CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT ("Agreement") is made and entered into on
this the 28th day of September, 1999, by and between TRIPOINT GLOBAL
COMMUNICATIONS INC., a Delaware corporation ("Recipient"), and VERTEX
COMMUNICATIONS CORPORATION, a Texas corporation ("Vertex").
WITNESSETH:
WHEREAS, Recipient and Vertex desire to enter into negotiations relating
to a possible business combination or acquisition (a "Transaction") involving
Recipient and Vertex;
WHEREAS, in connection with Recipient's evaluation of the Transaction,
Recipient requires access to certain information of Vertex concerning the
business and affairs of Vertex that is either nonpublic, confidential or
proprietary in nature;
WHEREAS, Vertex is willing to provide limited access to the Evaluation
Material (as hereinafter defined) to Recipient and Recipient's authorized
agents, subject to the restrictions hereinafter set forth pertaining to the
protection and preservation of the Evaluation Material, in order to enable
Recipient to determine whether Recipient desires to pursue further negotiations
with Vertex; and
WHEREAS, the parties desire to set forth the terms and conditions upon
which the Evaluation Material is to be disclosed to Recipient and the rights and
obligations of the parties with respect to such Evaluation Material;
NOW, THEREFORE, for and in consideration of the above stated premises, the
mutual covenants set forth herein, and other good and valuable consideration,
the recipient and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Evaluation Material. As used herein, the term "Evaluation Material"
means all information that Vertex has furnished or is furnishing to Recipient
in connection with a Transaction, whether furnished before or after the date
of this Agreement, whether tangible or intangible, and whether verbally, in
writing, on computer disk or otherwise, including the customer list,
documents identifying past, present and future customers, the financial books
and records of Vertex and related financial statements and tax returns of
Vertex, and documents or other information pertaining to the assets,
liabilities and business operations of Vertex and its subsidiaries, as well
as all information generated by Recipient or by Recipient's Representatives
(as defined below) that contains, reflects, or is derived from the foregoing
furnished information, including all analyses, compilations, data, studies,
notes, interpretations, memoranda or other
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documents prepared by Recipient or Recipient's Representatives. Notwithstanding
the preceding, the term "Evaluation Material" shall not be construed to include,
and the confidentiality and use provisions of this Agreement shall not apply to:
(a) information that is or becomes generally available to the public other than
as a result of disclosure by Recipient or any of Recipient's Representatives,
(b) information known to Recipient prior to the time of disclosure by Vertex;
and (c) information that is obtained by Recipient from any other source than
Vertex or its affiliates, but only if such disclosure of information to
Recipient does not, to Recipient's knowledge, violate any contractual or legal
obligation to Vertex on the part of such source or does not, to Recipient's
knowledge, breach a confidential relationship of such source to Vertex.
2. Confidentiality of Evaluation Material. The Evaluation Material is
disclosed and delivered to Recipient in the strictest confidence and Recipient
agrees to receive and hold the Evaluation Material in the strictest confidence
and in accordance with the provisions and intentions of this Agreement. This
Agreement shall apply to all of the Evaluation Material disclosed to Recipient
by Vertex or its agents, without regard to whether such disclosure is by means
of written documents or otherwise. Recipient acknowledges that the Evaluation
Material is proprietary to Vertex and that Recipient has no rights or interest
in the Evaluation Material and shall not use any part of the Evaluation Material
for Recipient's own benefit except as specifically set forth in this Agreement.
3. Terms of Disclosure. Initially, the Evaluation Material shall be
disclosed by Vertex to Recipient for the sole purpose of evaluating the
feasibility of Recipient negotiating and executing an agreement with Vertex or
its shareholders to acquire, directly or indirectly, the assets or outstanding
shares of capital stock of Vertex or otherwise enter into a Transaction with
Vertex. Subject to the terms of this Agreement, Recipient may distribute or
otherwise disclose the Evaluation Material to a reasonable number of persons,
including Recipient's directors, officers, employees, lenders, prospective
lenders, attorneys, financial advisors, accountants and other experts
(collectively, "Recipient's Representatives"), on a need to know basis required
to enable Recipient to evaluate the Evaluation Material and the business of
Vertex in order to permit Recipient to determine whether and on what terms
Recipient desires to enter into a Transaction with Vertex (the "Permitted Use"),
provided such individuals are informed by Recipient of the confidential nature
of the Evaluation Material. Notwithstanding the preceding, Recipient
acknowledges and agrees that the sales or production personnel of Recipient
shall not be permitted access to the Evaluation Material without the prior
written consent of Vertex. In addition, Recipient agrees that it will not use
any part of the Evaluation Material for the purposes of marketing or product
development.
