW Common Stock held of record by
the ESOT, and (iv) the unallocated shares of TIW Common Stock
surrendered by the ESOT after the Execution Date as payment against
the outstanding indebtedness of the ESOT to the Company.
ARTICLE 3
TERMINATION
3.1 Termination.
(a) Termination Prior to Effective Date. This Agreement
may be terminated and the Merger may be abandoned at any time prior to
the Effective Date:
(1) By mutual written consent of Vertex and the
Company; or
(2) By Vertex on the one hand or the Company on
the other hand, if any court of competent jurisdiction in the
United States or other United States governmental body or any
regulatory agency in the United States shall have issued an
order, decree, regulation or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree,
regulation, ruling or other action shall not have been vacated
or reversed or set aside on appeal, with prejudice against the
party seeking to restrain the transaction.
(b) Termination Prior to Closing Date. This Agreement
may be terminated and the Merger may be abandoned at any time prior to
the Closing Date:
(1) By either Vertex on the one hand or the
Company on the other hand, if the Closing shall not have
occurred by June 30, 1997, provided that the failure to
consummate the transactions contemplated hereby is not
primarily a result of the failure by the party so electing to
terminate the Agreement to perform any of its obligations
hereunder;
(2) By Vertex in the event that one or more of
the conditions set forth in Section 2.1 hereof is not
satisfied at or prior to the Closing; and
PLAN OF MERGER - Page 11
<PAGE> 16
(3) By the Company in the event that one or more
of the conditions set forth in Section 2.2 hereof is not
satisfied at or prior to the Closing.
The date on which this Agreement is terminated pursuant to this
section is herein referred to as the "Termination Date."
3.2 Effect of Termination. In the event that this Agreement shall
be terminated pursuant to the provisions of Section 3.1 hereof, all obligations
of the parties hereto under the Agreement shall terminate and there shall be no
liability, except for any breach of this Agreement prior to such termination,
of any party to another party. In the event that VAC shall fail to consummate
the Merger in accordance with the terms and conditions of this Agreement, for
any reason whatsoever other than the Company's default hereunder or pursuant to
a right of termination granted Vertex in Section 3.1 hereof, the Company may
(i) enforce specific performance of this Agreement, or (ii) terminate this
Agreement and obtain such legal or equitable relief to which the Company may be
entitled, in law or in equity, as a result of such breach of Vertex. In the
event the Company shall fail to consummate the Merger in accordance with the
terms and conditions of this Agreement for any reason whatsoever other than
Vertex's default hereunder or pursuant to a right of termination granted the
Company in Section 3.1 hereof, Vertex may (i) enforce specific performance of
this Agreement, or (ii) terminate this Agreement and obtain such legal or
equitable relief to which Vertex may be entitled, in law or in equity, as a
result of such breach of the Company.
ARTICLE 4
GENERAL PROVISIONS
4.1 Closing. Subject to the provisions of Sections 2.1 and 2.2
hereof, the closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Vertex's counsel, Thompson & Knight, P.C.,
1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, at 10:00 a.m. Central
Daylight Time, on June 11, 1997, or at such other place, date or time as the
parties may mutually agree upon in writing for the Closing to take place. The
date on which the Closing occurs is herein referred to as the "Closing Date."
4.2 Headings. The section and paragraph headings or titles herein
are for convenience and do not limit the scope or effect of any provision of
this Agreement.
4.3 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns subject to the terms and conditions set forth in the Reorganization
Agreement; provided, however, that this Agreement may not be assigned by any
party without the written consent of the other party.
4.4 Amendments. This Agreement may be amended only by an
instrument in writing executed by all parties hereto.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
PLAN OF MERGER - Page 12
<PAGE> 17
4.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas without regard to
the principles of conflicts of laws thereof.
IN WITNESS THEREOF, each of the undersigned corporations has caused
this Agreement to be signed in its corporate name by its duly authorized
officer as of the 11th day of June, 1997.
COMPANY:
TIW SYSTEMS, INC.
By: /s/ Rein Luik
-----------------------------------------
REIN LUIK,
President and Chief Executive Officer
VAC:
VERTEX ACQUISITION CORPORATION
By: /s/ James D. Carter
-----------------------------------------
JAMES D CARTER,
Vice President
VERTEX:
VERTEX COMMUNICATIONS CORPORATION
By: /s/ J. Rex Vardeman
-----------------------------------------
J. REX VARDEMAN,
President and Chief Executive Officer
PLAN OF MERGER - Page 13
<PAGE> 1
EXHIBIT 99.1
================================================================================
VERTEX COMMUNICATIONS CORPORATION
EXHIBIT 99.1
TO
CURRENT REPORT ON FORM 8-K/A
Date of Report (Date of Earliest Event Reported): May 9, 1997
================================================================================
<PAGE> 2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") by and between
TIW SYSTEMS, INC., a Nevada corporation formerly known as Vertex Acquisition
Corporation and having its principal place of business in Santa Clara, Santa
Clara County, California (the "Company"), and REIN LUIK (the "Executive"), a
resident of Santa Clara, Santa Clara County, California, is made and entered
into in Santa Clara, California, effective as of the 11th day of June, 1997
(the "Effective Date").
W I T N E S S E T H:
WHEREAS, on even date herewith TIW Systems, Inc., a California
corporation ("TIW") merged with and into the Company with the Company being the
surviving corporation;
WHEREAS, the Executive is a founder of TIW and currently serves as the
President and Chief Executive Officer of TIW, and the Board of Directors of the
Company (the "Board") recognizes that the Executive's participation in the
management of the Company is vital to the continued growth and success of the
Company; and
WHEREAS, the Board desires to provide for the continued employment of
the Executive, subject to the terms and conditions herein provided; and
WHEREAS, the Executive is willing to commit himself to continue to
serve the Company in the respective capacities hereinafter stated, subject to
the terms and conditions herein provided;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto hereby covenant and agree as follows:
1
TERMS OF EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby employs the Executive as the
President and Chief Executive Officer of the Company for and during the term
hereof, or as such other executive officer of the Company as the Board may
designate from time to time during the term hereof, subject to the discretion
of the Board and the terms and conditions hereof. The Executive hereby accepts
such employment pursuant to the terms and conditions set forth in this
Agreement.
1.2 DUTIES OF EXECUTIVE. The Executive shall serve and perform in
the capacities described in Section 1.1 hereof and shall have such duties,
responsibilities, and authorities as are designated for such offices pursuant
to the Bylaws, as amended, of the Company, and as may be reasonably assigned to
the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 1
<PAGE> 3
Executive from time to time by the Board; provided, however, the Executive
shall, during the term hereof, continuously have and retain such duties,
responsibilities, and authorities which are at least as significant in scope
and substance as the duties, responsibilities, and authorities required of the
Executive's respective offices and positions with the Company as of the
Effective Date. Subject to the discretion of the Board, the Executive shall,
and shall have commensurate authority to, direct, manage, supervise and control
the business, affairs and property of the Company, including but not limited
to: managing and coordinating the business operations and activities of the
Company and its divisions and subsidiaries; promulgating, approving and
implementing operating plans and administrative policies and fostering economy
throughout the Company and its divisions and subsidiaries; acting as the
principal public relations officer of the Company; approving the addition,
elimination and/or modification of management and non-management positions and
related personnel within the Company and its divisions and subsidiaries;
approving salary and wage structures; and performing any and all other duties
as the Executive shall deem necessary or appropriate for the efficient
management and operation of the Company's business. The Executive shall report
and be responsible to the Board.
The Executive agrees to devote the Executive's full time, best
efforts, abilities, knowledge and experience to the faithful performance of the
duties, responsibilities, and authorities which may be reasonably assigned to
the Executive and which are consistent with the Executive's executive offices
described under Section 1.1 of this Agreement. Notwithstanding the preceding,
the Executive may, without being in violation of the Executive's obligations
hereunder, (i) serve on corporate, civic or charitable boards, or committees
which are not engaged in business in competition with the Company or any
subsidiary thereof, and (ii) invest the Executive's personal assets in such
form or manner as will not require any material services by the Executive in
the operation of the entities in which such investments are made, provided the
Executive shall use his best efforts to pursue such activities in such a manner
so that such activities shall not prevent the Executive from fulfilling his
obligations to the Company hereunder.
1.3 TERM. This Agreement shall become effective as of the
Effective Date and shall continue in force and effect for successive three-year
periods from each successive day thereafter, unless sooner terminated as
provided in Section 1.8 of this Agreement. The term of this Agreement is
sometimes hereinafter referred to as the "Employment Period."
1.4 DIRECTORSHIP. The Executive agrees to serve as a Director of
the Company during the Employment Period, if so elected by the shareholders of
the Company; provided, however, that the Company shall indemnify the Executive
for any and all liabilities incurred by the Executive in connection with
serving the Company in any and all such capacities, to the maximum extent
permitted by applicable state law, and in any case on a basis no less favorable
than is currently provided to other members of the Company's Board.
1.5 PLACE OF PERFORMANCE. In connection with the Executive's
employment by the Company during the Employment Period, the Executive shall be
based and the Executive's services shall be performed in Santa Clara, Santa
Clara County, California, at the location where the Executive was employed
immediately preceding the Effective Date hereof, or at any office or location
not more than thirty (30) miles from Santa Clara, California, except for
reasonable travel required in connection with the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 2
<PAGE> 4
Company's business to an extent substantially consistent with the Executive's
business travel obligations to TIW as of the Effective Date hereof.
1.6 COMPENSATION. The Company shall pay the Executive, as full
compensation for services rendered by the Executive under this Agreement, as
follows:
(a) ANNUAL BASE SALARY. The Company shall pay the
Executive an annual base salary (the "Annual Base Salary") of TWO
HUNDRED TEN THOUSAND AND NO/100 DOLLARS ($210,000.00) per year, or
such higher Annual Base Salary as may be determined from time to time
during the term hereof in accordance with the provisions of subsection
(b) of this Section 1.6 by the Compensation Committee of the Board or
the Board, in its sole discretion, as applicable, prorated for any
partial period of employment. Such Annual Base Salary shall be
subject to all appropriate federal and state withholding and payroll
taxes and shall be paid by the Company to the Executive in equal
bi-weekly installments in accordance with the regular payroll policies
and practices of the Company or in such other periodic installments
and on such days during the month as the Company and the Executive
shall mutually determine. The Company's compensation of the Executive
by payments of the Annual Base Salary pursuant to this Section 1.6(a)
shall not be deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of the
Company, nor shall such compensation in any way limit or reduce any
other obligation of the Company hereunder; and, except to the extent
specifically set forth herein, no other compensation, benefit or
payment hereunder shall in any way limit or reduce the obligation of
the Company to pay the Annual Base Salary to the Executive during the
term of this Agreement.
(b) ADJUSTMENTS TO ANNUAL BASE SALARY. The Annual Base
Salary set forth in Section 1.6(a) of this Agreement shall be subject
to adjustment annually, effective as of October 1 of each fiscal year
of the Company during the term of this Agreement, beginning with the
fiscal year commencing October 1, 1998, to reflect increases thereof,
if any, authorized and approved by the Compensation Committee of the
Board or the Board, as applicable. For purposes of this Agreement,
any reference to "Annual Base Salary" herein shall mean the
Executive's Annual Base Salary, as adjusted, as applicable.
(c) ANNUAL BONUS COMPENSATION. In addition to the Annual
Base Salary set forth in Section 1.6(a) hereof and any other amounts
of compensation payable to the Executive pursuant to any other
provisions of this Agreement, the Company shall also pay the Executive
discretionary annual bonus compensation ("Annual Bonus Compensation")
in an amount, if any, determined by the Board and the Compensation
Committee of the Board to be proper and appropriate for each fiscal
year of the Company during the term of this Agreement. Such Annual
Bonus Compensation shall be based upon such factors as the Board or
the Compensation Committee of the Board shall deem appropriate and
consistent with factors applicable to other executive officers of the
Company, including (i) the Executive's contributions to the success of
the business operations and the consolidated net- after-tax profits of
the Company, its divisions and its subsidiaries for each fiscal year
of the Company during the term hereof, as determined in accordance
with generally accepted accounting principles, (ii) the consolidated
revenues of the Company, its divisions and its subsidiaries for each
fiscal year of the Company, and (iii) the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 3
<PAGE> 5
general overall economic performance of the Company, its divisions and
its subsidiaries for each fiscal year of the Company. Such Annual
Bonus Compensation, if any, shall be paid by the Company to the
Executive in the manner set forth in the resolution of the Board or
the Compensation Committee of the Board, as applicable, authorizing
and declaring the payment of such Annual Bonus Compensation to the
Executive (the "Bonus Resolution"). Notwithstanding anything herein
to the contrary, the Executive shall not be entitled to any Annual
Bonus Compensation for any fiscal year of the Company or any part
thereof during the term of this Agreement unless and until such Annual
Bonus Compensation is determined and declared by the Board or the
Compensation Committee of the Board, as applicable.
1.7 EMPLOYMENT BENEFITS. In addition to the Annual Base Salary
and any Annual Bonus Compensation payable to the Executive hereunder, the
Executive shall be entitled to the following benefits upon satisfaction by the
Executive of the eligibility requirements therefor, subject to the following
limitations:
(a) SICK LEAVE BENEFITS AND DISABILITY INSURANCE. Unless
this Agreement is terminated pursuant to the provisions of Section
1.8(a)(2) hereof, the Executive shall be paid sick leave benefits at
the Executive's then prevailing Annual Base Salary rate during the
Executive's absence due to illness or other temporary incapacity,
reduced by the amount, if any, of worker's compensation, social
security entitlement or disability benefits, if any, under the
Company's group disability insurance plan, if any.
(b) HOSPITALIZATION, ACCIDENT, MAJOR MEDICAL AND DENTAL
INSURANCE. During the Employment Period, the Company, at its own
expense, shall provide the Executive (and all dependents of the
Executive at the request and expense of the Executive) with group
hospitalization, group accident, major medical, and disability
insurance in amounts of coverage comparable to the coverage, if any,
provided other executive officers of the Company.
