-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F+Mh7P7ca+VEV3HrN8knTjdLzPxaa7ocFgAbsbRgS/cLEW66W1vikqna8McPdzw9 HgmxUAqEb2L02i7JzPWU1g== 0000909518-03-000500.txt : 20030729 0000909518-03-000500.hdr.sgml : 20030729 20030729161807 ACCESSION NUMBER: 0000909518-03-000500 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTERNA CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12657 FILM NUMBER: 03808905 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 FORMER COMPANY: FORMER CONFORMED NAME: DYNATECH CORP DATE OF NAME CHANGE: 19920703 10-K/A 1 mv7-29_10ka.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2003 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ COMMISSION FILE NUMBER 000-07438 ACTERNA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 04-2258582 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 12410 MILESTONE CENTER DRIVE GERMANTOWN, MD 20876 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (240) 404-1550 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common Stock, par value $0.01 per share (TITLE OF CLASS) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K |_| Indicate by checkmark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes |_| No |X| At September 30, 2002 and June 19, 2003, the aggregate market value of the Common Stock of the registrant held by non-affiliates was $10,627,386 and $1,859,793, respectively. At June 19, 2003, there were 192,282,130 shares of Common Stock of the registrant outstanding. DOCUMENTS INCORPORATED BY REFERENCE None. EXPLANATORY NOTE The undersigned registrant hereby amends the following items of its Annual Report on Form 10-K for the fiscal year ended March 31, 2003 to include the Part III and Part IV information set forth herein: PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. INFORMATION REGARDING DIRECTORS The following table sets forth certain information with respect to the Company's Directors:
Name and Principal Occupation Director for at least the Past Five Years Age Since - -------------------------------- --- ----- Ned C. Lautenbach 59 1998 Ned C. Lautenbach is a principal and Director of CD&R and served as the Company's Chairman, President and Chief Executive Officer from May 20, 1999 to July 22, 2001, the Company's Chairman and Chief Executive Officer from July 23, 2001 to March 7, 2003, and as a Director since November 30, 1998. Mr. Lautenbach continues to serve as the Company's Chairman. Mr. Lautenbach joined CD&R in 1998 from IBM Corporation where he served as Senior Vice President and Group Executive of Worldwide Sales and Services, and was a member of the IBM Corporate Executive Committee. During his career at IBM, he held a variety of other senior executive positions in several divisions, including President of the National Distribution Division of the United States, President, Asia Pacific, and Chairman, IBM World Trade Corporation. Mr. Lautenbach received his M.B.A. from Harvard University and his B.A. in economics at the University of Cincinnati. He is a member of the Board of Trustees of Fidelity Investments and a Director of Eaton Corporation, and Covansys, Inc. He is a limited partner of Associates V, a Director of Associates II Inc., a limited partner of Associates VI and a Director of Associates VI Inc. Marvin L. Mann 70 1999 Marvin L. Mann has served as a Director since February 4, 1999. Mr. Mann serves as a director of Lexmark International and also served since April 1999 as Chairman Emeritus of the Board of Directors of Lexmark International Group, Inc., a corporation in which an affiliate of CD&R had an investment from 1991 through 1998. He served as Chairman of the Board of Lexmark International Group, Inc., from March 1991 through April 1999, as Chief Executive Officer from March 1991 through May 1998, and as President from March 1991 through February 1997. Prior to such time, Mr. Mann held numerous positions with IBM. During his IBM career, Mr. Mann held a number of executive positions including President of the Information Products Division, President of the Service Sector Division and President and Chief Executive Officer of the Satellite Business Systems. He was elected an IBM Vice President in 1985. Mr. Mann serves as a director of Imation Corporation and is a member of the Board of Trustees of Fidelity Investments. John R. Peeler 48 1998 John R. Peeler currently serves as the Company's President and, since March 7, 2003, Chief Executive Officer and, since May 21, 1998, as a Director. Mr. Peeler has been employed by the Company since 1980 and has held positions of increasing responsibility including Vice President of Engineering, Vice President of Product Development, Division President, and Executive Vice President and Chief Operating Officer. Prior to joining the Company, he was a communications system design engineer 2 Name and Principal Occupation Director for at least the Past Five Years Age Since - -------------------------------- --- ----- with Hughes Network Systems (formerly M/A Com DCC). Mr. Peeler received a Bachelor of Science degree and a Master of Science degree, both in electrical engineering, from the University of Virginia. Donald J. Gogel 54 2002 Donald J. Gogel is a principal, Chief Executive Officer and Director of CD&R and has served as a Director of the Company since May 14, 2002. Mr. Gogel is a limited partner of Associates V, President, Chief Executive Officer and Director of Associates II, Inc., a limited partner of Associates VI and President, Chief Executive Officer and Director of Associates VI Inc. Prior to joining CD&R in 1989, Mr. Gogel was a partner at McKinsey & Company, Inc., and a managing director at Kidder, Peabody & Company, Inc. He serves as Vice Chairman and Trustee of both the Cancer Research Institute and the Mount Sinai-NYU Medical Center. Mr. Gogel holds a BA from Harvard College, a graduate degree from Balliol College, Oxford University, where he was a Rhodes scholar, and a J.D. degree from Harvard Law School. Mr. Gogel also serves as a Director of Jafra Cosmetics International, Inc., Kinko's, Inc., and Turbochef, Inc. William O. McCoy 69 1999 William O. McCoy has served as a Director since July 20, 1999. From April 1999 until August 2000 he served as Interim Chancellor of the University of North Carolina, Chapel Hill, North Carolina. He retired in November 1998 as Vice President for Finance of the sixteen-campus University of North Carolina. He joined UNC General Administration in 1995 after a 35-year career with the BellSouth Corporation, where he served as Vice Chairman of the Board of Directors from 1984 through 1994. Mr. McCoy also serves as a Director of Progress Energy Corporation, Liberty Corporation of Greenville, S.C., North Carolina Capital Management Trust and Duke Realty Corporation, and is a member of the Board of Trustees of Fidelity Investments and a partner of Franklin Street Partners. Victor A. Pelson 66 1999 