4. Restriction of Further Disclosure. Recipient shall notify Vertex in
advance in writing of any individual other than Recipient's Representatives to
whom Recipient desires to disclose any part of the Evaluation Material. If
Vertex notifies Recipient that Vertex objects to
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the dissemination of the Evaluation Material to such other individual, Recipient
shall not disseminate any part of the Evaluation Material to such other
individual. Neither party shall, without the prior written consent of the other
party, subject only to the exceptions expressly set forth in this Agreement: (a)
disclose to any third party the fact that Vertex has provided any of the
Evaluation Material to Recipient; (b) disclose to any third party that any
investigations, discussions or negotiations are taking place concerning a
Transaction involving Vertex and Recipient; or (c) disclose any of the terms,
conditions, status or other facts with respect to any such Transaction.
Notwithstanding anything to the contrary contained herein, each party may issue
any press release or make any public statement without approval of the other
party as may be required by law, provided the party issuing the press release or
making such statement shall give prior notice thereof to the other party and
consult with the other party as to the contents thereof. Recipient shall not,
without the prior written consent of Vertex, subject only to the exceptions
expressly set forth in this Agreement, (a) disclose to any third party any or
all of the Evaluation Material; (b) permit any third party to have access to the
Evaluation Material; or (c) use the Evaluation Material for any purpose other
than the Permitted Use.
5. Protection of Information. Recipient shall use commercially reasonable
efforts, including efforts commensurate with those used by Recipient for the
protection of its own confidential and proprietary information, to protect the
Evaluation Material disclosed to Recipient and Recipient's agents pursuant to
this Agreement; provided, however, Recipient shall have no obligation or
authority to initiate litigation or incur costs or other expenses on behalf of,
or for the benefit of, Vertex. Recipient shall be responsible to Vertex for all
authorized and unauthorized disclosures of the Evaluation Material by Recipient
or Recipient's Representatives or agents. Such responsibility of Recipient shall
be in addition to and not by way of limitation of any right or remedy Vertex
may have against Recipient's Representatives with respect to any such breach.
6. Compelled Disclosure. Recipient agrees that in the event that it or any
of Recipient's Representatives are requested or required (by law, deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose any of the Evaluation Material, Recipient will
provide Vertex with prompt prior written notice of such request or requirement
so that Vertex may seek a protective order or other appropriate remedy and/or
consent in writing to such disclosure. In the event that such protective order
or other remedy is not obtained and Vertex has not consented in writing to such
disclosure, and Recipient or Recipient's Representatives are nonetheless,
advised in writing by Recipient's outside legal counsel, that they are legally
required to disclose the Evaluation Material, Recipient and Recipient's
Representatives may furnish only that portion of the Evaluation Material that
Recipient and Recipient's Representatives are advised in writing by outside
legal counsel is legally required; provided that Recipient will exercise
commercially reasonable efforts to assist Vertex in obtaining an order or
reasonable assurance that the confidential treatment will be
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accorded such Evaluation Material.
7. Return of Evaluation Material. In the event that Vertex requests in
writing the return of the Evaluation Material, Recipient shall deliver to the
President of Vertex all of the Evaluation Material theretofore disclosed to
Recipient in the form of documents and tangible items, and all copies,
summaries, records, and descriptions thereof and all other written information
which constitutes Evaluation Material, including all such written information in
the possession of Recipient's Representatives and agents. Notwithstanding the
preceding, that portion of the Evaluation Material that was generated by
Recipient or Recipient's Representatives may be destroyed by Recipient or
Recipient's Representatives (rather than being returned to Vertex); provided,
however, that Recipient shall promptly deliver to Vertex a certificate signed by
the President of Recipient certifying that such Evaluation Material has been
destroyed. Notwithstanding the return or destruction of the Evaluation Material
in accordance with this Section, Recipient and Recipient's Representations shall
continue to be bound by the other provisions of this Agreement.