(c) VACATIONS. The Executive shall be entitled to a
reasonable paid vacation of not less than twenty (20) business days
each calendar year during the Employment Period, exclusive of holidays
and weekends, which vacation shall be taken by the Executive in
accordance with the business requirements of the Company at the time
and its vacation plans, policies and practices as applied to executive
officers of the Company then in effect relative to this subject. The
Executive shall also be entitled to compensation in respect of earned
or accrued but unused vacation time based on the Executive's Annual
Base Salary applicable at the time and to all paid holidays granted by
the Company to its executive officers.
(d) EMPLOYMENT FACILITIES. During the Employment Period,
the Company shall provide, at its expense, appropriate and adequate
office space, furniture, communications, stenographic and
word-processing equipment, supplies, personnel (including
professional, clerical, support and other personnel) and such other
facilities and services as shall be suitable to the Executive's
position and adequate for the Executive's use in performing the
Executive's duties and responsibilities under this Agreement.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 4
<PAGE> 6
(e) OTHER EMPLOYMENT BENEFITS. During the Employment
Period, the Company shall (i) maintain in full force and effect at the
Company's expense and the Executive shall be entitled, pursuant to the
terms thereof and subject to qualifying therefor, to full
participation in, all of the employee benefit plans and arrangements
maintained by the Company on the Effective Date for its executive
officers (including without limitation each profit sharing/savings
plan, pension and retirement plan and arrangement, if any, stock
option plan, life insurance and health and accident plan and
arrangement, medical insurance plan, disability plan, and vacation
plan), and, (ii) in the event the Company shall adopt any additional
employee benefit plans during the Employment Period, the Executive
shall be entitled to full participation in each such adopted plan upon
satisfaction of the eligibility requirements thereof. The Company
shall not make any changes in such plans or arrangements during the
Employment Period that would adversely affect the Executive's rights
or benefits accrued thereunder at the time of such change; provided,
however, the Board may, from time to time, terminate any employee
benefit plan then offered or maintained by the Company. The Executive
shall be entitled to participate in or receive benefits under any
employee benefit plans or arrangements made available by the Company
in the future to its executive and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. To the extent not
provided for by any employee benefit plan maintained or adopted
pursuant to this subsection (e) of this Section 1.7, the Company
shall, at its expense, provide the Executive with an annual complete
physical examination conducted by a physician of the Executive's
choice, the results of which shall be kept confidential between the
Executive and such physician. Nothing paid to the Executive under any
plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the Annual Base Salary or
Annual Bonus Compensation payable to the Executive pursuant to
subsections (a) and (c) of Section 1.6 hereof. Notwithstanding any
provision of this Agreement to the contrary, any payments or benefits
payable to the Executive hereunder in respect of any fiscal year of
the Company during which the Executive is employed by the Company for
less than the entire fiscal year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the
number of days in such fiscal year during which the Executive is so
employed.
(f) REIMBURSEMENT OF EMPLOYEE EXPENSES. The Executive is
authorized to incur ordinary, necessary and reasonable expenses in
connection with the performance of the Executive's duties and
responsibilities under this Agreement and for the promotion of the
business and activities of the Company during the Employment Period,
including, without limitation, expenses for necessary travel and
entertainment and other items of expenses required in the normal and
routine course of the Executive's employment hereunder. The Company
shall reimburse the Executive from time to time for all such business
expenses incurred pursuant to and in conformity with the provisions of
this Section and the policies and practices of the Company then in
effect relative to the reimbursement of business expenses, provided
that the Executive submits to the Company:
(1) An account book or similar written record in
which the Executive recorded at or near the time each
expenditure was made: (i) the amount of the expenditures;
(ii) the time, place and designation of the type of
entertainment and travel or other expenses, or the date and
description of the gift (gifts made to one individual are not
to exceed a total of Twenty-Five and No/100 Dollars [$25.00]
in any fiscal year); (iii) the business reason
EXECUTIVE EMPLOYMENT AGREEMENT - Page 5
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for the expenditure and the nature of the business benefit
derived or expected to be derived as the result of the
expenditure; and (iv) the names, occupations, addresses and
other information concerning each person who was entertained
or given a gift sufficient to establish the business
relationship to the Company; and
(2) Documentary evidence (such as supporting
receipts or paid bills) which state sufficient information to
establish the amount, date, place and essential character of
the expenditure, for each expenditure (i) of Twenty-Five and
No/100 Dollars ($25.00) or more (except for transportation
charges if not readily available) and (ii) for lodging or
traveling away from home.
1.8 TERMINATION.
(a) ABSENCE OF A BREACH OF AGREEMENT. This Agreement and
the Executive's employment hereunder may be terminated without any
breach of this Agreement at any time during the term hereof only by
reason of and in accordance with the following provisions:
(1) DEATH. If the Executive dies during the term
of this Agreement and while in the employ of the Company, the
Executive's employment hereunder shall automatically terminate
as of the date of the Executive's death, and the Company shall
have no further liability hereunder to the Executive or the
Executive's estate, except to the extent set forth in Section
1.9(a) hereof.
(2) DISABILITY. If, during the term of this
Agreement, the Executive shall be prevented from performing
the Executive's duties hereunder by reason of becoming totally
and permanently disabled as hereinafter defined, then the
Company may terminate the Executive's employment hereunder
upon written Notice of Termination (effective as of the Date
of Termination specified in Section 1.8[d] hereof) to the
Executive without any further liability hereunder to the
Executive, except as set forth in Section 1.9(b) hereof. For
purposes of this Agreement, the Executive shall be deemed to
have become totally and permanently disabled when (i) the
Executive receives "total disability benefits" under either
(a) Social Security, or (b) the Company's long-term disability
plan, if any (whether funded with insurance paid for by either
the Company or the Executive or self-funded by the Company),
(ii) the Board, upon the written report of a qualified
physician (after a complete physical examination of the
Executive) selected by the Board or the Company's insurers and
acceptable to the Executive or the Executive's authorized
legal representative (which agreement as to acceptability will
not be unreasonably withheld), shall have determined that the
Executive has become physically and/or mentally incapable of
performing the Executive's duties under this Agreement on a
permanent basis even after reasonable accommodations (within
the meaning of the Americans With Disabilities Act) have been
attempted by the Company for the benefit of the Executive to
enable the Executive to perform his duties hereunder, or (iii)
the Executive is unable, due to injury, illness or other
incapacity (physical or mental), to perform the essential
functions, duties and responsibilities of the positions
contemplated herein on a full-time basis for the entire time
of a continuous period of one hundred eighty (180) consecutive
calendar days after
EXECUTIVE EMPLOYMENT AGREEMENT - Page 6
<PAGE> 8
its commencement or for an aggregate period of two hundred
forty (240) calendar days out of a continuous period of three
hundred sixty-five (365) calendar days even after reasonable
accommodations (within the meaning of the Americans With
Disabilities Act) have been attempted by the Company for the
benefit of the Executive to enable the Executive to perform
his duties hereunder.
(3) TERMINATION BY THE COMPANY.
(A) FOR CAUSE. During the Employment
Period, the Company may discharge the Executive for
cause and terminate the Executive's employment
hereunder upon written Notice of Termination
(effective as of the Date of Termination specified in
Section 1.8[d] hereof) to the Executive without any
further liability hereunder to the Executive or the
Executive's estate, except to the extent set forth in
Sections 1.9(c) hereof. Such notice of discharge
shall describe with reasonable specificity the cause
or causes for the termination of the Executive's
employment, as well as the effective Date of
Termination of employment. For purposes of this
Agreement, a discharge for "Cause" shall mean
termination of the Executive's employment upon
written Notice of Termination to the Executive,
limited, however, to one or more of the following
reasons:
(i) the Executive shall have been
convicted by a court of competent
jurisdiction of or admitted to an act of
fraud, theft or embezzlement against the
Company; or
(ii) the Executive shall have
otherwise been convicted by a court of
competent jurisdiction of a felony; or
(iii) the willful and unauthorized
disclosure by the Executive of Trade Secrets
(as defined in Section 1.11[b] hereof) of the
Company as determined by the affirmative vote
of at least a majority of the Board; or
(iv) the willful and continued
failure by the Executive to substantially
perform his obligations under this Agreement
(other than any such failure resulting from
the Executive's incapacity due to physical or
mental illness) which is not remedied within
thirty (30) days after a Notice of
Termination (as defined in Section 1.8[c]
hereof) is delivered to the Executive that
specifically identifies, as required below,
the facts and circumstances leading the
Company to believe that the Executive has
willfully and continuously failed to
substantially perform his obligations under
and in violation of this Agreement. For
purposes of this subsection, no act, or
failure to act, on the Executive's part shall
be considered "willful" unless done, or
omitted to be done, by him in bad faith and
without reasonable belief that his action or
omission was in the best interests of the
Company. Notwithstanding the foregoing, the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 7
<PAGE> 9
Executive shall not be deemed to have been
terminated for Cause without (1) reasonable
notice to the Executive setting forth the
reasons, facts and circumstances for the
Company's intention to terminate for Cause,
(2) an opportunity for the Executive,
together with his counsel, to be heard before
the Board, and (3) delivery to the Executive
of a Notice of Termination pursuant to
Section 1.8(c) hereof, from the Board or its
authorized delegate finding that in the
Board's good faith determination the
Executive was guilty of the conduct set forth
above, and specifying the particulars thereof
in detail.
(B) WITHOUT CAUSE. In the event the
Executive's employment hereunder is terminated by the
Company pursuant to the provisions of Section
1.8(a)(3)(A) hereof for Cause as determined by the
Board and it is subsequently determined by a court of
competent jurisdiction that the Company did not have
proper Cause to discharge the Executive, then and in
such event, notwithstanding any other provision
herein to the contrary, the Executive's employment
hereunder shall be deemed to have been terminated by
the Company in breach of this Agreement without
Cause, but with notice pursuant to the provisions of
Section 1.8(b) hereof as of the date the Executive's
employment was previously terminated by the Company
purportedly for Cause, and the Company shall have no
liability to the Executive or the Executive's estate
other than as set forth in Section 1.9(f)(2) hereof.
(4) TERMINATION BY THE EXECUTIVE.
(A) REASONS FOR TERMINATION. The
Executive may terminate his employment hereunder (i)
for "Good Reason" (as hereinafter defined) at any
time upon sixty (60) days written Notice of
Termination to the Company, in which event the
Company shall have no further liability hereunder to
the Executive, except to the extent set forth in
Section 1.9(d) hereof, or (ii) voluntarily, at the
Executive's option, at any time upon sixty (60) days
written Notice of Termination to the Company, in
which event the Company shall have no further
liability hereunder to the Executive, except to the
extent set forth in Section 1.9(e) hereof.
(B) GOOD REASON. For purposes of this
Agreement, the term "Good Reason" shall mean, without
the Executive's express written consent, the
occurrence of any of the following circumstances
(each of which occurrences shall constitute a
"Change"):
(i) the relocation of the Company's
principal executive offices to a location
more than thirty (30) miles from Santa Clara,
California, or the Company's requiring the
Executive to be based anywhere other than the
location described in Section 1.5 hereof,
except for travel reasonably required of the
Executive in the performance of the
Executive's duties on
EXECUTIVE EMPLOYMENT AGREEMENT - Page 8
<PAGE> 10
behalf of the Company to an extent
substantially consistent with the Executive's
business travel obligations as of the
Effective Date hereof;
(ii) the failure of the Company to
obtain an agreement, satisfactory to the
Executive, from any and all successors to
assume and agree to perform this Agreement,
as contemplated in Section 2.4 hereof;
(iii) any purported termination by
the Company of the Executive's employment
otherwise than as expressly permitted by this
Agreement, including, but not limited to, any
purported termination which is not effected
pursuant to a Notice of Termination
satisfying the requirements of subsections
(c) and (d) of this Section 1.8 hereof (and,
if applicable, the requirements of Section
1.8[a][3] hereof);
(iv) any failure by the Company to
comply with any material provision of this
Agreement that has not been cured within ten
(10) business days after written notice of
such noncompliance has been delivered by the
Executive to the Company; or
(v) the occurrence of a "Change of
Control" of the Company, as defined below, if
the Executive terminates this Agreement
within one (1) year after such Change of
Control.
The Executive's continued employment shall
not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason
hereunder. For purposes of this Section
1.8(a)(4)(B), any good faith determination of "Good
Reason" made by the Executive shall constitute and
create a reasonable presumption of Good Reason,
subject to rebuttal by the Company.
(C) CHANGE OF CONTROL. For the purposes
of this Agreement, a "Change of Control" of the
Company shall mean:
(i) the transfer, through one
transaction or a series of related
transactions, either directly or indirectly,
or through one or more intermediaries, of
beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of 20% or more of
either the then outstanding shares of common
stock or the combined voting power of the
Company's then outstanding voting securities
entitled to vote generally in the election of
directors, or the last of any series of
transfers that results in the transfer of
beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of 20% or more of
either the then outstanding shares of common
stock or the combined voting power of the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 9
<PAGE> 11
Company's then outstanding voting securities
entitled to vote generally in the election of
directors; or
(ii) approval by the shareholders of
the Company entitled to vote thereon of a
merger or consolidation, the result of which
is that persons who were the shareholders of
the Company immediately prior to such merger
or consolidation do not, immediately
thereafter, own or otherwise beneficially
hold more than 40% of the combined voting
power of the surviving or consolidated
company's then outstanding voting securities
entitled to vote generally in the election of
directors, or a liquidation or dissolution of
the Company or the sale of all or
substantially all of the assets of the
Company; or
(iii) the transfer, through one
transaction or a series of related
transactions, either directly or indirectly,
or through one or more intermediaries, of
more than 50% of the assets of the Company,
or the last of any series of transfers that
results in the transfer of more than 50% of
the assets of the Company. For purposes of
this Section 1.8(a)(4), the determination of
what constitutes more than 50% of the assets
of the Company shall be determined based on
the most recent audited consolidated
financial statements of the Company as
certified by its independent accountants; or
(iv) During any fiscal year of the
Company, individuals who at the beginning of
such year constitute the Board of the Company
and any new director or directors whose
election to the Board was approved by a vote
of a majority of the directors then still in
office who either were directors at the
beginning of such year or whose election or
nomination for election was previously so
approved, cease for any reason to constitute
a majority of the Board.