Victor A. Pelson has served as a Director since September 28, 1999. He presently serves as a Senior Advisor of UBS Warburg. Prior to his affiliation with UBS Warburg, Mr. Pelson held numerous positions at AT&T Corporation. During his AT&T career, Mr. Pelson held a number of executive positions including Chairman of AT&T Global Operations, Group Executive and CEO of AT&T's Communications Services Group. He was also the Chairman of the New Jersey State Chamber of Commerce from 1989 to 1991. Mr. Pelson is also a member of the Board of Directors of United Parcel Services Inc., Eaton Corporation and Dun and Bradstreet. Brian H. Rowe 72 1998 Brian H. Rowe has served as a Director since November 30, 1998. He is currently Chairman of Atlas Air Worldwide Holdings, Inc., and Atlas Air, Inc., and Chairman Emeritus of GE Aircraft Engines in Cincinnati, Ohio, where he also served as Chairman from September 1993 through January 1995, and as President and Chief Executive Officer from 1979 through 1993. Mr. Rowe also serves as a Director of Atlas Air, Inc., B/E Aerospace, Inc., Textron, Inc., and AeroEquity. Richard J. Schnall 34 1999 Richard J. Schnall is a principal of CD&R and has served as a Director of the Company since September 28, 1999. Prior to joining CD&R in 1996, Mr. Schnall worked in the investment banking division of Smith Barney & Co. and Donaldson, Lufkin & Jenrette, Inc. He also worked for McKinsey & 3 Name and Principal Occupation Director for at least the Past Five Years Age Since - -------------------------------- --- ----- Company, Inc. Mr. Schnall is a graduate of the Wharton School at the University of Pennsylvania and Harvard Business School. He is a limited partner of Associates V, a Director of Associates II Inc., a limited partner of Associates VI and a Director of Associates V Inc. Mr. Schnall also serves as a Director of SIRVA, Inc., Brake Brothers Ltd., Global Decisions, Inc. Peter M. Wagner 50 2000 Peter M. Wagner joined Debitel AG, Stuttgart, Germany, as its President and Chief Executive Officer on May 22, 2000. From September 30, 1998 until May 19, 2000, he served as President, Chief Executive Officer and Director of Wavetek Wandel Goltermann, Inc., and was elected to the Company's Board on March 23, 2000. Mr. Wagner served as President, Chief Executive Officer and Managing Director of Wandel & Goltermann, Inc., from February 1998 to September 1998, as Executive Vice President, Chief Operating Officer and Managing Director of Wandel Goltermann, Inc., from October 1995 to February 1998 and as Vice President, Sales and Marketing from March 1995 to October 1995. From January 1990 to February 1995, Mr. Wagner was General Manager of the Line Transmission Systems Division of Alcatel SEL AG in Stuttgart, Germany. Mr. Wagner serves as a Director of Deutsche Messe AG and of Jambal AG, DEKRA EV, and MTS GmbH in Germany, as well as a Director of several privately held companies affiliated with Debitel AG in the Netherlands, Denmark, France and Spain.
EXECUTIVE OFFICERS OF THE COMPANY The following sets forth certain information with respect to the executive officers of the Company: Ned Lautenbach (1) Chairman 59 John R. Peeler (1) President and Chief Executive Officer 48 John D. Ratliff Corporate Vice President and Chief Financial Officer 43 Richard H. Goshorn Corporate Vice President, General Counsel and Corporate Secretary 47 Thomas Turner President and Chief Executive Officer of Itronix Corporation 55 Michael Arbuthnot President and Chief Executive Officer of da Vinci Systems, Inc. 56
(1) Biographical information pertaining to Messrs. Peeler and Lautenbach are presented above under "Information Regarding Directors". John D. Ratliff, 43, serves as Corporate Vice President and Chief Financial Officer of the Company. Mr. Ratliff joined the Company in June 2000 and was named Corporate Vice President and Chief Financial Officer of the Company effective January 1, 2002. Mr. Ratliff joined the Company from IBM where he served most recently as Vice President of Finance and Planning for IBM's personal computer unit from January 1997 through June 2000. During his career at IBM, Mr. Ratliff held a variety of senior executive positions in several divisions, including serving as Vice President, Finance and Planning for IBM's Latin America operation from November 1995 through December 1996. Richard H. Goshorn, 47, has served as Corporate Vice President, General Counsel and Corporate Secretary, since joining the Company in April 2002. Prior to joining the Company, Mr. Goshorn served as a Senior Vice President and General Counsel for Cable & Wireless Global from June 1999 through May 2001. Mr. Goshorn held a number of positions at Cable & Wireless PLC and its subsidiaries from 1991 through 2001 in London, Brussels and Singapore, including as Vice President, Legal Services, Global Businesses for Cable & Wireless PLC 4 from 1997 through 1998, and as Vice President and General Counsel to Cable & Wireless USA, Inc., from 1998 through 1999. Prior to joining Cable & Wireless, Mr. Goshorn was an attorney for the London based law firm of Gottesman Jones and Partners, and for the Ohio based law firm of Frost & Jacobs. Mr. Goshorn also served as a senior attorney for Fort Howard Corporation. Mr. Goshorn holds a B.A. in economics from The College of Wooster and a J.D. from Duke University School of Law. Thomas Turner, 55, has served as President and Chief Executive Officer of Itronix Corporation, a subsidiary of the Company, since February 2002. He joined Itronix from WhereNet, a Silicon Valley based leader in Real Time Location Systems, where he served as senior vice president. He joined WhereNet in 1999 from Datamax Corporation where he was president and director for five years. Prior to Datamax, Mr. Turner was senior vice president - North America for Symbol Technologies, and earlier in his career he held a number of positions with Wang Laboratories including chief executive officer of Wang Canada. Mr. Turner earned his BS in Electrical Engineering from Tufts University. Michael Arbuthnot, 56, has served as President and Chief Executive Officer of da Vinci Systems, Inc., a subsidiary of the Company, since March, 2002. Mr. Arbuthnot served as President of da Vinci Systems from 1994 to 2001 and took a nine-month sabbatical before rejoining the company in his current position. He held various positions with Ampex and Philips BTS prior to joining da Vinci systems. Mr. Arbuthnot attended St. Paul's University in Winnipeg, Canada. No family relationships exist among any director or any executive officers of the Company. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The Company believes that all persons who were subject to Section 16(a) of the Securities Exchange Act for the past fiscal year complied with the filing requirements thereof, except for Messrs. Mann, McCoy, Pelson and Wagner who each inadvertently filed a late Form 4 with respect to one transaction. In making this disclosure, the Company has relied on copies of the reports filed with the SEC by directors, executive officers and ten percent holders, and in the case of directors and executive officers, written representations. ITEM 11. EXECUTIVE COMPENSATION. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following summary compensation table sets forth information concerning compensation awarded to, earned by, or paid to (i) the Company's Chief Executive Officer, (ii) the four other most highly compensated executive officers who were serving as executive officers at the end of fiscal year 2003 and (iii) Messrs. Woodbury and Tremallo, who were no longer serving as executive officers as of March 31, 2003, but who were among the Company's most highly compensated executive officers for fiscal year 2003 (collectively referred to as the "Named Executive Officers"), for services rendered in all capacities with respect to the fiscal years ended March 31, 2001, 2002 and 2003: 5