8. No Representation as to Completeness. Each of Vertex and Recipient
acknowledges that neither Vertex nor any of its representatives makes any
express or implied representation or warranty as to the accuracy or completeness
of the Evaluation Material and that each of Vertex and its representatives
expressly disclaims any and all liability that may be based on the Evaluation
Material, errors therein, or omissions therefrom. Recipient acknowledges (i)
that Recipient is not entitled to rely on the accuracy or completeness of the
Evaluation Material, (ii) that neither Vertex nor any of its representatives
shall have any liability whatsoever to Recipient or any other entity based on
the Evaluation Material, and (iii) that Recipient instead shall be entitled to
rely solely on the representations and warranties, if any, made to Recipient in
any definitive agreement regarding the Transaction (a "Definitive Agreement").
The term "Definitive Agreement" does not include an executed letter of intent or
any other preliminary written agreement that the parties thereto state is not
intended to be legally binding, except in accordance with the terms of any such
letter of intent or other preliminary written agreement. In addition, a
Definitive Agreement does not include any written or oral acceptance of any
offer or bid submitted by Recipient or Vertex.
9. No Obligation. Each of Vertex and Recipient understands and agrees that
no contract or agreement providing for a Transaction shall be deemed to exist
until a Definitive Agreement has been executed and delivered, and each of Vertex
and Recipient hereby waives, in advance, any claims (including breach of
contract) in connection with a Transaction unless and until Recipient and Vertex
shall have entered into a Definitive Agreement. Each of Vertex and Recipient
also agrees that unless and until a Definitive Agreement between Recipient and
Vertex with respect to a Transaction has been executed and delivered, neither
Vertex nor Recipient nor any of their respective shareholders or affiliates have
any legal obligation of any kind whatsoever with respect to such Transaction by
virtue of this Agreement or any other written or oral
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expression with respect to such Transaction except, in the case of this
Agreement, for the matters specifically agreed to herein. Recipient understands
that (i) Vertex and its financial advisors shall be free to conduct any process
for any Transaction as they in their sole discretion shall determine (including
negotiating with any of the prospective parties to such Transaction and entering
into a Definitive Agreement without prior notice to Recipient or any other
person) and (ii) any procedures relating so such Transaction may be changed at
any time without notice to Recipient or any other person.
10. Right to Terminate Negotiations. Each of Vertex and Recipient reserves
the right, in such party's sole discretion, to reject any and all proposals made
regarding a Transaction and to terminate negotiations and discussions with the
other party at any time.
11. Securities Laws. Recipient acknowledges that (i) Recipient is aware
that, under certain circumstances, the United States securities laws prohibit a
person who has material, nonpublic information about a company from purchasing
or selling securities of that company, or from communicating that information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell those securities and (ii) Recipient is
familiar with the Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations promulgated thereunder, and agrees that Recipient will
neither use, nor cause any third party to use, any Evaluation Material in
contravention of the Exchange Act or any such rules and regulations, including
Rules 10b-5 and 14e-3.
12. Standstill. Recipient agrees that, prior to one year after the date
hereof, Recipient will not (and will ensure that its affiliates that control,
are controlled by or are under common control with it (as defined in the rules
under the Exchange Act) and any person acting on behalf of or in concert with
Recipient or any controlled affiliate will not), alone or with others, directly
or indirectly, take any of the following actions unless Recipient is first
invited in writing by the Board of Directors of Vertex to make such action:
a. Purchase or otherwise acquire (or enter into any agreement or
make any proposal to purchase or otherwise acquire) record or beneficial
ownership of any securities (which, for purposes of this Agreement,
includes, without limitation, indebtedness) of Vertex, any warrant or
option to purchase such securities, any security convertible into or
exchangeable for any such securities or any other right to acquire such
securities;
b. Propose to Vertex or its security holders, or make any
announcement with respect to, any Transaction between Recipient, any of
its affiliates or Recipient and any other person, on the one hand, and
Vertex or any of its security holders, on the other hand, or involving
Vertex or any of its securities or security holders;
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c. Effect or seek, offer or propose (whether publicly or otherwise)
to effect or participate in (i) any acquisition of the assets of Vertex or
any of its subsidiaries, (ii) any tender or exchange offer, merger or
other business combination involving Vertex or any of its subsidiaries, or
(iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to Vertex or any of its
subsidiaries;
d. Seek to control or influence Vertex, its management, Board of
Directors (including without limitation by affecting the composition of
the Board of Directors) or policies through the solicitation of proxies,
consents, or otherwise or make or in any participate in any solicitation
of proxies to vote, or seek to advise or influence any person with respect
to the voting of securities of Vertex;
e. Seek to advise or influence any person with respect to the voting
of securities of Vertex;
f. Assist, advise, encourage, or provide any information or
financing to any other persons seeking to acquire, directly or indirectly,
control of Vertex, its management, Board of Directors, policies,
securities, business or assets;
g. Make any request to waive, amend or terminate any provision of
this Agreement or to permit Recipient to take any action prohibited
herein; or
h. Take any initiative with respect to Vertex or its subsidiaries
which could require Vertex to make a public announcement regarding any
such prohibited initiative or action referred to in this Section.