(b) TERMINATION BY THE COMPANY WITH NOTICE.
Notwithstanding any provision in this Agreement to the contrary, the
Company may terminate the Executive's employment hereunder for a
reason other than as set forth in Subparagraphs (a)(1), (a)(2), or
(a)(3) of this Section 1.8 upon written Notice of Termination
(effective as of the Date of Termination specified in Section 1.8[d]
hereof) to the Executive without any further liability hereunder to
the Executive, except to the extent set forth in Sections 1.9(f)(1)
hereof.
(c) NOTICE OF TERMINATION. Any termination of the
Executive's employment by the Company or by the Executive (other than
termination pursuant to subsection [a][1] of this Section 1.8 hereof)
shall be communicated by written Notice of Termination to the other
party. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined in
EXECUTIVE EMPLOYMENT AGREEMENT - Page 10
<PAGE> 12
Section 1.8[d] hereof) is other than the date of delivery of such
notice, specifies the termination date (which date shall not be less
than ten [10] days after the delivery of such notice).
(d) DATE OF TERMINATION. "Date of Termination" shall
mean (i) if the Executive's employment is terminated by his death, the
date of his death, (ii) if the Executive's employment is terminated
pursuant to subsection (a)(2) of Section 1.8 hereof (relating to
disability), thirty (30) days after Notice of Termination is delivered
to the Executive (provided that the Executive shall not have returned
to the performance of his duties on a full-time basis during such
thirty [30] day period), (iii) if the Executive's employment is
terminated pursuant to subsection (a)(3) of Section 1.8 hereof
(relating to Cause), ten (10) days after Notice of Termination is
delivered to the Executive, and (iv) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of
Termination, subject to other applicable provisions of this Agreement.
1.9 COMPENSATION UPON TERMINATION.
(a) DEATH. In the event the Executive's employment
hereunder is terminated pursuant to the provisions of Section
1.8(a)(1) hereof due to the death of the Executive, the Company shall
have no further obligation to the Executive or the Executive's estate,
except to pay to the Executive's spouse, or if the Executive leaves no
spouse, to the estate of the Executive (i) any accrued, but unpaid,
Annual Base Salary, any authorized but unreimbursed business expenses,
and any vacation benefits which have accrued as of the date of death,
but were then unpaid or unused, and (ii) any accrued, but unpaid,
Annual Bonus Compensation to the date of death, but without
accelerating the bonus payment date. Any amount due the Executive
under clause (i) of this Paragraph shall be paid in a lump-sum cash
payment within thirty (30) days after the death of the Executive and
any amount due the Executive under clause (ii) of this Paragraph shall
be paid in accordance with the Bonus Resolution.
(b) DISABILITY. In the event the Executive's employment
hereunder is terminated pursuant to the provisions of Section
1.8(a)(2) hereof due to the Disability of the Executive, the Company
shall be relieved of all of its obligations under this Agreement,
except to pay the Executive (i) any accrued, but unpaid Annual Base
Salary, any authorized but unreimbursed business expenses, and any
vacation benefits which have accrued as of the effective Date of
Termination of the Executive's employment hereunder due to Disability,
but then remain unpaid, (ii) any accrued, but unpaid, Annual Bonus
Compensation to the effective Date of Termination due to Disability,
but without accelerating the bonus payment date, and (iii) an amount
equal to one year's Annual Base Salary of the Executive in effect on
the effective Date of Termination due to Disability, less any proceeds
payable to the Executive under disability insurance, if any, for the
twelve-month period immediately following the effective Date of
Termination due to Disability. The provisions of the preceding
sentence shall not affect the Executive's rights to receive payments
under the Company's disability insurance plan, if any. Any amount due
the Executive under clause (i) of this Paragraph shall be paid in a
lump-sum cash payment within thirty (30) days after the effective Date
of Termination of the Executive's employment hereunder, any amount due
the Executive under clause (ii) of this Paragraph shall be paid in
accordance with the Bonus Resolution, and any amount due the Executive
under clause (iii) of this Paragraph shall be paid
EXECUTIVE EMPLOYMENT AGREEMENT - Page 11
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in accordance with the Company's regular payroll periods during the
twelve-month period immediately following the effective Date of
Termination due to Disability of the Executive.
(c) CAUSE. In the event the Executive's employment
hereunder is terminated by the Company for Cause pursuant to the
provisions of Section 1.8(a)(3) hereof, the Company shall have no
further obligation to the Executive under this Agreement, except to
pay the Executive (i) any accrued, but unpaid, Annual Base Salary, any
authorized but unreimbursed business expenses, and any vacation
benefits which have accrued as of the effective Date of Termination of
the Executive's employment hereunder, but were then unpaid or unused,
and (ii) any accrued, but unpaid, Annual Bonus Compensation to the
effective Date of Termination, but without accelerating the bonus
payment date. Any amount due the Executive under clause (i) of this
Paragraph shall be paid in a lump-sum cash payment within thirty (30)
days after the effective Date of Termination of the Executive's
employment hereunder and any amount due the Executive under clause
(ii) of this Paragraph shall be paid in accordance with the Bonus
Resolution.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. In the
event this Agreement is terminated by the Executive pursuant to the
provisions of Section 1.8(a)(4)(A)(i) hereof, the Executive shall be
entitled to receive (i) any accrued, but unpaid, Annual Base Salary,
any authorized but unreimbursed business expenses, and any vacation
benefits which have accrued as of the effective Date of Termination of
the Executive's employment hereunder, but were then unpaid or unused,
(ii) any accrued, but unpaid, Annual Bonus Compensation to the
effective Date of Termination, but without accelerating the bonus
payment date, and (iii) an amount in cash equal to three (3) times the
average aggregate annual compensation of the Executive as determined
from the sum of the Executive's Annual Base Salary and Annual Bonus
Compensation for the five (5) fiscal years of the Company ended
immediately prior to the effective Date of Termination of the
Executive's employment with the Company. Any amount due the Executive
under clause (i) of this Paragraph shall be paid in a lump-sum cash
payment within thirty (30) days after the effective Date of
Termination of the Executive's employment hereunder, any amount due
the Executive under clause (ii) of this Paragraph shall be paid in
accordance with the Bonus Resolution, and any amount due the Executive
under clause (iii) of this Paragraph shall be paid in a lump-sum cash
payment within thirty (30) days after the effective Date of
Termination of the Executive's employment hereunder.
(e) TERMINATION BY THE EXECUTIVE WITH NOTICE. In the
event the Executive's employment hereunder is voluntarily terminated
by the Executive pursuant to the provisions of Section 1.8(a)(4)(A)
hereof for other than Good Reason, the Executive shall be entitled to
receive (i) any accrued, but unpaid, Annual Base Salary, any
authorized but unreimbursed business expenses, and any vacation
benefits which have accrued as of the effective Date of Termination of
the Executive's employment hereunder, but were then unpaid or unused,
and (ii) any accrued, but unpaid, Annual Bonus Compensation to the
effective Date of Termination but without accelerating the bonus
payment date. Any amount due the Executive under clause (i) of this
Paragraph shall be paid in a lump-sum cash payment within thirty (30)
days after the effective Date of Termination of the Executive's
employment hereunder, and any amount due the Executive under clause
(ii) of this Paragraph shall be paid in accordance with the Bonus
Resolution.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 12
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(f) TERMINATION BY THE COMPANY WITH NOTICE.
(1) PURSUANT TO SECTION 1.8(b). In the event the
Executive's employment hereunder is terminated by the Company
pursuant to the provisions of Section 1.8(b) hereof, the
Executive shall be entitled to receive (i) any accrued, but
unpaid, Annual Base Salary, any authorized but unreimbursed
business expenses, and any vacation benefits which have
accrued as of the effective Date of Termination of the
Executive's employment hereunder, but were then unpaid or
unused, (ii) any accrued, but unpaid, Annual Bonus
Compensation to the effective Date of Termination, but without
accelerating the bonus payment date, and (iii) an amount in
cash equal to three (3) times the average aggregate annual
compensation of the Executive as determined from the sum of
the Executive's Annual Base Salary and Annual Bonus
Compensation for the five (5) fiscal years of the Company
ended immediately prior to the effective Date of Termination
of the Executive's employment with the Company. Any amount
due the Executive under clause (i) of this Paragraph shall be
paid in a lump-sum cash payment within thirty (30) days after
the effective Date of Termination of the Executive's
employment hereunder, any amount due the Executive under
clause (ii) of this Paragraph shall be paid in accordance with
the Bonus Resolution, and any amount due the Executive under
clause (iii) of this Paragraph shall be paid in a lump-sum
cash payment within thirty (30) days after the effective Date
of Termination of the Executive's employment hereunder.
(2) PURSUANT TO SECTION 1.8(A)(3)(B). In the
event the Executive's employment is purportedly terminated by
the Company pursuant to the provisions of Section 1.8
(a)(3)(A) for Cause and it is subsequently determined by a
court of competent jurisdiction that the Company did not have
adequate Cause to discharge the Executive, the Executive shall
be entitled to receive (i) the amount of compensation set
forth in Section 1.9(f)(1) immediately above, less any amount
previously paid to the Executive pursuant to the provisions of
Section 1.9(c) hereof, and (ii) the amount of the reasonable
attorneys' fees, plus court costs incurred by the Executive in
contesting that the Executive was improperly discharged by the
Company for Cause. Any amount due the Executive under clauses
(i) and (ii) of this Paragraph shall be paid in a lump-sum
cash payment within thirty (30) days after the rendition of a
final judgment (after all appeals have been exhausted)
determining that the Executive was not terminated for Cause or
the date of final compromise and settlement of such issue
between the parties, as applicable.
1.10 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. Notwithstanding
any provision of this Agreement to the contrary, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Payments"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties with respect to such excise tax (such excise tax and any such
interest and penalties being hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Gross-Up
Payment, the Executive shall retain an amount of the Gross-
EXECUTIVE EMPLOYMENT AGREEMENT - Page 13
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Up Payment free and clear of all claims, taxes and impositions equal to the
Excise Tax imposed upon the Payments.
1.11 PROTECTIVE COVENANTS. The Executive recognizes that the
Executive's employment by the Company exacts the highest standards of trust and
confidence because (i) the Executive has become fully familiar with and will
further enhance his knowledge of all aspects of the Company's business and that
of its subsidiaries during the Executive's Employment Period with the Company,
(ii) certain information of which the Executive has secured or will gain
knowledge during the Executive's Employment Period is proprietary and
confidential information which is of special and peculiar value to the Company
or its subsidiaries, and (iii) if any such proprietary and confidential
information were imparted or otherwise disclosed to or became known by any
person, including the Executive, engaging in a business in competition with
that of the Company or its subsidiaries, hardship, loss and irreparable injury
and damage could result to the Company or its subsidiaries, the measurement of
which would be difficult if not impossible to ascertain. Therefore, the
Executive agrees that it is necessary for the Company to protect its business
and that of its subsidiaries from such potential damage, and the Executive
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interests of both the Executive and
the Company, to protect the Company or its subsidiaries against such potential
damage and shall apply to and be binding upon the Executive as provided herein.
(a) PROPRIETARY INFORMATION. The Executive acknowledges
that any and all inventions, improvements, discoveries, formulae,
processes, products or designs developed by the Executive alone or in
conjunction with others in connection with the Company's business
during the term of the Executive's Employment Period with the Company
("Proprietary Information") shall be the sole and absolute property of
the Company in perpetuity, that the Executive shall promptly disclose
such Proprietary Information to the Company, and the Executive shall
have no right, title or interest therein or to receive additional
monies therefor, regardless of whether development occurred during
normal employment hours or any other time during the term of the
Executive's Employment Period with the Company. The Executive shall
assist the Company in obtaining patents on all such Proprietary
Information deemed patentable by the Company and shall execute all
documents necessary to obtain such patents and to vest the Company
with full and complete title to the patents and to protect the patents
against infringement by others. For purposes of this Agreement, an
invention or concept shall be deemed to have been made during the
period of the Executive's Employment Period if, during such period,
the invention or concept was conceived or first actually reduced to
practice, and the Executive agrees that any patent application filed
by the Executive within one (1) year after the termination of the
Executive's employment with the Company shall be presumed to relate to
an invention or concept made or discovered during the term of the
Executive's Employment Period with the Company, unless the Executive
can establish the contrary.
(b) TRADE SECRETS. The Executive further acknowledges
that the Company or its subsidiaries has developed unique skills,
concepts, sales presentations, marketing programs, marketing strategy,
business practices, methods of operation, trademarks, licenses,
technical information, Proprietary Information, computer software
programs, tapes and discs concerning its operations, systems, customer
lists, customer leads, documents identifying past, present and future
customers, hiring and training methods, financial and other
confidential and proprietary
EXECUTIVE EMPLOYMENT AGREEMENT - Page 14
<PAGE> 16
information concerning its business operations and products ("Trade
Secrets"). The Executive recognizes that the Executive's position
with the Company is one of the highest trust and confidence by reason
of the Executive's access to and contact with certain Trade Secrets of
the Company and its subsidiaries. The Executive agrees and covenants
to use the Executive's best efforts and to exercise utmost diligence
to protect and safeguard the Trade Secrets of the Company and its
subsidiaries. The Executive further agrees and covenants that, except
as may be required by the Company in connection with this Agreement,
or with the prior written consent of the Company, the Executive shall
not, either during the term of this Agreement or thereafter, directly
or indirectly, use for the Executive's own benefit or for the benefit
of another, or disclose, disseminate, or distribute to another, any
Trade Secret (whether or not acquired, learned, obtained, or developed
by the Executive alone or in conjunction with others) of the Company
or its subsidiaries or of others with whom the Company or its
subsidiaries has a business relationship. All memoranda, notes,
records, drawings, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of
this Agreement, arising out of, in connection with, or related to any
activity or business of the Company or its subsidiaries, including,
but not limited to, the Company's customers, suppliers, or others with
whom the Company has a business relationship, the Company's
arrangements with such parties, and the Company's pricing and product
policies and strategies, are, and shall continue to be, the sole and
exclusive property of the Company, and shall, together with all copies
thereof and all advertising literature, be returned and delivered to
the Company by the Executive immediately, without demand, upon the
termination of this Agreement, or at any time upon the Company's
demand.