LONG-TERM COMPENSATION ANNUAL COMPENSATION (1) AWARDS(2) ----------------------- --------- SECURITIES ALL OTHER NAME AND FISCAL SALARY BONUS UNDERLYING COMPENSATION PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) ($)(3) ------------------ ---- --- --- ----------- ------ Ned C. Lautenbach (4) 2003 0 0 0 0 Chairman and 2002 0 0 0 0 Chief Executive Officer 2001 0 0 0 0 John R. Peeler (5) 2003 410,833 325,000 0 0 President and 2002 425,000 150,000 0 54,304 Chief Executive Officer 2001 410,600 721,280 0 53,402 John D. Ratliff 2003 300,000 825,000 250,000 0 Corporate Vice President and 2002 281,250 150,000 100,000 29,460 Chief Financial Officer 2001 235,512 372,949 0 2,391 Richard H. Goshorn 2003 263,442 75,000 200,000 0 Corporate Vice President, General 2002 --- --- --- --- Counsel and Corporate Secretary 2001 --- --- --- --- Thomas Turner 2003 226,442 100,000 0 0 President and Chief Executive 2002 37,500 50,000 200,000 0 Officer of Itronix Corporation 2001 --- --- --- --- Michael Arbuthnot 2003 170,000 251,500 0 0 President and Chief Executive 2002 157,000 0 0 0 Officer of da Vinci Systems 2001 176,167 251,600 0 0 Mark V.B. Tremallo 2003 210,000 163,057 0 0 former Corporate Vice President, 2002 281,250 0 0 18,075 General Counsel and Secretary 2001 214,142 182,658 0 22,622 Robert W. Woodbury, Jr. 2003 220,000 192,135 0 0 former Corporate Vice President 2002 219,166 0 0 6,150 and Corporate Controller 2001 210,000 193,200 0 25,153
(1) Perquisites and other personal benefits paid to each Named Executive Officer in each instance aggregated less than the lesser of $50,000 or 10% of the total annual salary and bonus set forth in the columns entitled "Salary" and "Bonus" for each Named Executive Officer, and accordingly, have been omitted from the table as permitted by the rules of the SEC. (2) Figures in this column show the number of options for the Common Stock granted. The Company did not grant any restricted stock awards or stock appreciation rights to any of the Named Executive Officers during the years shown. (3) Represents Company contributions on behalf of the executives under the 401(k) plan and under a non-qualified deferred compensation plan. (4) On March 7, 2003, Mr. Peeler replaced Mr. Lautenbach as Chief Executive Officer of Acterna. Mr. Lautenbach currently serves as Chairman. 6 (5) On March 7, 2003, Mr. Peeler replaced Mr. Lautenbach as Chief Executive Officer of Acterna. OPTION GRANTS IN FISCAL YEAR 2003 The following table sets forth certain information concerning individual grants of stock options to the Named Executive Officers during the fiscal year ended March 31, 2003:
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS FOR OPTION TERM ----------------- --------------- PERCENT OF NUMBER OF TOTAL SECURITIES OPTIONS/ UNDERLYING SARS GRANTED EXERCISE OF APPRECIATION FOR OPTIONS IN FISCAL BASE PRICE EXPIRATION OPTION TERM(2) NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($) ---- ---------- ---- ------ ---- ----- ------ Ned C. Lautenbach --- John R. Peeler --- John D. Ratliff 250,000 2.74% $1.40 4/1/2012 $570,115 $907,795 Richard H. Goshorn 200,000 2.19% $1.44 5/8/2012 $469,123 $746,986 Thomas Turner --- Michael Arbuthnot --- Mark Tremallo --- Robert H. Woodbury, Jr. ---
(1) The options in this table vest annually in four equal installments beginning on the first anniversary date of grant and expire ten years after the date of grant. (2) These columns show the hypothetical value of the options granted at the end of the option terms if the price of the Common Stock were to appreciate annually by 5% and 10%, respectively, based on the grant date value of the Common Stock. 2003 AGGREGATE OPTIONS EXERCISE AND OPTION VALUES AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 AND FY-END OPTION VALUES The following table sets forth certain information regarding stock option exercises by the Named Executive Officers during the fiscal year ended March 31, 2003, and stock options held by the Named Executive Officers at March 31, 2003:
NUMBER OF SECURITIES VALUE OF UNEXERCISED SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT ACQUIRED ON VALUE OPTIONS AT FY-END(#)(1) FY-END($)(2) NAME EXERCISE(#) REALIZED($)(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- -------------- ----------- ------------- ----------- ------------- Ned C. Lautenbach --- --- --- --- --- --- John R. Peeler --- --- 2,090,866 60,000 --- --- John D. Ratliff --- --- 305,000 745,000 --- --- Richard H. Goshorn --- --- 0 200,000 --- --- Thomas Turner --- --- 50,000 150,000 --- --- Michael Arbuthnot --- --- 538,339 49,200 --- --- Mark Tremallo --- --- 259,149 0 --- --- Robert H. Woodbury, Jr. --- --- 694,631 0 --- ---
7 (1) Based on the number of shares subject to these options at fiscal year ended March 31, 2003. (2) Calculated on the basis of the fair market value of the Common Stock as determined by the Board of Directors in accordance with the Amended and Restated 1994 Stock Option and Inventive Plan on March 31, 2003 ($.06), less the applicable option exercise price. (3) Calculated on the basis of the fair market value of the Common Stock on the date of exercise, less the option exercise price. COMPENSATION OF DIRECTORS Each director who is not also an officer or employee of the Company or any subsidiary of the Company or a representative of CD&R Funds V or VI or any successor investment vehicle managed by CD&R will receive (i) an annual retainer of $75,000, which is payable in four quarterly payments of $18,750 at the beginning of each quarter for services to be provided during that quarter and (ii) a fee of $1,500 for each committee meeting attended. EMPLOYMENT AND OTHER AGREEMENTS In May 1998, the Company entered into an employment agreement with Mr. Peeler. The employment agreement provides for an initial term of five years. Pursuant to his employment agreement, Mr. Peeler currently