Notwithstanding the foregoing, (i) if any third party that is not an
affiliate of Recipient publicly makes (x) a tender or exchange offer or other
bona fide offer (including an offer for a privately negotiated transaction) to
acquire directly or indirectly securities of Vertex under circumstances such
that, immediately after such acquisition, such third party would beneficially
own more than 15% of any class of such securities, or (y) a proposal or offer
for a merger, consolidation or other business combination directly or indirectly
involving Vertex or a proposal or offer to acquire directly or indirectly all or
substantially all of the assets of Vertex (any proposal or offer referred to in
clauses (x) or (y) being herein called a "Business Combination Proposal"), which
Business Combination Proposal is either (A) not withdrawn or terminated within
five days after such Business Combination Proposal is made or (B) accepted by
the Board of Directors of Vertex, the restrictions set forth in this Section
shall not be deemed to preclude Recipient from making a Business Combination
Proposal; provided that the restrictions set forth in this Section shall again
be applicable in accordance with their terms upon the withdrawal or termination
of the original Business Combination Proposal or the rejection thereof by the
Board of Directors of Vertex, except to the extent Recipient has previously
publicly announced a
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Business Combination Proposal as permitted by this sentence.
13. Remedies. Recipient acknowledges and agrees that, in the event of any
breach of this Agreement, Vertex would be irreparably and immediately harmed and
could not be made whole by monetary damages. Accordingly, Recipient agrees that,
in addition to any other remedy to which Vertex may be entitled at law or in
equity, Vertex shall be entitled to an injunction or injunctions (without the
posting of any bond or security and without proof of actual damages) to prevent
breaches of this Agreement and/or to compel specific performance of the
Agreement, and that neither Recipient nor Recipient's Representatives will
oppose the granting of such relief.
14. Fees and Expenses. Except as otherwise provided herein or as may
otherwise be agreed upon by the parties in writing, the parties shall each pay
all of their own fees and expenses incident to the negotiation, preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including without limitation the fees and expenses of their respective
counsel, accountants, and other experts and representatives, whether or not the
transactions contemplated by this Agreement are consummated.
15. Legal Fees and Costs. In the event any party must incur legal expenses
to enforce any provision of this Agreement, the prevailing party will be
entitled to recover such legal expenses, including without limitation,
attorneys' fees, costs and necessary disbursements, in addition to any other
relief to which such party shall be entitled.
16. Vertex Representatives. All contacts by Recipient or Recipient's
Representatives with Vertex, regarding the Evaluation Material or a Transaction
shall be made through either J. Xxx Xxxxxxxx, the President and Chief Executive
Officer of Vertex, or Xxxxx X. Xxxxxx, the Vice President and Chief Financial
Officer of Vertex, or such other person as Recipient is notified in writing to
contact.
17. Amendment. This Agreement may not be modified, altered, amended or
terminated except by the written agreement of all of the parties.
18. Integrated Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous representations, understandings and
agreements, oral or written, made between the parties or their affiliates
concerning the subject matter hereof, and all such prior or contemporaneous
representations, understandings and agreements are hereby terminated.
19. Waiver. No failure or delay by Vertex or Recipient in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power, or privilege
preclude any other or further exercise thereof.
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20. Invalid Provision. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. If
any of the provisions of this Agreement shall be deemed to be unenforceable by
reason of its extent, duration, scope or otherwise, then the parties contemplate
that the court making such determination shall enforce the remaining provisions
of this Agreement, shall reduce such extent, duration, scope or other provision
and shall enforce them in their reduced form for all purposes contemplated by
this Agreement.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to its rules
governing conflicts of law.
22. Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
23. Termination. This Agreement shall terminate on the third anniversary
of the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
TRIPOINT GLOBAL COMMUNICATIONS, INC. VERTEX COMMUNICATIONS CORPORATION
/s/ X. X. Xxxxxxx /s/ J. Xxx Xxxxxxxx
By: By:
XXXX XXXXXXX J. XXX XXXXXXXX
Chief Executive Officer President and Chief Executive Officer
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