(c) RESTRICTION ON SOLICITING CUSTOMERS OF THE COMPANY OR
ITS SUBSIDIARIES. The Executive covenants that for a period of two
(2) years following the effective Date of Termination of this
Agreement, the Executive will not, either directly or indirectly, (i)
disclose or otherwise make known to any person or entity the names or
addresses of any of the customers of the Company or its subsidiaries,
(ii) call on, solicit, or entice away, or attempt to call on, solicit
or entice away any of the customers of the Company or its subsidiaries
with whom the Executive became acquainted during the Executive's
Employment Period with the Company, either for himself or for any
other person, firm, corporation or other business entity.
(d) SURVIVAL OF COVENANTS. Each covenant of the
Executive set forth in this Section 1.11 shall survive the termination
of this Agreement and shall be construed as an agreement independent
of any other provision of this Agreement, and the existence of any
claim or cause of action of the Executive against the Company whether
predicated on this Agreement or otherwise shall not constitute a
defense to the enforcement by the Company of such covenants.
(e) REMEDIES. In the event of breach or threatened
breach by the Executive of any provision of this Section 1.11, the
Company shall be entitled to equitable relief by temporary restraining
order, temporary injunction, permanent injunction or otherwise, in
addition to any other legal or equitable relief to which it may be
entitled, including any and all monetary damages which the Company may
incur as a result of such breach or violation or threatened breach or
violation. The Company may pursue any remedy available to it
concurrently or consecutively in any order as to any breach or
violation, or threatened breach or violation, and
EXECUTIVE EMPLOYMENT AGREEMENT - Page 15
<PAGE> 17
the pursuit of one or more of such remedies at any time shall not be
deemed an election of remedies or waiver of the right to pursue any
other of such remedies as to such breach or violation, or threatened
breach or violation, or as to any other breach or violation, or
threatened breach or violation.
(f) NO EFFECT ON NONCOMPETITION AGREEMENT. The Executive
acknowledges that on even date herewith the Executive entered into a
Noncompetition Agreement with Vertex Communications Corporation, a
Texas corporation ("Vertex") and the Company, which is a wholly-owned
subsidiary of Vertex, arising from the merger of TIW (a corporation in
which the Executive was a director, executive officer and a
shareholder owning approximately twenty-one percent (21%) of the
issued and outstanding capital stock thereof) with and into the
Company whereby the Company as the surviving corporation in the merger
acquired all of the assets and business of TIW. The Executive
acknowledges and agrees that the Noncompetition Agreement and this
Agreement are independent agreements which are separately enforceable
against the Executive in accordance with the respective terms thereof.
The Executive hereby acknowledges that the Executive's agreement to
be bound by the protective covenants set forth in this Section 1.11 was a
material inducement for the Company entering into this Agreement and agreeing
to pay the Executive the compensation, benefits and other amounts set forth
herein.
2
GENERAL PROVISIONS
2.1 NOTICES. All notices, requests, consents, demands and all
other communications required or otherwise provided for under this Agreement
shall be in writing and shall be deemed to have been duly issued when delivered
on the date personally delivered or on the date deposited in a receptacle
maintained by the United States Postal Service for such purpose, postage
prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive: Dr. Rein Luik
c/o TIW Systems, Inc.
2211 Lawson Lane
Santa Clara, California 95054
If to the Company: TIW Systems, Inc.
c/o Vertex Communications Corporation
2600 North Longview Street
Kilgore, Texas 75662
Attn: Chairman of the Board
EXECUTIVE EMPLOYMENT AGREEMENT - Page 16
<PAGE> 18
or to such other address as any party hereto may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt by the addressee.
2.2 SEVERABILITY. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
2.3 WAIVER, MODIFICATION AND INTEGRATION. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This Agreement
contains the entire agreement of the parties concerning employment of the
Executive by the Company and supersedes all prior and contemporaneous
representations, understandings and agreements, either oral or in writing,
between the parties hereto with respect to the employment of the Executive by
the Company and the payment of any severance or similar payment by the Company
or TIW Systems, Inc., a California corporation ("TIW"), to the Executive upon
the termination of the Executive's employment, including, but not limited to,
any obligation of TIW or the Company to the Executive under the STEP Multiple
Employer Supplemental Benefit Plan ("TIW Supplemental Benefit Plan"), and all
such prior or contemporaneous representations, understandings and agreements,
both oral and written, are hereby terminated. Notwithstanding the preceding,
the Executive shall be entitled to receive any benefit payable by a third party
to the Executive under the TIW Supplemental Benefit Plan, and the payment of
such benefit by a third party shall not affect the Company's obligations to the
Executive hereunder. This Agreement may not be modified, altered or amended
except by written agreement of the parties hereto.
2.4 SUCCESSORS; BINDING EFFECT. This Agreement shall be binding
and effective upon the Company and its successors and permitted assigns, and
upon the Executive, the Executive's heirs, executors and legal representatives;
provided, however, that the Company shall not assign this Agreement without the
written consent of the Executive. The Company shall require any and all
successors (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 in form and substance satisfactory to the Executive, to
expressly 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 had occurred. Failure of the Company to obtain such agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and shall entitle the Executive to terminate his employment for Good
Reason, as herein defined. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its respective business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 2.4 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. This Agreement and all
rights of the Executive hereunder shall, inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 17
<PAGE> 19
2.5 GOVERNING LAW. The parties hereto agree that the laws of the
State of California shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the respective parties hereto.
2.6 REPRESENTATION OF EXECUTIVE. The Executive hereby represents
and warrants to the Company that the Executive has not previously assumed any
obligations inconsistent with those contained in this Agreement. The Executive
further represents and warrants to the Company that the Executive has entered
into this Agreement pursuant to the Executive's own initiative and that the
Company did not induce the Executive to execute this Agreement in contravention
of any existing commitments. The Executive acknowledges that the Company has
entered into this Agreement in reliance upon the foregoing representations of
the Executive.
2.7 SURVIVAL. The provisions of Section 1.9, 1.10 and 1.11 shall
survive the termination of this Agreement and the termination of the employment
relationship created hereunder to the extent necessary or reasonably
appropriate to effectuate the intents and purposes of the parties hereto as
expressed in such Sections.
2.8 COUNTERPART EXECUTION. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same document.
IN WITNESS WHEREOF, the respective parties hereto have each executed
this Agreement as of the day and year first above written, effective as of the
Effective Date.
TIW SYSTEMS, INC.
By: /s/ J. Rex Vardeman
-------------------------------------
J. REX VARDEMAN,
Chairman of the Board
ATTEST:
/s/ Joe A. Ylitalo
- -----------------------
Secretary EXECUTIVE:
/s/ Rein Luik
----------------------------------------
REIN LUIK
EXECUTIVE EMPLOYMENT AGREEMENT - Page 18
<PAGE> 1
EXHIBIT 99.2
================================================================================
VERTEX COMMUNICATIONS CORPORATION
EXHIBIT 99.2
TO
CURRENT REPORT ON FORM 8-K/A
Date of Report (Date of Earliest Event Reported): May 9, 1997
================================================================================
<PAGE> 2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") by and between TIW
SYSTEMS, INC., a Nevada corporation formerly known as Vertex Acquisition
Corporation and having its principal place of business in Santa Clara, Santa
Clara County, California (the "Company"), and LOUIS BECKER (the "Executive"), a
resident of Santa Clara, Santa Clara County, California, is made and entered
into in Santa Clara, California, effective as of the 11th day of June, 1997
(the "Effective Date").
W I T N E S S E T H:
WHEREAS, on even date herewith TIW Systems, Inc., a California corporation
("TIW") merged with and into the Company with the Company being the surviving
corporation;
WHEREAS, the Executive currently serves as the Executive Vice President of
TIW, and the Board of Directors of the Company (the "Board") recognizes that
the Executive's participation in the management of the Company is vital to the
continued growth and success of the Company; and
WHEREAS, the Board desires to provide for the continued employment of the
Executive, subject to the terms and conditions herein provided; and
WHEREAS, the Executive is willing to commit himself to continue to serve
the Company in the capacity hereinafter stated, subject to the terms and
conditions herein provided;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto hereby covenant and agree as follows:
1
TERMS OF EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby employs the Executive as the
Executive Vice President of the Company for and during the term hereof, or as
such other executive officer of the Company as the Board may designate from
time to time during the term hereof, subject to the discretion of the Board and
the terms and conditions hereof. The Executive hereby accepts such employment
pursuant to the terms and conditions set forth in this Agreement.
1.2 DUTIES OF EXECUTIVE. The Executive shall serve and perform in the
capacity described in Section 1.1 hereof and shall have such duties,
responsibilities, and authorities as are designated for such office pursuant to
the Bylaws, as amended, of the Company, and as may be reasonably assigned to
the Executive from time to time by the Board; provided, however, the Executive
shall, during the term hereof, continuously have and retain such duties,
responsibilities, and authorities which are at least as significant in scope
and substance as the duties, responsibilities, and authorities required of the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 1
<PAGE> 3
Executive's office and position with the Company as of the Effective Date.
Subject to the discretion of the Board and subject to the direction of the
President and Chief Executive Officer of the Company, the Executive shall, and
shall have commensurate authority to, direct, manage, supervise and control the
business, affairs and property of the Company, including but not limited to:
managing and coordinating the business operations and activities of the Company
and its divisions and subsidiaries; promulgating, approving and implementing
operating plans and administrative policies and fostering economy throughout
the Company and its divisions and subsidiaries; approving the addition,
elimination and/or modification of management and non-management positions and
related personnel within the Company and its divisions and subsidiaries;
approving salary and wage structures; and performing any and all other duties
as the Executive shall deem necessary or appropriate for the efficient
management and operation of the Company's business. The Executive shall report
and be responsible to the President and Chief Executive Officer of the Company.
The Executive agrees to devote the Executive's full time, best efforts,
abilities, knowledge and experience to the faithful performance of the duties,
responsibilities, and authorities which may be reasonably assigned to the
Executive and which are consistent with the Executive's executive office
described under Section 1.1 of this Agreement. Notwithstanding the preceding,
the Executive may, without being in violation of the Executive's obligations
hereunder, (i) serve on corporate, civic or charitable boards, or committees
which are not engaged in business in competition with the Company or any
subsidiary thereof, and (ii) invest the Executive's personal assets in such
form or manner as will not require any material services by the Executive in
the operation of the entities in which such investments are made, provided the
Executive shall use his best efforts to pursue such activities in such a manner
so that such activities shall not prevent the Executive from fulfilling his
obligations to the Company hereunder.
1.3 TERM. This Agreement shall become effective as of the Effective
Date and shall continue in force and effect for successive three-year periods
from each successive day thereafter, unless sooner terminated as provided in
Section 1.7 of this Agreement. The term of this Agreement is sometimes
hereinafter referred to as the "Employment Period."
1.4 PLACE OF PERFORMANCE. In connection with the Executive's employment
by the Company during the Employment Period, the Executive shall be based and
the Executive's services shall be performed in Santa Clara, Santa Clara County,
California, at the location where the Executive was employed immediately
preceding the Effective Date hereof, or at any office or location not more than
thirty (30) miles from Santa Clara, California, except for reasonable travel
required in connection with the Company's business to an extent substantially
consistent with the Executive's business travel obligations to TIW as of the
Effective Date hereof.
1.5 COMPENSATION. The Company shall pay the Executive, as full
compensation for services rendered by the Executive under this Agreement, as
follows:
(a) ANNUAL BASE SALARY. The Company shall pay the Executive an
annual base salary (the "Annual Base Salary") of ONE HUNDRED SIXTY
THOUSAND AND NO/100 DOLLARS ($160,000.00) per year, or such higher Annual
Base Salary as may be determined from time to time during the term hereof
in accordance with the provisions of subsection (b) of this Section 1.5 by
the Compensation Committee of the Board or the Board, in its sole
discretion, as applicable, prorated for any partial period of employment.
Such Annual Base Salary shall be
EXECUTIVE EMPLOYMENT AGREEMENT - Page 2
<PAGE> 4
subject to all appropriate federal and state withholding and payroll taxes
and shall be paid by the Company to the Executive in equal bi-weekly
installments in accordance with the regular payroll policies and practices
of the Company or in such other periodic installments and on such days
during the month as the Company and the Executive shall mutually
determine. The Company's compensation of the Executive by payments of the
Annual Base Salary pursuant to this Section 1.5(a) shall not be deemed
exclusive and shall not prevent the Executive from participating in any
other compensation or benefit plan of the Company, nor shall such
compensation in any way limit or reduce any other obligation of the
Company hereunder; and, except to the extent specifically set forth
herein, no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Annual Base
Salary to the Executive during the term of this Agreement.
(b) ADJUSTMENTS TO ANNUAL BASE SALARY. The Annual Base Salary set
forth in Section 1.5(a) of this Agreement shall be subject to adjustment
annually, effective as of October 1 of each fiscal year of the Company
during the term of this Agreement, beginning with the fiscal year
commencing October 1, 1998, to reflect increases thereof, if any,
authorized and approved by the Compensation Committee of the Board or the
Board, as applicable. For purposes of this Agreement, any reference to
"Annual Base Salary" herein shall mean the Executive's Annual Base Salary,
as adjusted, as applicable.