receives an annual base salary of $425,000 and is entitled to participate in the Company's annual incentive compensation program, which provides an annual bonus based on the satisfaction of certain performance targets as determined by the Company's Board of Directors. In addition, Mr. Peeler may participate in all of the Company's pension, deferred compensation and supplemental savings programs, insurance programs, including life, medical, dental and disability, and other special benefit or perquisite programs generally available to the Company's senior executives. The employment agreement further provides for the election of Mr. Peeler to serve as a Director during his employment with the Company. Pursuant to his employment agreement, a substantial majority of the options to purchase shares of Common Stock held by Mr. Peeler prior to the May 1998 recapitalization of the Company became fully vested and exercisable. In addition, the employment agreement restricts the ability of Mr. Peeler to transfer shares of Common Stock beneficially owned by him (other than certain permitted transfers for estate planning purposes and transfers not exceeding in the aggregate 25% of the Common Stock owned, or subject to options held by the executive at the effective time of the May 1998 recapitalization) during his tenure. The employment agreement also provides that, in the event of the Company's termination of Mr. Peeler's employment during the term of the agreement other than for "Cause" (as defined in his employment agreement) or by Mr. Peeler for "Good Reasons" (as defined in this employment agreement), he will be entitled to special termination benefits consisting of (a) continued payments of his average annual base salary and average annual bonus until the second anniversary of the date of termination, (b) continued coverage under the Company's medical insurance plan until his 65th birthday and (c) a pro rata incentive compensation bonus for the portion of the calendar year preceding such termination. The agreement also contains customary indemnification, confidentiality, non-competition and non-solicitation provisions. In January 2002, the Company entered into an employment agreement with Mr. Ratliff. The initial term of the employment agreement was February 1, 2002 and ended on February 1, 2003. Thereafter, the employment agreement is automatically renewed for additional one-year periods, unless Mr. Ratliff or the 8 Company provides 30 days' notice prior to the expiration of any such term that such an extension will not occur. Pursuant to his employment agreement, Mr. Ratliff currently receives an annual base salary of $300,000, is eligible for the Company's bonus plan and is entitled to severance in the event of termination of employment other than for "Cause" (as defined in his employment agreement) of a lump sum payment equal to the product of the monthly base pay and 1.5 times the number of years service with the Company (but not less than 12 months' base pay nor more than 18 months' base pay), plus a payment of one year's bonus at the target amount. In May 2002, the Company entered into an employment agreement with Mr. Goshorn. The initial term of the employment agreement was May 9, 2002 and ended on February 1, 2003. Thereafter, the employment agreement is automatically renewed for additional one-year periods, unless Mr. Goshorn or the Company provides 30 days' notice prior to the expiration of any such term that such an extension will not occur. Pursuant to his employment agreement, Mr. Goshorn currently receives an annual base salary of $285,000, is eligible for the Company's bonus plan and is entitled to severance in the event of termination of employment other than for "Cause" (as defined in his employment agreement) of a lump sum payment equal to the product of the monthly base pay and 1.5 times the number of years of service with the Company (but not less than 12 months' base pay nor more than 18 months' base pay), plus a payment of one year's bonus at the target amount. In January 2002, the Company entered into an employment agreement with Mr. Turner. The initial term of the employment agreement was January 18, 2002 and ended on January 18, 2003. Thereafter, the employment agreement is automatically renewed for additional one-year periods, unless Mr. Turner or the Company provides 30 days' notice prior to the expiration of any such term that such an extension will not occur. Pursuant to his employment agreement, Mr. Turner currently receives an annual base salary of $225,000, is eligible for the Company's bonus plan and is entitled to severance in the event of termination of employment other than for "Cause" (as defined in his employment agreement) of a lump sum payment equal to the product of the monthly base pay and 1.5 times the number of years of service with the Company (but not less than 12 months' base pay nor more than 18 months' base pay), plus a payment of one year's bonus at the target amount. RETENTION AGREEMENTS In December 2002, the Company entered into a Retention Agreement with Mr. Peeler. Pursuant to the Agreement, as modified by the Key Employee Retention and Severance Plan (the "KERP"), which was approved by the United States Bankruptcy Court for the Southern District in New York on July 22, 2003, Mr. Peeler is entitled to receive payments of up to $1 million, as incentive to remain with the Company and assist in the implementation of the Company's restructuring. Mr. Peeler received a payment of $250,000 in December 2002, an additional payment of $250,000 in April 2003, and will receive an additional payment of $500,000 on the earlier to occur of three months after (i) the effective date of the Company's plan of reorganization and (ii) May 6, 2004. In December 2002, the Company entered into a Retention Agreement with Mr. Ratliff. Pursuant to the Agreement, as modified by the KERP, Mr. Ratliff is entitled to receive payments of up to $1 million, as incentive to remain with the Company and assist in the implementation of the Company's restructuring. Mr. Ratliff received a payment of $500,000 in December 2002 and an additional payment of $500,000 in April 2003. Mr. Ratliff will be entitled to retain the April 2003 payment if he remains with the Company until the earlier to occur of (i) the completion of the sale of all or substantially all of the assets of da Vinci and (ii) July 31, 2003. In December 2002, the Company entered into a Retention Agreement with Mr. Goshorn. Pursuant to the Agreement, as modified by the KERP, Mr. Goshorn is entitled to receive payments of up to $300,000, as incentive to remain with the Company and assist in the implementation of the Company's restructuring. Mr. Goshorn received a payment of $75,000 in December 2002, an additional payment of $75,000 in April 2003, and will receive an additional payment of $150,000 on the earlier to occur of (i) one month after the effective date of the Company's plan of reorganization and (ii) May 6, 2004. 9 Mr. Turner is a participant in the Company's KERP. Pursuant to the KERP, Mr. Turner is entitled to receive a payment of $200,000 as incentive to remain with the Company and assist in the implementation of the Company's restructuring. Mr. Turner will receive the payment of $200,000 on the earlier to occur of (i) one month after the effective date of the Company's plan of reorganization and (ii) May 6, 2004. SEPARATION AGREEMENTS The Company entered into a Separation Agreement with Mr. Tremallo dated February 28, 2002, pursuant to which Mr. Tremallo resigned from the Company effective May 31, 2002. The Separation Agreement provides that from the date of Mr. Tremallo's resignation from the Company he will receive continued payments of base salary and average annual bonus for a period of one year, continued benefits under the Company's medical and life insurance plans for a period of one year, and executive outplacement services from the Company. Mr. Tremallo's payments and benefits under the Separation Agreement are reduced by any amounts received by Mr. Tremallo from a new employer or through self-employment. Pursuant to the Separation Agreement, the Company and CD&R Fund V each waived its right to repurchase certain securities and options received by Mr. Tremallo. Any vested options held by Mr. Tremallo on the date of his resignation from the Company may be exercised until the second anniversary of his resignation, and all unvested options held by Mr. Tremallo on the date of his resignation were cancelled and forfeited. The Non-Disclosure, Non-Competition and Non-Solicitation Agreement, dated as of May 21, 1998, between the Company and Mr. Tremallo remains unaffected by the Separation Agreement. Mr. Tremallo and the Company also executed mutual releases in connection with the Separation Agreement. The Company entered into a Separation Agreement with Mr. Woodbury on February 28, 2002, pursuant to which Mr. Woodbury resigned from the Company effective August 31, 2002. The Separation Agreement provides that from the date of Mr. Woodbury's resignation from the Company he will receive continued payments of base salary and average annual bonus for a period of one year, continued benefits under the Company's medical and life insurance plans for a period of one year, and executive outplacement services from the Company. Mr. Woodbury's payments and benefits under the Separation Agreement are reduced by any amounts received by Mr. Woodbury from a new employer or through self-employment. Pursuant to the Separation Agreement, the Company and CD&R Fund V each waived its right to repurchase certain securities and options received by Mr. Woodbury. Any vested options held by Mr. Woodbury on the date of his resignation from the Company may be exercised until the second anniversary of his resignation, and all unvested options held by Mr. Woodbury on the date of his resignation were cancelled and forfeited. The Non-Disclosure, Non-Competition and Non-Solicitation Agreement, dated as of May 21, 1998, between the Company and Mr. Woodbury remains unaffected by the Separation Agreement. Mr. Woodbury and the Company also executed mutual releases in connection with the Separation Agreement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. EQUITY COMPENSATION PLAN INFORMATION The following table sets forth information concerning compensation plans previously approved by security holders and not previously approved by security holders. 10
NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE UNDER EQUITY ISSUED UPON EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS OUTSTANDING OPTIONS OUTSTANDING OPTIONS, (EXCLUDING SECURITIES WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A)) PLAN CATEGORY (A) (B) (C) - ------------- --- --- --- Equity compensation plans approved by security holders............................... 33,555,418 $3.48 22,194,582 Equity compensation plans not approved by security holders............................ --- --- --- ---------- ------ ---------- Total...................................... 33,555,418 $ 3.48 22,194,582 ========== ====== ==========
SECURITY OWNERSHIP OF DIRECTORS, CERTAIN BENEFICIAL OWNERS AND EXECUTIVE OFFICERS The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of June 30, 2003, with respect to: (i) each current director and each Named Executive Officers (as defined below under "Executive Compensation") of the Company; (ii) all current directors and executive officers of the Company as a group; (iii) each current beneficial owner of five percent or more of the Common Stock:
AMOUNT AND NATURE OF PERCENT OF NAME BENEFICIAL OWNERSHIP (1) COMMON STOCK (2) - ---- ------------------------ ---------------- Clayton, Dubilier & Rice Fund V Limited Partnership (3) 123,290,770 64.13% Clayton, Dubilier & Rice Fund VI Limited Partnership (4) 30,625,000 15.93% DIRECTORS AND EXECUTIVE OFFICERS Ned C. Lautenbach 431,681 * John R. Peeler (5) 3,093,043 1.59% John D. Ratliff (6) 507,500 * Richard H. Goshorn (7) 50,000 * Thomas Turner ( 8) 50,000 * Michael Arbuthnot (9) 582,539 * Mark Tremallo (10) 259,149 * Robert H. Woodbury, Jr. (11) 694,631 * Brian H. Rowe (12) 197,475 * Marvin L. Mann (13) 218,619 * William O. McCoy (14) 220,642 * Victor A. Pelson (15) 219,931 * Peter M. Wagner (16) 129,225 * Donald J. Gogel 0 * Richard J. Schnall 0 * All current Directors and Executive Officers as a group (15 persons) (17) (18) 5,700,655 2.91%
The symbol "*" denotes less than 1% of outstanding common stock. 11 (1) Represents shares of common stock beneficially owned on June 30, 2003. Unless otherwise noted, each person has sole voting and investment power with respect to such shares. (2) Based upon 192,257,957 shares of common stock outstanding as of June 30, 2003. Common stock includes all shares of outstanding common stock plus, as required for the purpose of determining beneficial ownership (in accordance with Rule 13d-1 promulgated pursuant to the U.S. Securities Exchange Act of 1934, as amended) all shares of common stock subject to any right of acquisition by such person, through exercise or conversion of any security, within 60 days of June 30, 2003. The percent of common stock owned by Clayton, Dubilier & Rice Fund V Limited Partnership and by Clayton, Dubilier & Rice Fund VI Limited Partnership is calculated based upon the number of shares outstanding and does not include shares issuable upon the exercise of outstanding options. (3) CD&R Associates V Limited Partnership ("Associates V") is the general partner of Clayton, Dubilier & Rice Fund V Limited Partnership ("CD&R Fund V") and has the power to direct CD&R Fund V as to the voting and disposition of shares held by CD&R Fund V. CD&R Investment Associates II, Inc., ("Associates II Inc.") is the managing general partner of Associates V and has the power to direct