(c) ANNUAL BONUS COMPENSATION. In addition to the Annual Base
Salary set forth in Section 1.5(a) hereof and any other amounts of
compensation payable to the Executive pursuant to any other provisions of
this Agreement, the Company shall also pay the Executive discretionary
annual bonus compensation ("Annual Bonus Compensation") in an amount, if
any, determined by the Board and the Compensation Committee of the Board
to be proper and appropriate for each fiscal year of the Company during
the term of this Agreement. Such Annual Bonus Compensation shall be based
upon such factors as the Board or the Compensation Committee of the Board
shall deem appropriate and consistent with factors applicable to other
executive officers of the Company, including (i) the Executive's
contributions to the success of the business operations and the
consolidated net-after-tax profits of the Company, its divisions and its
subsidiaries for each fiscal year of the Company during the term hereof,
as determined in accordance with generally accepted accounting principles,
(ii) the consolidated revenues of the Company, its divisions and its
subsidiaries for each fiscal year of the Company, and (iii) the general
overall economic performance of the Company, its divisions and its
subsidiaries for each fiscal year of the Company. Such Annual Bonus
Compensation, if any, shall be paid by the Company to the Executive in the
manner set forth in the resolution of the Board or the Compensation
Committee of the Board, as applicable, authorizing and declaring the
payment of such Annual Bonus Compensation to the Executive (the "Bonus
Resolution"). Notwithstanding anything herein to the contrary, the
Executive shall not be entitled to any Annual Bonus Compensation for any
fiscal year of the Company or any part thereof during the term of this
Agreement unless and until such Annual Bonus Compensation is determined
and declared by the Board or the Compensation Committee of the Board, as
applicable.
1.6 EMPLOYMENT BENEFITS. In addition to the Annual Base Salary and any
Annual Bonus Compensation payable to the Executive hereunder, the Executive
shall be entitled to the following benefits upon satisfaction by the Executive
of the eligibility requirements therefor, subject to the following limitations:
EXECUTIVE EMPLOYMENT AGREEMENT - Page 3
<PAGE> 5
(a) SICK LEAVE BENEFITS AND DISABILITY INSURANCE. Unless this
Agreement is terminated pursuant to the provisions of Section 1.7(a)(2)
hereof, the Executive shall be paid sick leave benefits at the Executive's
then prevailing Annual Base Salary rate during the Executive's absence due
to illness or other temporary incapacity, reduced by the amount, if any,
of worker's compensation, social security entitlement or disability
benefits, if any, under the Company's group disability insurance plan, if
any.
(b) HOSPITALIZATION, ACCIDENT, MAJOR MEDICAL AND DENTAL INSURANCE.
During the Employment Period, the Company, at its own expense, shall
provide the Executive (and all dependents of the Executive at the request
and expense of the Executive) with group hospitalization, group accident,
major medical, and disability insurance in amounts of coverage comparable
to the coverage, if any, provided other executive officers of the Company.
(c) VACATIONS. The Executive shall be entitled to a reasonable
paid vacation of not less than twenty (20) business days each calendar
year during the Employment Period, exclusive of holidays and weekends,
which vacation shall be taken by the Executive in accordance with the
business requirements of the Company at the time and its vacation plans,
policies and practices as applied to executive officers of the Company
then in effect relative to this subject. The Executive shall also be
entitled to compensation in respect of earned or accrued but unused
vacation time based on the Executive's Annual Base Salary applicable at
the time and to all paid holidays granted by the Company to its executive
officers.
(d) EMPLOYMENT FACILITIES. During the Employment Period, the
Company shall provide, at its expense, appropriate and adequate office
space, furniture, communications, stenographic and word-processing
equipment, supplies, personnel (including professional, clerical, support
and other personnel) and such other facilities and services as shall be
suitable to the Executive's position and adequate for the Executive's use
in performing the Executive's duties and responsibilities under this
Agreement.
(e) OTHER EMPLOYMENT BENEFITS. During the Employment Period, the
Company shall (i) maintain in full force and effect at the Company's
expense and the Executive shall be entitled, pursuant to the terms thereof
and subject to qualifying therefor, to full participation in, all of the
employee benefit plans and arrangements maintained by the Company on the
Effective Date for its executive officers (including without limitation
each profit sharing/savings plan, pension and retirement plan and
arrangement, if any, stock option plan, life insurance and health and
accident plan and arrangement, medical insurance plan, disability plan,
and vacation plan), and, (ii) in the event the Company shall adopt any
additional employee benefit plans during the Employment Period, the
Executive shall be entitled to full participation in each such adopted
plan upon satisfaction of the eligibility requirements thereof. The
Company shall not make any changes in such plans or arrangements during
the Employment Period that would adversely affect the Executive's rights
or benefits accrued thereunder at the time of such change; provided,
however, the Board may, from time to time, terminate any employee benefit
plan then offered or maintained by the Company. The Executive shall be
entitled to participate in or receive benefits under any employee benefit
plans or arrangements made available by the Company in the future to its
executive and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans and arrangements. To the extent not provided for by any employee
benefit plan maintained or adopted pursuant to this subsection (e)
EXECUTIVE EMPLOYMENT AGREEMENT - Page 4
<PAGE> 6
of this Section 1.6, the Company shall, at its expense, provide the
Executive with an annual complete physical examination conducted by a
physician of the Executive's choice, the results of which shall be kept
confidential between the Executive and such physician. Nothing paid to
the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the Annual Base
Salary or Annual Bonus Compensation payable to the Executive pursuant to
subsections (a) and (c) of Section 1.5 hereof. Notwithstanding any
provision of this Agreement to the contrary, any payments or benefits
payable to the Executive hereunder in respect of any fiscal year of the
Company during which the Executive is employed by the Company for less
than the entire fiscal year shall, unless otherwise provided in the
applicable plan or arrangement, be prorated in accordance with the number
of days in such fiscal year during which the Executive is so employed.
(f) REIMBURSEMENT OF EMPLOYEE EXPENSES. The Executive is
authorized to incur ordinary, necessary and reasonable expenses in
connection with the performance of the Executive's duties and
responsibilities under this Agreement and for the promotion of the
business and activities of the Company during the Employment Period,
including, without limitation, expenses for necessary travel and
entertainment and other items of expenses required in the normal and
routine course of the Executive's employment hereunder. The Company shall
reimburse the Executive from time to time for all such business expenses
incurred pursuant to and in conformity with the provisions of this Section
and the policies and practices of the Company then in effect relative to
the reimbursement of business expenses, provided that the Executive
submits to the Company:
(1) An account book or similar written record in which the
Executive recorded at or near the time each expenditure was made:
(i) the amount of the expenditures; (ii) the time, place and
designation of the type of entertainment and travel or other
expenses, or the date and description of the gift (gifts made to one
individual are not to exceed a total of Twenty-Five and No/100
Dollars [$25.00] in any fiscal year); (iii) the business reason for
the expenditure and the nature of the business benefit derived or
expected to be derived as the result of the expenditure; and (iv)
the names, occupations, addresses and other information concerning
each person who was entertained or given a gift sufficient to
establish the business relationship to the Company; and
(2) Documentary evidence (such as supporting receipts or
paid bills) which state sufficient information to establish the
amount, date, place and essential character of the expenditure, for
each expenditure (i) of Twenty-Five and No/100 Dollars ($25.00) or
more (except for transportation charges if not readily available)
and (ii) for lodging or traveling away from home.
1.7 TERMINATION.
(a) ABSENCE OF A BREACH OF AGREEMENT. This Agreement and the
Executive's employment hereunder may be terminated without any breach of
this Agreement at any time during the term hereof only by reason of and in
accordance with the following provisions:
(1) DEATH. If the Executive dies during the term of this
Agreement and while in the employ of the Company, the Executive's
employment hereunder shall automatically terminate as of the date of
the Executive's death, and the Company shall have no further
EXECUTIVE EMPLOYMENT AGREEMENT - Page 5
<PAGE> 7
liability hereunder to the Executive or the Executive's estate, except to
the extent set forth in Section 1.8(a) hereof.
(2) DISABILITY. If, during the term of this Agreement, the
Executive shall be prevented from performing the Executive's duties
hereunder by reason of becoming totally and permanently disabled as
hereinafter defined, then the Company may terminate the Executive's
employment hereunder upon written Notice of Termination (effective
as of the Date of Termination specified in Section 1.7[d] hereof) to
the Executive without any further liability hereunder to the
Executive, except as set forth in Section 1.8(b) hereof. For
purposes of this Agreement, the Executive shall be deemed to have
become totally and permanently disabled when (i) the Executive
receives "total disability benefits" under either (a) Social
Security, or (b) the Company's long-term disability plan, if any
(whether funded with insurance paid for by either the Company or the
Executive or self-funded by the Company), (ii) the Board, upon the
written report of a qualified physician (after a complete physical
examination of the Executive) selected by the Board or the Company's
insurers and acceptable to the Executive or the Executive's
authorized legal representative (which agreement as to acceptability
will not be unreasonably withheld), shall have determined that the
Executive has become physically and/or mentally incapable of
performing the Executive's duties under this Agreement on a
permanent basis even after reasonable accommodations (within the
meaning of the Americans With Disabilities Act) have been attempted
by the Company for the benefit of the Executive to enable the
Executive to perform his duties hereunder, or (iii) the Executive is
unable, due to injury, illness or other incapacity (physical or
mental), to perform the essential functions, duties and
responsibilities of the position contemplated herein on a full-time
basis for the entire time of a continuous period of one hundred
eighty (180) consecutive calendar days after its commencement or for
an aggregate period of two hundred forty (240) calendar days out of
a continuous period of three hundred sixty-five (365) calendar days
even after reasonable accommodations (within the meaning of the
Americans With Disabilities Act) have been attempted by the Company
for the benefit of the Executive to enable the Executive to perform
his duties hereunder.
(3) TERMINATION BY THE COMPANY.
(A) FOR CAUSE. During the Employment Period, the
Company may discharge the Executive for cause and terminate the
Executive's employment hereunder upon written Notice of
Termination (effective as of the Date of Termination specified
in Section 1.7[d] hereof) to the Executive without any further
liability hereunder to the Executive or the Executive's estate,
except to the extent set forth in Sections 1.8(c) hereof. Such
notice of discharge shall describe with reasonable specificity
the cause or causes for the termination of the Executive's
employment, as well as the effective Date of Termination of
employment. For purposes of this Agreement, a discharge for
"Cause" shall mean termination of the Executive's employment
upon written Notice of Termination to the Executive, limited,
however, to one or more of the following reasons:
EXECUTIVE EMPLOYMENT AGREEMENT - Page 6
<PAGE> 8
(i) the Executive shall have been convicted by a court
of competent jurisdiction of or admitted to an act of fraud,
theft or embezzlement against the Company; or
(ii) the Executive shall have otherwise been convicted
by a court of competent jurisdiction of a felony; or
(iii) the willful and unauthorized disclosure by the
Executive of Trade Secrets (as defined in Section 1.10[b]
hereof) of the Company as determined by the affirmative vote of
at least a majority of the Board; or
(iv) the willful and continued failure by the Executive
to substantially perform his obligations under this Agreement
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) which is not
remedied within thirty (30) days after a Notice of Termination
(as defined in Section 1.7[c] hereof) is delivered to the
Executive that specifically identifies, as required below, the
facts and circumstances leading the Company to believe that the
Executive has willfully and continuously failed to
substantially perform his obligations under and in violation of
this Agreement. For purposes of this subsection, no act, or
failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by him in bad
faith and without reasonable belief that his action or omission
was in the best interests of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for Cause without (1) reasonable notice to the
Executive setting forth the reasons, facts and circumstances
for the Company's intention to terminate for Cause, (2) an
opportunity for the Executive, together with his counsel, to be
heard before the Board, and (3) delivery to the Executive of a
Notice of Termination pursuant to Section 1.7(c) hereof, from
the Board or its authorized delegate finding that in the
Board's good faith determination the Executive was guilty of
the conduct set forth above, and specifying the particulars
thereof in detail.
(B) WITHOUT CAUSE. In the event the Executive's
employment hereunder is terminated by the Company pursuant to
the provisions of Section 1.7(a)(3)(A) hereof for Cause as
determined by the Board and it is subsequently determined by a
court of competent jurisdiction that the Company did not have
proper Cause to discharge the Executive, then and in such
event, notwithstanding any other provision herein to the
contrary, the Executive's employment hereunder shall be deemed
to have been terminated by the Company in breach of this
Agreement without Cause, but with notice pursuant to the
provisions of Section 1.7(b) hereof as of the date the
Executive's employment was previously terminated by the Company
purportedly for Cause, and the Company shall have no liability
to the Executive or the Executive's estate other than as set
forth in Section 1.8(f)(2) hereof.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 7
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(4) TERMINATION BY THE EXECUTIVE.
(A) REASONS FOR TERMINATION. The Executive may
terminate his employment hereunder (i) for "Good Reason" (as
hereinafter defined) at any time upon sixty (60) days written
Notice of Termination to the Company, in which event the
Company shall have no further liability hereunder to the
Executive, except to the extent set forth in Section 1.8(d)
hereof, or (ii) voluntarily, at the Executive's option, at any
time upon sixty (60) days written Notice of Termination to the
Company, in which event the Company shall have no further
liability hereunder to the Executive, except to the extent set
forth in Section 1.8(e) hereof.
(B) GOOD REASON. For purposes of this Agreement, the
term "Good Reason" shall mean, without the Executive's express
written consent, the occurrence of any of the following
circumstances (each of which occurrences shall constitute a
"Change"):
(i) the relocation of the Company's principal
executive offices to a location more than thirty (30)
miles from Santa Clara, California, or the Company's
requiring the Executive to be based anywhere other than
the location described in Section 1.4 hereof, except for
travel reasonably required of the Executive in the
performance of the Executive's duties on behalf of the
Company to an extent substantially consistent with the
Executive's business travel obligations as of the
Effective Date hereof;
(ii) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any and
all successors to assume and agree to perform this
Agreement, as contemplated in Section 2.4 hereof;
(iii) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement, including, but not limited
to, any purported termination which is not effected
pursuant to a Notice of Termination satisfying the
requirements of subsections (c) and (d) of this Section
1.7 hereof (and, if applicable, the requirements of
Section 1.7[a][3] hereof);
(iv) any failure by the Company to comply with any
material provision of this Agreement that has not been
cured within ten (10) business days after written notice
of such noncompliance has been delivered by the
Executive to the Company; or
(v) the occurrence of a "Change of Control" of the
Company, as defined below, if the Executive terminates
this Agreement within one (1) year after such Change of
Control.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason
EXECUTIVE EMPLOYMENT AGREEMENT - Page 8
<PAGE> 10
hereunder. For purposes of this Section 1.7(a)(4)(B), any good faith
determination of "Good Reason" made by the Executive shall constitute and
create a reasonable presumption of Good Reason, subject to rebuttal by the
Company.