Associates V as to its direction of CD&R Fund V's voting and disposition of the shares held by CD&R Fund V. No person controls the voting and dispositive power of Associates II Inc., with respect to the shares owned by CD&R Fund V. Each of Associates V and Associates II Inc. expressly disclaims beneficial ownership of the shares owned by CD&R Fund V. The business address of Associates II Inc., Associates V and CD&R Fund V is 1403 Foulk Road, Suite 106, Wilmington, Delaware 19803. (4) CD&R Associates VI Limited Partnership ("Associates VI") is the general partner of Clayton, Dubilier & Rice Fund VI Limited Partnership ("CD&R Fund VI") and has the power to direct CD&R Fund VI as to the voting and disposition of shares held by CD&R Fund VI. CD&R Investment Associates VI, Inc. ("Associates VI Inc.") is the managing general partner of Associates VI and has the power to direct Associates VI as to its direction of CD&R Fund VI's voting and disposition of the shares held by CD&R Fund VI. No person controls the voting and dispositive power of Associates VI Inc. with respect to the shares owned by CD&R Fund VI. Each of Associates VI and Associates VI Inc. expressly disclaims beneficial ownership of the shares owned by CD&R Fund VI. The business address of Associates VI Inc., Associates VI and CD&R Fund VI is 1403 Foulk Road, Suite 106, Wilmington, Delaware 19803. (5) Includes 2,210,866 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (6) Includes 507,500 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (7) Includes 50,000 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (8) Includes 50,000 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (9) Includes 582,539 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (10) Includes 259,149 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (11) Includes 694,631 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. 12 (12) Includes 26,750 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003, and 39,694 deferred shares. (13) Includes 26,750 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. (14) Includes 26,750 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003, and 43,238 deferred shares. (15) Includes 21,750 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003, and 51,575 deferred shares. (16) Includes 21,750 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003.3. (17) Includes 3,434,655 shares of common stock issuable upon exercise of stock options which are exercisable within 60 days of June 30, 2003. Does not include 123,290,770 shares of common stock owned by CD&R Fund V and 30,625,000 shares of common stock owned by CD&R Fund VI. Donald J. Gogel, Ned C. Lautenbach and Richard J. Schnall may be deemed to share beneficial ownership of the shares owned by record by Clayton, Dubilier & Rice funds by virtue of their status as stockholders of Associates II Inc., and Associates VI Inc., the managing general partners of Associates V and Associates VI, respectively, the general partners of CD&R Fund V and CD&R Fund VI, respectively, but each expressly disclaims such beneficial ownership of the shares owned by CD&R Fund V and CD&R Fund VI. The voting stockholders of Associates II Inc. and Associates VI Inc. share investment and voting power with respect to securities owned by CD&R Fund V and CD&R Fund VI, respectively, but no individual controls such investment or voting power. (18) Does not include information regarding the beneficial ownership of Messrs. Tremallo and Woodbury, each of whom were Named Executive Officers (as defined above under "Executive Compensation") of the Company for fiscal year 2003, but who were no longer serving as executive officers of the Company as of March 31, 2003. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. CD&R Fund B and CD&R Fund VI Clayton, Dubilier & Rice Fund V Limited Partnership ("CD&R Fund V"), is a private investment fund managed by Clayton, Dubilier & Rice, Inc. The general partner of CD&R Fund V is CD&R Associates V Limited Partnership ("Associates V"), a Cayman Islands exempted limited partnership. Associates V has three general partners. The managing general partner of Associates V is CD&R Investment Associates II, Inc. ("Associates II Inc."), a Cayman Islands exempted company. The other general partners of Associates V are CD&R Cayman Investment Associates, Inc., a Cayman Islands exempted company and CD&R Investment Associates, Inc., a Delaware corporation. Clayton, Dubilier & Rice Fund VI Limited Partnership ("CD&R Fund VI") is a private investment fund managed by Clayton, Dubilier & Rice, Inc. The general partner of CD&R Fund VI is CD&R Associates VI Limited Partnership ("Associates VI"), a Cayman Islands exempted limited partnership. The general partner of Associates VI is CD&R Investment Associates VI, Inc. ("Associates VI Inc."), a Cayman Islands exempted company. CD&R Clayton, Dubilier & Rice, Inc. ("CD&R") is a private investment firm which is organized as a Delaware corporation. It is the manager of a series of investment funds, including CD&R Fund V and CD&R Fund VI, formed to invest in equity or equity-related securities of entities formed to effect leveraged 13 acquisition transactions and in the equity of corporation where the infusion of capital coupled with the provision of managerial assistance can be expected to generate returns on investments comparable to returns historically achieved in negotiating the transaction in which the funds it manages invest. After the consummation of such transactions, it generally provides management and financial consulting services to the companies in which its investment funds have invested during the period of such fund's investment. Such services include helping such companies to establish effective banking, legal and other business relationships and assisting management in developing and implementing strategies in improving the operational, marketing and financial performance of such companies. Mr. Lautenbach, who is a principal of CD&R, serves as the Company's Chairman. In May 1999, the Company, its wholly-owned subsidiary Acterna LLC, and CD&R entered into a Loanout Agreement, which requires the payment of an annual fee to CD&R for his services rendered to the Company, which has been waived for 2003. Mr. Lautenbach remains an employee of CD&R and is a limited partner of Associates VI and a Director of Associates II Inc. and Associates VI Inc. Mr. Gogel, who is a principal, Chief Executive Officer and a Director of CD&R, serves as one of the company's Directors. Mr. Gogel is also a limited partner of Associates V, President, Chief Executive Officer and Director of Associates II, Inc., a limited partner of Associates VI and President, Chief Executive Officer and Director of Associates VI Inc. Mr. Schnall, who is a principal of CD&R, serves as one of the Company's Directors. Mr. Schnall is also a limited partner of Associates V and Associates VI and a Director of Associates II Inc. and Associates VI Inc. At the time of the May 1998 recapitalization of the Company, the Company entered into a consulting agreement with CD&R that provides, for so long as CD&R Fund V has an investment in the Company and its subsidiaries, for (a) an annual fee (in addition to the $500,000 paid annually to CD&R for Mr. Lautenbach's services) for providing management and financial consulting services to the Company and its subsidiaries and (b) reimbursement of out-of-pocket expenses it incurs after the May 1998 recapitalization. The annual management fee that would have been paid to CD&R pursuant to this consulting agreement for the fiscal year ending March 31, 2003 has been waived. The Company also agreed to indemnify CD&R and certain related parties, subject to certain limitations, against all claims and liabilities arising out of or in connection with the federal securities laws or any other applicable securities or other laws in connection with the May 1998 recapitalization and related transactions and the operation of the business following the May 1998 recapitalization. In addition, in May 1998, the Company entered into a registration rights agreement with CD&R Fund V and certain other shareholders that provides that the parties may require the Company to register their shares of Common Stock under the Securities Act of 1933, as amended. In connection with the Company's merger on May 23, 2000 with Wavetek Wandel Goltermann, Inc., this registration rights agreement was amended to include CD&R Fund VI as a party. On January 15, 2002, Acterna LLC, a wholly-owned subsidiary of the Company, issued and sold at par $75 million aggregate principal amount of 12% Senior Secured Convertible Notes due 2007 (the "Convertible Notes") to CD&R Fund VI. Interest on the Convertible Notes is payable semi-annually in arrears on each March 31st and September 30th, with interest payments commencing on March 31, 2002. At the option of Acterna LLC, interest is payable in cash or in-kind by the issuance of additional Convertible Notes. Due to limitations imposed by the Company's Senior Secured Credit Facility, Acterna LLC expects to pay interest on the Convertible Notes in-kind by issuing additional Convertible Notes. The Convertible Notes are secured by a second lien on all of the assets of the Company and its subsidiaries that secure the Senior Secured Credit Facility, and are guaranteed by the Company and its domestic subsidiaries. In addition to the annual management fees described above, in fiscal year 2002, the Company paid CD&R a $2.3 million financing fee in connection with the issuance of the Senior Secured Convertible Notes. On June 24, 2002, Acterna LLC, a wholly owned subsidiary of the Company, along with CD&R VI (Barbados), Ltd., ("CD&R Barbados") commenced cash tender offers, as amended, for up to $155 million, on a combined basis, in principal amount of its outstanding 9.75% Senior Subordinated Notes due 2008. The tender offers provided for cash consideration of $220 in exchange for each $1,000 principal amount of notes tendered, and all accrued interest due thereon. These combined tender offers expired on August 12, 2002, and resulted in the purchase and retirement of notes having an aggregate principal value of $106.3 14 million by Acterna LLC and the purchase of notes having an aggregate principal value of $43 million by CD&R Barbados. The Company recorded an after-tax gain of $58.7 million during fiscal 2003 related to its portion of the notes tendered. In connection with these combined tender offers, Acterna LLC granted CD&R Barbados the right (which CD&R Barbados agreed to exercise only at the request of the administration agent under the Senior Secured Credit Facility) to invest all future cash interest received, on an after tax basis, on all the Senior Subordinated Notes held by CD&R Barbados in new senior secured convertible notes of Acterna LLC. The new notes that will be issued upon such reinvestment will have terms substantially similar to the 12% Senior Secured Convertible Notes due 2007 (the "Convertible Notes") issued to CDR Fund VI in January 2002 except that the interest rate and conversion rate applicable to any series of new notes will be determined at the time of issuance. During December 2002, in connection with an interest payment on the senior subordinated notes by Acterna, LLC, CD&R Barbados exercised this right to invest $2.8 million of its after-tax interest proceeds in newly issued senior secured convertible notes of Acterna LLC due 2007. Interest on these notes is to be paid semi-annually, in arrears, at a rate of 12% per annum. These notes have a conversion rate of 2,273 shares of common stock per $1,000 of principal. CDR Barbados is a Barbados company, all of the capital stock of which is owned by CD&R Fund VI. At the option of Acterna LLC, interest is payable in cash or in-kind by the issuance of additional Convertible Notes. Due to limitations imposed by the Company's Senior Secured Credit Facility, Acterna LLC expects to pay interest on the Convertible Notes in-kind by issuing additional Convertible Notes. The Convertible Notes are secured by a second lien on all of the assets of the Company and its subsidiaries that secure the Senior Secured Credit Facility, and are guaranteed by the Company and its domestic subsidiaries. CD&R Barbados is a Barbados company holding and International Business Company license. All of the capital stock of CD&R Barbados is owned by CD&R Fund VI. Mr. Schnall, who is a principal of CD&R and one of the Company's Directors, also serves as a director of CD&R Barbados. LOANS TO DIRECTORS AND OFFICERS On April 1, 2001, the Company loaned John R. Peeler, President and Chief Executive Officer of the Company, $1,160,000 for the purpose of paying taxes associated with the exercise of stock options. This loan bears interest at a rate of 8.5% per annum. As of June 30, 2003, $1,184,650 was outstanding on the loan, including principal and accrued interest. On May 1, 2002, the Company loaned Richard Goshorn $60,000 in connection with the hiring of Mr. Goshorn. This loan bears interest at a rate of 7% per annum. On each anniversary of the loan, $20,000 of the loan and all accrued interest during such period are forgiven, provided that Mr. Goshorn continues to be employed by the Company. The entire remaining amount outstanding on the loan and all accrued interest shall be forgiven if Mr. Goshorn is terminated without cause. As of June 30, 2003, the principal amount outstanding on the loan was $40,000, plus accrued interest from May 1, 2003. The Company believes that the terms of the loans described above were reasonable and competitive. ITEM 16. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K. (c) Exhibits Item 16(c) is amended to add the exhibits listed below. 