(C) CHANGE OF CONTROL. For the purposes of this
Agreement, a "Change of Control" of the Company shall mean:
(i) the transfer, through one transaction or a
series of related transactions, either directly or
indirectly, or through one or more intermediaries, of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934)
of 20% or more of either the then outstanding shares of
common stock or the combined voting power of the
Company's then outstanding voting securities entitled to
vote generally in the election of directors, or the last
of any series of transfers that results in the transfer
of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of
1934) of 20% or more of either the then outstanding
shares of common stock or the combined voting power of
the Company's then outstanding voting securities
entitled to vote generally in the election of
directors; or
(ii) approval by the shareholders of the Company
entitled to vote thereon of a merger or consolidation,
the result of which is that persons who were the
shareholders of the Company immediately prior to such
merger or consolidation do not, immediately thereafter,
own or otherwise beneficially hold more than 40% of the
combined voting power of the surviving or consolidated
company's then outstanding voting securities entitled to
vote generally in the election of directors, or a
liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company;
or
(iii) the transfer, through one transaction or a
series of related transactions, either directly or
indirectly, or through one or more intermediaries, of
more than 50% of the assets of the Company, or the last
of any series of transfers that results in the transfer
of more than 50% of the assets of the Company. For
purposes of this Section 1.7(a)(4), the determination of
what constitutes more than 50% of the assets of the
Company shall be determined based on the most recent
audited consolidated financial statements of the Company
as certified by its independent accountants; or
(iv) During any fiscal year of the Company,
individuals who at the beginning of such year constitute
the Board of the Company and any new director or
directors whose election to the Board was approved by a
vote of a majority of the directors then still in office
who either were directors at the beginning of such year
or whose election or nomination for
EXECUTIVE EMPLOYMENT AGREEMENT - Page 9
<PAGE> 11
election was previously so approved, cease for any
reason to constitute a majority of the Board.
(b) TERMINATION BY THE COMPANY WITH NOTICE. Notwithstanding any
provision in this Agreement to the contrary, the Company may terminate the
Executive's employment hereunder for a reason other than as set forth in
Subparagraphs (a)(1), (a)(2), or (a)(3) of this Section 1.7 upon written
Notice of Termination (effective as of the Date of Termination specified
in Section 1.7[d] hereof) to the Executive without any further liability
hereunder to the Executive, except to the extent set forth in Sections
1.8(f)(1) hereof.
(c) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection [a][1] of this Section 1.7 hereof) shall be
communicated by written Notice of Termination to the other party. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined in Section 1.7[d] hereof) is other than
the date of delivery of such notice, specifies the termination date (which
date shall not be less than ten [10] days after the delivery of such
notice).
(d) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
the Executive's employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated pursuant to
subsection (a)(2) of Section 1.7 hereof (relating to disability), thirty
(30) days after Notice of Termination is delivered to the Executive
(provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty [30] day period), (iii)
if the Executive's employment is terminated pursuant to subsection (a)(3)
of Section 1.7 hereof (relating to Cause), ten (10) days after Notice of
Termination is delivered to the Executive, and (iv) if the Executive's
employment is terminated for any other reason, the date specified in the
Notice of Termination, subject to other applicable provisions of this
Agreement.
1.8 COMPENSATION UPON TERMINATION.
(a) DEATH. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.7(a)(1) hereof due to
the death of the Executive, the Company shall have no further obligation
to the Executive or the Executive's estate, except to pay to the
Executive's spouse, or if the Executive leaves no spouse, to the estate of
the Executive (i) any accrued, but unpaid, Annual Base Salary, any
authorized but unreimbursed business expenses, and any vacation benefits
which have accrued as of the date of death, but were then unpaid or
unused, and (ii) any accrued, but unpaid, Annual Bonus Compensation to the
date of death, but without accelerating the bonus payment date. Any
amount due the Executive under clause (i) of this Paragraph shall be paid
in a lump- sum cash payment within thirty (30) days after the death of the
Executive and any amount due the Executive under clause (ii) of this
Paragraph shall be paid in accordance with the Bonus Resolution.
(b) DISABILITY. In the event the Executive's employment hereunder
is terminated pursuant to the provisions of Section 1.7(a)(2) hereof due
to the Disability of the Executive, the Company shall be relieved of all
of its obligations under this Agreement, except to pay the Executive (i)
EXECUTIVE EMPLOYMENT AGREEMENT - Page 10
<PAGE> 12
any accrued, but unpaid Annual Base Salary, any authorized but
unreimbursed business expenses, and any vacation benefits which have
accrued as of the effective Date of Termination of the Executive's
employment hereunder due to Disability, but then remain unpaid, (ii) any
accrued, but unpaid, Annual Bonus Compensation to the effective Date of
Termination due to Disability, but without accelerating the bonus payment
date, and (iii) an amount equal to one year's Annual Base Salary of the
Executive in effect on the effective Date of Termination due to
Disability, less any proceeds payable to the Executive under disability
insurance, if any, for the twelve-month period immediately following the
effective Date of Termination due to Disability. The provisions of the
preceding sentence shall not affect the Executive's rights to receive
payments under the Company's disability insurance plan, if any. Any
amount due the Executive under clause (i) of this Paragraph shall be paid
in a lump-sum cash payment within thirty (30) days after the effective
Date of Termination of the Executive's employment hereunder, any amount
due the Executive under clause (ii) of this Paragraph shall be paid in
accordance with the Bonus Resolution, and any amount due the Executive
under clause (iii) of this Paragraph shall be paid in accordance with the
Company's regular payroll periods during the twelve-month period
immediately following the effective Date of Termination due to Disability
of the Executive.
(c) CAUSE. In the event the Executive's employment hereunder is
terminated by the Company for Cause pursuant to the provisions of Section
1.7(a)(3) hereof, the Company shall have no further obligation to the
Executive under this Agreement, except to pay the Executive (i) any
accrued, but unpaid, Annual Base Salary, any authorized but unreimbursed
business expenses, and any vacation benefits which have accrued as of the
effective Date of Termination of the Executive's employment hereunder, but
were then unpaid or unused, and (ii) any accrued, but unpaid, Annual Bonus
Compensation to the effective Date of Termination, but without
accelerating the bonus payment date. Any amount due the Executive under
clause (i) of this Paragraph shall be paid in a lump-sum cash payment
within thirty (30) days after the effective Date of Termination of the
Executive's employment hereunder and any amount due the Executive under
clause (ii) of this Paragraph shall be paid in accordance with the Bonus
Resolution.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. In the event
this Agreement is terminated by the Executive pursuant to the provisions
of Section 1.7(a)(4)(A)(i) hereof, the Executive shall be entitled to
receive (i) any accrued, but unpaid, Annual Base Salary, any authorized
but unreimbursed business expenses, and any vacation benefits which have
accrued as of the effective Date of Termination of the Executive's
employment hereunder, but were then unpaid or unused, (ii) any accrued,
but unpaid, Annual Bonus Compensation to the effective Date of
Termination, but without accelerating the bonus payment date, and (iii) an
amount in cash equal to three (3) times the average aggregate annual
compensation of the Executive as determined from the sum of the
Executive's Annual Base Salary and Annual Bonus Compensation for the five
(5) fiscal years of the Company ended immediately prior to the effective
Date of Termination of the Executive's employment with the Company. Any
amount due the Executive under clause (i) of this Paragraph shall be paid
in a lump-sum cash payment within thirty (30) days after the effective
Date of Termination of the Executive's employment hereunder, any amount
due the Executive under clause (ii) of this Paragraph shall be paid in
accordance with the Bonus Resolution, and any amount due the Executive
under clause (iii) of this Paragraph shall be paid in a lump-sum cash
payment within thirty (30) days after the effective Date of Termination of
the Executive's employment hereunder.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 11
<PAGE> 13
(e) TERMINATION BY THE EXECUTIVE WITH NOTICE. In the event the
Executive's employment hereunder is voluntarily terminated by the
Executive pursuant to the provisions of Section 1.7(a)(4)(A) hereof for
other than Good Reason, the Executive shall be entitled to receive (i) any
accrued, but unpaid, Annual Base Salary, any authorized but unreimbursed
business expenses, and any vacation benefits which have accrued as of the
effective Date of Termination of the Executive's employment hereunder, but
were then unpaid or unused, and (ii) any accrued, but unpaid, Annual Bonus
Compensation to the effective Date of Termination but without accelerating
the bonus payment date. Any amount due the Executive under clause (i) of
this Paragraph shall be paid in a lump-sum cash payment within thirty (30)
days after the effective Date of Termination of the Executive's employment
hereunder, and any amount due the Executive under clause (ii) of this
Paragraph shall be paid in accordance with the Bonus Resolution.
(f) TERMINATION BY THE COMPANY WITH NOTICE.
(1) PURSUANT TO SECTION 1.7(B). In the event the
Executive's employment hereunder is terminated by the Company
pursuant to the provisions of Section 1.7(b) hereof, the Executive
shall be entitled to receive (i) any accrued, but unpaid, Annual
Base Salary, any authorized but unreimbursed business expenses, and
any vacation benefits which have accrued as of the effective Date of
Termination of the Executive's employment hereunder, but were then
unpaid or unused, (ii) any accrued, but unpaid, Annual Bonus
Compensation to the effective Date of Termination, but without
accelerating the bonus payment date, and (iii) an amount in cash
equal to three (3) times the average aggregate annual compensation
of the Executive as determined from the sum of the Executive's
Annual Base Salary and Annual Bonus Compensation for the five (5)
fiscal years of the Company ended immediately prior to the effective
Date of Termination of the Executive's employment with the Company.
Any amount due the Executive under clause (i) of this Paragraph
shall be paid in a lump-sum cash payment within thirty (30) days
after the effective Date of Termination of the Executive's
employment hereunder, any amount due the Executive under clause (ii)
of this Paragraph shall be paid in accordance with the Bonus
Resolution, and any amount due the Executive under clause (iii) of
this Paragraph shall be paid in a lump-sum cash payment within
thirty (30) days after the effective Date of Termination of the
Executive's employment hereunder.
(2) PURSUANT TO SECTION 1.7(A)(3)(B). In the event the
Executive's employment is purportedly terminated by the Company
pursuant to the provisions of Section 1.7 (a)(3)(A) for Cause and it
is subsequently determined by a court of competent jurisdiction that
the Company did not have adequate Cause to discharge the Executive,
the Executive shall be entitled to receive (i) the amount of
compensation set forth in Section 1.8(f)(1) immediately above, less
any amount previously paid to the Executive pursuant to the
provisions of Section 1.8(c) hereof, and (ii) the amount of the
reasonable attorneys' fees, plus court costs incurred by the
Executive in contesting that the Executive was improperly discharged
by the Company for Cause. Any amount due the Executive under
clauses (i) and (ii) of this Paragraph shall be paid in a lump-sum
cash payment within thirty (30) days after the rendition of a final
judgment (after all appeals have been exhausted) determining that
the Executive was not terminated for Cause or the date of final
compromise and settlement of such issue between the parties, as
applicable.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 12
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1.9 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. Notwithstanding any
provision of this Agreement to the contrary, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Payments"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties with respect to such excise tax (such excise tax and any such
interest and penalties being hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Gross-Up
Payment, the Executive shall retain an amount of the Gross-Up Payment free and
clear of all claims, taxes and impositions equal to the Excise Tax imposed upon
the Payments.
1.10 PROTECTIVE COVENANTS. The Executive recognizes that the Executive's
employment by the Company exacts the highest standards of trust and confidence
because (i) the Executive has become fully familiar with and will further
enhance his knowledge of all aspects of the Company's business and that of its
subsidiaries during the Executive's Employment Period with the Company, (ii)
certain information of which the Executive has secured or will gain knowledge
during the Executive's Employment Period is proprietary and confidential
information which is of special and peculiar value to the Company or its
subsidiaries, and (iii) if any such proprietary and confidential information
were imparted or otherwise disclosed to or became known by any person,
including the Executive, engaging in a business in competition with that of the
Company or its subsidiaries, hardship, loss and irreparable injury and damage
could result to the Company or its subsidiaries, the measurement of which would
be difficult if not impossible to ascertain. Therefore, the Executive agrees
that it is necessary for the Company to protect its business and that of its
subsidiaries from such potential damage, and the Executive further agrees that
the following covenants constitute a reasonable and appropriate means,
consistent with the best interests of both the Executive and the Company, to
protect the Company or its subsidiaries against such potential damage and shall
apply to and be binding upon the Executive as provided herein.
(a) PROPRIETARY INFORMATION. The Executive acknowledges that any
and all inventions, improvements, discoveries, formulae, processes,
products or designs developed by the Executive alone or in conjunction
with others in connection with the Company's business during the term of
the Executive's Employment Period with the Company ("Proprietary
Information") shall be the sole and absolute property of the Company in
perpetuity, that the Executive shall promptly disclose such Proprietary
Information to the Company, and the Executive shall have no right, title
or interest therein or to receive additional monies therefor, regardless
of whether development occurred during normal employment hours or any
other time during the term of the Executive's Employment Period with the
Company. The Executive shall assist the Company in obtaining patents on
all such Proprietary Information deemed patentable by the Company and
shall execute all documents necessary to obtain such patents and to vest
the Company with full and complete title to the patents and to protect the
patents against infringement by others. For purposes of this Agreement,
an invention or concept shall be deemed to have been made during the
period of the Executive's Employment Period if, during such period, the
invention or concept was conceived or first actually reduced to practice,
and the Executive agrees that any patent application filed by the
Executive within one (1) year after the termination of the Executive's
employment with the Company shall be presumed to relate to an invention or
concept made or discovered during the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 13
<PAGE> 15
term of the Executive's Employment Period with the Company, unless the
Executive can establish the contrary.
(b) TRADE SECRETS. The Executive further acknowledges that the
Company or its subsidiaries has developed unique skills, concepts, sales
presentations, marketing programs, marketing strategy, business practices,
methods of operation, trademarks, licenses, technical information,
Proprietary Information, computer software programs, tapes and discs
concerning its operations, systems, customer lists, customer leads,
documents identifying past, present and future customers, hiring and
training methods, financial and other confidential and proprietary
information concerning its business operations and products ("Trade
Secrets"). The Executive recognizes that the Executive's position with
the Company is one of the highest trust and confidence by reason of the
Executive's access to and contact with certain Trade Secrets of the
Company and its subsidiaries. The Executive agrees and covenants to use
the Executive's best efforts and to exercise utmost diligence to protect
and safeguard the Trade Secrets of the Company and its subsidiaries. The
Executive further agrees and covenants that, except as may be required by
the Company in connection with this Agreement, or with the prior written
consent of the Company, the Executive shall not, either during the term of
this Agreement or thereafter, directly or indirectly, use for the
Executive's own benefit or for the benefit of another, or disclose,
disseminate, or distribute to another, any Trade Secret (whether or not
acquired, learned, obtained, or developed by the Executive alone or in
conjunction with others) of the Company or its subsidiaries or of others
with whom the Company or its subsidiaries has a business relationship.
All memoranda, notes, records, drawings, documents, or other writings
whatsoever made, compiled, acquired, or received by the Executive during
the term of this Agreement, arising out of, in connection with, or related
to any activity or business of the Company or its subsidiaries, including,
but not limited to, the Company's customers, suppliers, or others with
whom the Company has a business relationship, the Company's arrangements
with such parties, and the Company's pricing and product policies and
strategies, are, and shall continue to be, the sole and exclusive property
of the Company, and shall, together with all copies thereof and all
advertising literature, be returned and delivered to the Company by the
Executive immediately, without demand, upon the termination of this
Agreement, or at any time upon the Company's demand.
(c) RESTRICTION ON SOLICITING CUSTOMERS OF THE COMPANY OR ITS
SUBSIDIARIES. The Executive covenants that for a period of two (2) years
following the effective Date of Termination of this Agreement, the
Executive will not, either directly or indirectly, (i) disclose or
otherwise make known to any person or entity the names or addresses of any
of the customers of the Company or its subsidiaries, (ii) call on,
solicit, or entice away, or attempt to call on, solicit or entice away any
of the customers of the Company or its subsidiaries with whom the
Executive became acquainted during the Executive's Employment Period with
the Company, either for himself or for any other person, firm, corporation
or other business entity.
(d) SURVIVAL OF COVENANTS. Each covenant of the Executive set
forth in this Section 1.10 shall survive the termination of this Agreement
and shall be construed as an agreement independent of any other provision
of this Agreement, and the existence of any claim or cause of action of
the Executive against the Company whether predicated on this Agreement or
otherwise shall not constitute a defense to the enforcement by the Company
of such covenants.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 14
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(e) REMEDIES. In the event of breach or threatened breach by the
Executive of any provision of this Section 1.10, the Company shall be
entitled to equitable relief by temporary restraining order, temporary
injunction, permanent injunction or otherwise, in addition to any other
legal or equitable relief to which it may be entitled, including any and
all monetary damages which the Company may incur as a result of such
breach or violation or threatened breach or violation. The Company may
pursue any remedy available to it concurrently or consecutively in any
order as to any breach or violation, or threatened breach or violation,
and the pursuit of one or more of such remedies at any time shall not be
deemed an election of remedies or waiver of the right to pursue any other
of such remedies as to such breach or violation, or threatened breach or
violation, or as to any other breach or violation, or threatened breach or
violation.
(f) NO EFFECT ON NONCOMPETITION AGREEMENT. The Executive
acknowledges that on even date herewith the Executive entered into a
Noncompetition Agreement with Vertex Communications Corporation, a Texas
corporation ("Vertex") and the Company, which is a wholly-owned subsidiary
of Vertex, arising from the merger of TIW (a corporation in which the
Executive was an executive officer and a shareholder owning approximately
six percent (6%) of the issued and outstanding capital stock thereof) with
and into the Company whereby the Company as the surviving corporation in
the merger acquired all of the assets and business of TIW. The Executive
acknowledges and agrees that the Noncompetition Agreement and this
Agreement are independent agreements which are separately enforceable
against the Executive in accordance with the respective terms thereof.
The Executive hereby acknowledges that the Executive's agreement to be
bound by the protective covenants set forth in this Section 1.10 was a material
inducement for the Company entering into this Agreement and agreeing to pay the
Executive the compensation, benefits and other amounts set forth herein.
2
GENERAL PROVISIONS
2.1 NOTICES. All notices, requests, consents, demands and all other
communications required or otherwise provided for under this Agreement shall be
in writing and shall be deemed to have been duly issued when delivered on the
date personally delivered or on the date deposited in a receptacle maintained
by the United States Postal Service for such purpose, postage prepaid, by
certified mail, return receipt requested, addressed to the respective parties
as follows:
If to the Executive: Mr. Louis Becker
c/o TIW Systems, Inc.
2211 Lawson Lane
Santa Clara, California 95054
EXECUTIVE EMPLOYMENT AGREEMENT - Page 15
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If to the Company: TIW Systems, Inc.
c/o Vertex Communications Corporation
2600 North Longview Street
Kilgore, Texas 75662
Attn:Chairman of the Board
or to such other address as any party hereto may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt by the addressee.
2.2 SEVERABILITY. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
2.3 WAIVER, MODIFICATION AND INTEGRATION. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This Agreement
contains the entire agreement of the parties concerning employment of the
Executive by the Company and supersedes all prior and contemporaneous
representations, understandings and agreements, either oral or in writing,
between the parties hereto with respect to the employment of the Executive by
the Company and the payment of any severance or similar payment by the Company
or TIW Systems, Inc., a California corporation ("TIW"), to the Executive upon
the termination of the Executive's employment, including, but not limited to,
any obligation of TIW or the Company to the Executive under the STEP Multiple
Employer Supplemental Benefit Plan ("TIW Supplemental Benefit Plan"), and all
such prior or contemporaneous representations, understandings and agreements,
both oral and written, are hereby terminated. Notwithstanding the preceding,
the Executive shall be entitled to receive any benefit payable by a third party
to the Executive under the TIW Supplemental Benefit Plan, and the payment of
such benefit by a third party shall not affect the Company's obligations to the
Executive hereunder. This Agreement may not be modified, altered or amended
except by written agreement of the parties hereto.
2.4 SUCCESSORS; BINDING EFFECT. This Agreement shall be binding and
effective upon the Company and its successors and permitted assigns, and upon
the Executive, the Executive's heirs, executors and legal representatives;
provided, however, that the Company shall not assign this Agreement without the
written consent of the Executive. The Company shall require any and all
successors (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 in form and substance satisfactory to the Executive, to
expressly 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 had occurred. Failure of the Company to obtain such agreement prior
to the effectiveness of any such succession shall constitute a breach of this
Agreement and shall entitle the Executive to terminate his employment for Good
Reason, as herein defined. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its respective business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 2.4 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. This Agreement and all
rights of the Executive hereunder shall, inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 16
<PAGE> 18
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement.
2.5 GOVERNING LAW. The parties hereto agree that the laws of the State
of California shall govern the validity of this Agreement, the construction of
its terms, and the interpretation of the rights and duties of the respective
parties hereto.
2.6 REPRESENTATION OF EXECUTIVE. The Executive hereby represents and
warrants to the Company that the Executive has not previously assumed any
obligations inconsistent with those contained in this Agreement. The Executive
further represents and warrants to the Company that the Executive has entered
into this Agreement pursuant to the Executive's own initiative and that the
Company did not induce the Executive to execute this Agreement in contravention
of any existing commitments. The Executive acknowledges that the Company has
entered into this Agreement in reliance upon the foregoing representations of
the Executive.
2.7 SURVIVAL. The provisions of Section 1.8, 1.9 and 1.10 shall survive
the termination of this Agreement and the termination of the employment
relationship created hereunder to the extent necessary or reasonably
appropriate to effectuate the intents and purposes of the parties hereto as
expressed in such Sections.
2.8 COUNTERPART EXECUTION. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same document.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 17
<PAGE> 19
IN WITNESS WHEREOF, the respective parties hereto have each executed this
Agreement as of the day and year first above written, effective as of the
Effective Date.
TIW SYSTEMS, INC.
By: /s/ J. Rex Vardeman
-------------------------------------
J. REX VARDEMAN,
Chairman of the Board
ATTEST:
/s/ Joe A. Ylitalo
- --------------------------------
Secretary EXECUTIVE:
/s/ Louis E. Becker
----------------------------------------
LOUIS BECKER
EXECUTIVE EMPLOYMENT AGREEMENT - Page 18
<PAGE> 1
EXHIBIT 99.3
================================================================================
VERTEX COMMUNICATIONS CORPORATION
EXHIBIT 99.3
TO
CURRENT REPORT ON FORM 8-K/A
Date of Report (Date of Earliest Event Reported): May 9, 1997
================================================================================
<PAGE> 2
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into this 11th day of June, 1997, by and among REIN LUIK, an individual
resident of Santa Clara County, California ("Luik"), VERTEX COMMUNICATIONS
CORPORATION, a Texas corporation ("Vertex"), and VERTEX ACQUISITION
CORPORATION, a Nevada corporation ("VAC"), which is a wholly-owned subsidiary
of Vertex and which has its principal place of business in Santa Clara County,
California.
W I T N E S S E T H:
WHEREAS, Luik (along with his wife) owns approximately twenty-one
percent (21%) of the issued and outstanding capital stock of TIW Systems, Inc.,
a California corporation ("TIW"), exclusive of any stock of TIW that Luik may
beneficially own as a participant in the TIW Systems Incorporated Employee
Stock Ownership Plan;
WHEREAS, Luik is also a Director and an officer of TIW;
WHEREAS, Vertex, VAC, TIW, Luik, Heldur Tonisson and the TIW Systems
Incorporated Employee Stock Ownership Trust have previously entered into that
certain Agreement and Plan of Reorganization dated May 9, 1997 (the
"Reorganization Agreement") under the terms of which VAC will acquire TIW
pursuant to a forward triangular merger whereby VAC will be the surviving
corporation (the "Merger") effective upon the date (the "Effective Date") which
is the later of the date of (i) the filing of Articles of Merger with, and
issuance of a Certificate of Merger by, the Secretary of State of Nevada, and
(ii) the filing of Articles of Merger with, and issuance of a Certificate of
Merger by, the Secretary of State of California.
WHEREAS, as a result of the Merger the shareholders of TIW, including
Luik, will collectively receive an aggregate amount of $7,892,824.00 in cash
and an aggregate amount of 574,359 shares of Vertex common stock, $.10 par
value per share (collectively, the "Merger Consideration");
WHEREAS, as a result of the Merger, all property, rights, privileges,
powers and franchises, and all and every other interest of TIW shall thereafter
be the property of VAC, including all assets of TIW used in operating TIW's
business as a manufacturer of earth station satellite communications antenna,
radio telescopes and associated components (the "Acquired Business");
WHEREAS, in connection with the Reorganization Agreement and as a
material inducement to Vertex and VAC to enter into the Reorganization
Agreement and perform their respective obligations thereunder, including the
payment of the Merger Consideration to the shareholders of TIW, including Luik,
and in order to protect the assets and goodwill of TIW, Luik has agreed that
Luik will not enter into competition with Vertex or VAC relative to the
operation of the Acquired Business for a period of four (4) years from the
Effective Date, and the parties hereto desire to more specifically delineate
such agreement herein;
NONCOMPETITION AGREEMENT - Page 1
<PAGE> 3
NOW, THEREFORE, for and in consideration of the premises, the parties
hereto hereby covenant and agree as follows:
ARTICLE 1
Agreement Regarding Competition
1.1 Agreement Not to Compete. For and in consideration of Vertex
and VAC entering into the Reorganization Agreement and performing their
respective obligations thereunder, including the payment of the Merger
Consideration, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Luik, Luik covenants and agrees
that, except as hereinafter set forth, during the Term hereof, as defined in
Section 1.5 below, Luik will not, directly or indirectly, either as an employee
(other than on behalf of Vertex or VAC or an affiliate thereof), employer,
consultant, agent, principal, partner, shareholder (other than through
ownership of publicly traded capital stock of a corporation which represents
less than five percent (5%) of the outstanding capital stock of such
corporation) corporate officer, director or in any other individual or
representative capacity, engage or participate in any business located in the
United States of America that engages in the design, manufacture and
implementation of satellite communication equipment and facilities, radio
telescopes or associated components or that competes with the business of the
Acquired Business as conducted as of the date hereof. Luik further agrees that
the existence of any cause of action against Vertex, VAC or the Acquired
Business shall not constitute a defense to the enforcement by Vertex or VAC of
this Agreement.
1.2 Nonsolicitation of Customers. During the Term hereof, Luik
shall not, either directly or indirectly, call on, solicit or take away or
attempt to call on, solicit or take away any of the customers or clients of VAC
or the Acquired Business as of the date hereof for the purpose of selling
products or services to such customers or clients which compete with the
products or services being sold or provided by VAC or the Acquired Business
either for himself or for any other person, firm, corporation or other entity.
1.3 Nonsolicitation of Employees. During the Term hereof, Luik
shall not, either directly or indirectly:
(a) Solicit, entice, persuade or induce, directly or
indirectly, any employee (or person who within the preceding ninety
(90) days was an employee) of TIW or of Vertex or of VAC or their
respective affiliates or any other person who is under contract with
or rendering services to TIW or to Vertex or VAC or their respective
affiliates, to terminate his or her employment by, or contractual
relationship with, such person or to refrain from extending or
renewing the same (upon the same or new terms) or to refrain from
rendering services to or for such person or to become employed by or
to enter into contractual relations with any persons other than such
person or to enter into a relationship with a competitor of TIW,
Vertex, VAC or their respective affiliates;
(b) Approach any such employee or other person for any of
the foregoing purposes, or
(c) Authorize or approve or assist in the taking of any
such actions by any person other than TIW, Vertex, VAC or their
respective affiliates.
NONCOMPETITION AGREEMENT - Page 2
<PAGE> 4
1.4 Restrictions on Certain Actions. During the Term hereof, Luik
shall not, either directly or indirectly, make any statements, or take any
actions, that would disparage Vertex, VAC or the Acquired Business.
1.5 Term. The Term of this Agreement (the "Term") shall be a
period of forty-eight (48) months commencing on the Effective Date and ending
at midnight on the same date forty-eight (48) months after the Effective Date.
ARTICLE 2
Remedies
2.1 Remedies. In the event of the breach or threatened breach by
Luik of any provision of Sections 1.1, 1.2, 1.3 and/or 1.4 hereof, Vertex
and/or VAC, as applicable, shall be entitled to relief by temporary restraining
order, temporary injunction, or permanent injunction or otherwise, in addition
to any other legal and equitable relief to which it may be entitled, including
any and all monetary damages which Vertex or VAC or the Acquired Business may
incur as a result of said breach, violation or threatened breach or violation.
Vertex or VAC, as applicable, may pursue any remedy available to it
concurrently or consecutively in any order as to any breach, violation, or
threatened breach or violation, and the pursuit of one of such remedies at any
time will not be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach, violation, or threatened
breach or violation, or as to any other breach, violation, or threatened breach
or violation.
2.2 Attorney Fees. The parties hereto agree that in the event
that Vertex and/or VAC finds it necessary to employ attorneys to enforce the
provisions of Sections 1.1, 1.2, 1.3 or 1.4 hereof through litigation, Vertex
and/or VAC, as applicable, shall be entitled to be reimbursed its reasonable
attorneys' fees and related court costs from Luik if Vertex and/or VAC is the
prevailing party in such litigation.
ARTICLE 3
General Provisions
3.1 Integration. This Agreement contains the complete agreement
between the parties hereto with respect to the subject matter hereof,
supersedes any existing agreements between such parties with respect to the
subject matter hereof and cannot be changed or terminated except by written
instrument executed by each of the parties.
3.2 Continuation Following Assignment. Luik agrees that this
Agreement and the covenants contained herein shall continue to be binding and
controlling on Luik notwithstanding the assignment of all or any part of VAC's
rights to or interest in the Acquired Business by VAC.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
NONCOMPETITION AGREEMENT - Page 3
<PAGE> 5
3.4 Severable Provisions. The intent of each party hereto is that
the restrictions and limitations on Luik described herein shall apply and be
enforceable to the fullest extent allowed by law and shall under no
circumstances be terminated in full in the event that any portion of such
limitations or restrictions exceed applicable law. The illegality, invalidity
or unenforceability of any term or provision of this Agreement shall have no
effect on any other term or provision of this Agreement and the provision held
to be void, illegal or unenforceable shall be limited so that it shall remain
in effect to the extent permissible by law. In the event any court of
competent jurisdiction determines that any part of the provisions hereof exceed
any applicable geographical, temporal or other legal or equitable limitations
or restrictions, then such court is hereby authorized and requested by the
parties to limit or reform the applicable limitations and restrictions to the
minimum extent necessary so that such limitations and restrictions set forth
herein are enforceable under applicable law.
3.5 Choice of Law and Venue. THIS AGREEMENT IS MADE AND ENTERED
INTO IN KILGORE, GREGG COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF. ANY LITIGATION, SPECIAL PROCEEDING OR OTHER
PROCEEDING AS BETWEEN THE PARTIES THAT MAY BE BROUGHT, OR ARISE OUT OF, IN
CONNECTION WITH OR BY REASON OF THIS AGREEMENT SHALL BE BROUGHT IN THE
APPLICABLE FEDERAL OR STATE COURT IN AND FOR GREGG COUNTY, TEXAS, WHICH COURTS
SHALL BE THE EXCLUSIVE COURTS OF JURISDICTION AND VENUE.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed and delivered by its duly authorized representative as of the day and
year first above written.
LUIK:
/s/ Rein Luik
-------------------------------------------
REIN LUIK, Individually
VERTEX:
VERTEX COMMUNICATIONS CORPORATION
By: /s/ J. Rex Vardeman
----------------------------------------
J. REX VARDEMAN,
President and Chief Executive Officer
VERTEX ACQUISITION CORPORATION
By: /s/ James D. Carter
----------------------------------------
JAMES D. CARTER, Vice President
NONCOMPETITION AGREEMENT - Page 4
<PAGE> 1
EXHIBIT 99.4
================================================================================
VERTEX COMMUNICATIONS CORPORATION
EXHIBIT 99.4
TO
CURRENT REPORT ON FORM 8-K/A
Date of Report (Date of Earliest Event Reported): May 9, 1997
================================================================================
<PAGE> 2
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into this 11th day of June, 1997, by and among LOUIS BECKER, an individual
resident of Santa Clara County, California ("Becker"), VERTEX COMMUNICATIONS
CORPORATION, a Texas corporation ("Vertex"), and VERTEX ACQUISITION
CORPORATION, a Nevada corporation ("VAC"), which is a wholly-owned subsidiary
of Vertex and which has its principal place of business in Santa Clara County,
California.
W I T N E S S E T H:
WHEREAS, Becker (along with his wife) owns approximately six percent
(6%) of the issued and outstanding capital stock of TIW Systems, Inc., a
California corporation ("TIW"), exclusive of any stock of TIW that Becker may
beneficially own as a participant in the TIW Systems Incorporated Employee
Stock Ownership Plan;
WHEREAS, Becker is also an officer of TIW;
WHEREAS, Vertex, VAC, TIW, Becker, Heldur Tonisson and the TIW Systems
Incorporated Employee Stock Ownership Trust have previously entered into that
certain Agreement and Plan of Reorganization dated May 9, 1997 (the
"Reorganization Agreement") under the terms of which VAC will acquire TIW
pursuant to a forward triangular merger whereby VAC will be the surviving
corporation (the "Merger") effective upon the date (the "Effective Date") which
is the later of the date of (i) the filing of Articles of Merger with, and
issuance of a Certificate of Merger by, the Secretary of State of Nevada, and
(ii) the filing of Articles of Merger with, and issuance of a Certificate of
Merger by, the Secretary of State of California.
WHEREAS, as a result of the Merger the shareholders of TIW, including
Becker, will collectively receive an aggregate amount of $7,892,824.00 in cash
and an aggregate amount of 574,359 shares of Vertex common stock, $.10 par
value per share (collectively, the "Merger Consideration");
WHEREAS, as a result of the Merger, all property, rights, privileges,
powers and franchises, and all and every other interest of TIW shall thereafter
be the property of VAC, including all assets of TIW used in operating TIW's
business as a manufacturer of earth station satellite communications antenna,
radio telescopes and associated components (the "Acquired Business");
WHEREAS, in connection with the Reorganization Agreement and as a
material inducement to Vertex and VAC to enter into the Reorganization
Agreement and perform their respective obligations thereunder, including the
payment of the Merger Consideration to the shareholders of TIW, including
Becker, and in order to protect the assets and goodwill of TIW, Becker has
agreed that Becker will not enter into competition with Vertex or VAC relative
to the operation of the Acquired Business for a period of four (4) years from
the Effective Date, and the parties hereto desire to more specifically
delineate such agreement herein;
NONCOMPETITION AGREEMENT - Page 1
<PAGE> 3
NOW, THEREFORE, for and in consideration of the premises, the parties
hereto hereby covenant and agree as follows:
ARTICLE 1
Agreement Regarding Competition
1.1 Agreement Not to Compete. For and in consideration of Vertex
and VAC entering into the Reorganization Agreement and performing their
respective obligations thereunder, including the payment of the Merger
Consideration, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Becker, Becker covenants and
agrees that, except as hereinafter set forth, during the Term hereof, as
defined in Section 1.5 below, Becker will not, directly or indirectly, either
as an employee (other than on behalf of Vertex or VAC or an affiliate thereof),
employer, consultant, agent, principal, partner, shareholder (other than
through ownership of publicly traded capital stock of a corporation which
represents less than five percent (5%) of the outstanding capital stock of such
corporation) corporate officer, director or in any other individual or
representative capacity, engage or participate in any business located in the
United States of America that engages in the design, manufacture and
implementation of satellite communication equipment and facilities, radio
telescopes or associated components or that competes with the business of the
Acquired Business as conducted as of the date hereof. Becker further agrees
that the existence of any cause of action against Vertex, VAC or the Acquired
Business shall not constitute a defense to the enforcement by Vertex or VAC of
this Agreement.
1.2 Nonsolicitation of Customers. During the Term hereof, Becker
shall not, either directly or indirectly, call on, solicit or take away or
attempt to call on, solicit or take away any of the customers or clients of VAC
or the Acquired Business as of the date hereof for the purpose of selling
products or services to such customers or clients which compete with the
products or services being sold or provided by VAC or the Acquired Business
either for himself or for any other person, firm, corporation or other entity.
1.3 Nonsolicitation of Employees. During the Term hereof, Becker
shall not, either directly or indirectly:
(a) Solicit, entice, persuade or induce, directly or
indirectly, any employee (or person who within the preceding ninety
(90) days was an employee) of TIW or of Vertex or of VAC or their
respective affiliates or any other person who is under contract with
or rendering services to TIW or to Vertex or VAC or their respective
affiliates, to terminate his or her employment by, or contractual
relationship with, such person or to refrain from extending or
renewing the same (upon the same or new terms) or to refrain from
rendering services to or for such person or to become employed by or
to enter into contractual relations with any persons other than such
person or to enter into a relationship with a competitor of TIW,
Vertex, VAC or their respective affiliates;
(b) Approach any such employee or other person for any of
the foregoing purposes, or
(c) Authorize or approve or assist in the taking of any
such actions by any person other than TIW, Vertex, VAC or their
respective affiliates.
NONCOMPETITION AGREEMENT - Page 2
<PAGE> 4
1.4 Restrictions on Certain Actions. During the Term hereof,
Becker shall not, either directly or indirectly, make any statements, or take
any actions, that would disparage Vertex, VAC or the Acquired Business.
1.5 Term. The Term of this Agreement (the "Term") shall be a
period of forty-eight (48) months commencing on the Effective Date and ending
at midnight on the same date forty-eight (48) months after the Effective Date.
ARTICLE 2
Remedies
2.1 Remedies. In the event of the breach or threatened breach by
Becker of any provision of Sections 1.1, 1.2, 1.3 and/or 1.4 hereof, Vertex
and/or VAC, as applicable, shall be entitled to relief by temporary restraining
order, temporary injunction, or permanent injunction or otherwise, in addition
to any other legal and equitable relief to which it may be entitled, including
any and all monetary damages which Vertex or VAC or the Acquired Business may
incur as a result of said breach, violation or threatened breach or violation.
Vertex or VAC, as applicable, may pursue any remedy available to it
concurrently or consecutively in any order as to any breach, violation, or
threatened breach or violation, and the pursuit of one of such remedies at any
time will not be deemed an election of remedies or waiver of the right to
pursue any other of such remedies as to such breach, violation, or threatened
breach or violation, or as to any other breach, violation, or threatened breach
or violation.
2.2 Attorney Fees. The parties hereto agree that in the event
that Vertex and/or VAC finds it necessary to employ attorneys to enforce the
provisions of Sections 1.1, 1.2, 1.3 or 1.4 hereof through litigation, Vertex
and/or VAC, as applicable, shall be entitled to be reimbursed its reasonable
attorneys' fees and related court costs from Becker if Vertex and/or VAC is the
prevailing party in such litigation.
ARTICLE 3
General Provisions
3.1 Integration. This Agreement contains the complete agreement
between the parties hereto with respect to the subject matter hereof,
supersedes any existing agreements between such parties with respect to the
subject matter hereof and cannot be changed or terminated except by written
instrument executed by each of the parties.
3.2 Continuation Following Assignment. Becker agrees that this
Agreement and the covenants contained herein shall continue to be binding and
controlling on Becker notwithstanding the assignment of all or any part of
VAC's rights to or interest in the Acquired Business by VAC.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
3.4 Severable Provisions. The intent of each party hereto is that
the restrictions and limitations on Becker described herein shall apply and be
enforceable to the fullest extent allowed by law and shall
NONCOMPETITION AGREEMENT - Page 3
<PAGE> 5
under no circumstances be terminated in full in the event that any portion of
such limitations or restrictions exceed applicable law. The illegality,
invalidity or unenforceability of any term or provision of this Agreement shall
have no effect on any other term or provision of this Agreement and the
provision held to be void, illegal or unenforceable shall be limited so that it
shall remain in effect to the extent permissible by law. In the event any
court of competent jurisdiction determines that any part of the provisions
hereof exceed any applicable geographical, temporal or other legal or equitable
limitations or restrictions, then such court is hereby authorized and requested
by the parties to limit or reform the applicable limitations and restrictions
to the minimum extent necessary so that such limitations and restrictions set
forth herein are enforceable under applicable law.
3.5 Choice of Law and Venue. THIS AGREEMENT IS MADE AND ENTERED
INTO IN KILGORE, GREGG COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF. ANY LITIGATION, SPECIAL PROCEEDING OR OTHER
PROCEEDING AS BETWEEN THE PARTIES THAT MAY BE BROUGHT, OR ARISE OUT OF, IN
CONNECTION WITH OR BY REASON OF THIS AGREEMENT SHALL BE BROUGHT IN THE
APPLICABLE FEDERAL OR STATE COURT IN AND FOR GREGG COUNTY, TEXAS WHICH COURTS
SHALL BE THE EXCLUSIVE COURTS OF JURISDICTION AND VENUE.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed and delivered by its duly authorized representative as of the day and
year first above written.
BECKER:
/s/ Louis E. Becker
------------------------------------------
LOUIS BECKER, Individually
VERTEX:
VERTEX COMMUNICATIONS CORPORATION
By: /s/ J. Rex Vardeman
---------------------------------------
J. REX VARDEMAN,
President and Chief Executive Officer
VERTEX ACQUISITION CORPORATION
By: /s/ James D. Carter
--------------------------------------
JAMES D. CARTER,
Vice President
NONCOMPETITION AGREEMENT - Page 4