15 EXHIBIT NO. EXHIBIT DESCRIPTION --- ------------------- 10.28 Employment Agreement, entered into on January 30, 2002, by and between Acterna Corporation and John Ratliff. 10.29 Employment Agreement, entered into on May 9, 2002, by and between Acterna Corporation and Richard H. Goshorn. 10.30 Employment Agreement, entered into on January 18, 2002, by and between Acterna Corporation and Thomas Turner. 10.31 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and John R. Peeler. 10.32 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and John Ratliff. 10.33 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and Richard H. Goshorn. 16 SIGNATURES July 29, 2003 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACTERNA CORPORATION By: /s/ JOHN R. PEELER ------------------------------------- CHIEF EXECUTIVE OFFICER By: /s/ JOHN D. RATLIFF ------------------------------------- CORPORATE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Name Title Date ---- ----- ---- /s/ NED C. LAUTENBACH Chairman of the Board and Director July 29, 2003 - ------------------------------- NED C. LAUTENBACH /s/ JOHN R. PEELER Chief Executive Officer, President and Director July 29, 2003 - ------------------------------- JOHN R. PEELER /s/ JOHN D. RATLIFF Corporate Vice President, Chief Financial Officer July 29, 2003 - ------------------------------- JOHN D. RATLIFF /s/ GRANT A. BARBER Vice President Finance, Corporate Controller July 29, 2003 - ------------------------------- GRANT A. BARBER /s/ DONALD GOGEL Director July 29, 2003 - ------------------------------- DONALD GOGEL /s/ MARVIN L. MANN Director July 29, 2003 - ------------------------------- MARVIN L. MANN /s/ WILLIAM O. MCCOY Director July 29, 2003 - ------------------------------- WILLIAM O. MCCOY /s/ VICTOR A. PELSON Director July 29, 2003 - ------------------------------- VICTOR A. PELSON /s/ BRIAN H. ROWE Director July 29, 2003 - ------------------------------- BRIAN H. ROWE /s/ RICAHRD J. SCHNALL Director July 29, 2003 - ------------------------------- RICAHRD J. SCHNALL /s/ PETER M. WAGNER Director July 29, 2003 - ------------------------------- PETER M. WAGNER
17 CERTIFICATIONS I, JOHN R. PEELER, CERTIFY THAT: 1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Acterna Corporation; and 2. Based on my knowledge, this amendment to the annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this amendment to the annual report. Date: July 29, 2003 /s/ John R. Peeler --------------------------------- John R. Peeler President and Chief Executive Officer 18 I, JOHN D. RATLIFF, CERTIFY THAT: 1. I have reviewed this Amendment No. 1 Annual Report on Form 10-K of Acterna Corporation; and 2. Based on my knowledge, this amendment to the annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this amendment to the annual report. Date: July 29, 2003 /s/ John D. Ratliff --------------------------------- John D. Ratliff Corporate Vice President and Chief Financial Officer 19 EXHIBIT INDEX EXHIBIT NO. EXHIBIT DESCRIPTION --- ------------------- 10.28 Employment Agreement, entered into on January 30, 2002, by and between Acterna Corporation and John Ratliff. 10.29 Employment Agreement, entered into on May 9, 2002, by and between Acterna Corporation and Richard H. Goshorn. 10.30 Employment Agreement, entered into on January 18, 2002, by and between Acterna Corporation and Thomas Turner. 10.31 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and John R. Peeler. 10.32 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and John Ratliff. 10.33 Retention Agreement, entered into on December 12, 2002, by and between Acterna Corporation and Richard H. Goshorn. 20 EX-10 3 jd7-22_ratliff.txt 10.28 Exhibit 10.28 EMPLOYMENT AGREEMENT AGREEMENT, dated as of January 30, 2002, by and between Acterna Corporation or an affiliate ("Company"), and John Ratliff ("Employee"). WHEREAS, Employee has been employed in a critical managerial position with Company; and WHEREAS, Company and Employee wish to set forth the terms of the Employee's continued employment by Company; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration including but not limited to options to purchase common stock of the Company being granted to Employee in conjunction with this Agreement, the parties hereto agree as follows: 1. Employment. Company hereby employs Employee, and Employee agrees to serve as an Employee of Company, on the terms and conditions set forth in this Agreement. 2. Period of Employment. The "Period of Employment" shall be the period commencing on February 1, 2002 and ending on February 1, 2003; provided, however, that commencing on February 1, 2003 and on the first day of February of each year thereafter, the term of the Agreement shall automatically be extended for one additional year unless at least 30 calendar days prior to any such date, Company or Employee shall have given notice in accordance with Section 11 hereof that such extension shall not occur. 1 3. Duties During the Period of Employment. During the Period of Employment, Employee shall serve as Corporate Vice President and CFO of the Company, or such other position as shall be assigned to Employee by the Board of Directors, and shall have such duties and responsibilities as are assigned to Employee by the Board of Directors of the Company commensurate with such position. Employee shall devote Employee's full business time, attention and efforts to the affairs of the Company during the Period of Employment, provided, however, that Employee may engage in other activities, such as activities involving professional, charitable, educational, religious and similar types of organizations, speaking engagements, membership on the board of directors of such other organizations as the Company may from time to time agree to, and similar types of activities, to the extent that such other activities, either individually or collectively, do not, in the sole and reasonable discretion of the Company, inhibit or prohibit the performance of Employee's duties under this Agreement, or conflict in any material way with the business of the Company and its affiliates. 4. Current Cash Compensation. As compensation for Employee's services hereunder, during the Period of Employment Employee will be entitled to receive an annual base salary at the rate of $300,000. Employee shall also be entitled to participate in Company's annual bonus plan, under which he or she shall have an annual target bonus opportunity of 100% of Employee's annual rate of base salary as in effect at the beginning of the fiscal year for which the bonus is payable. The Company shall review Employee's annual rate of base salary and target annual bonus opportunity at least annually and, in light of such review, may, in the discretion of the Board of Directors of the Company, (which Board may, for these purposes and all other purposes of this Agreement, delegate to officers of the Company its 2 duties and discretion hereunder) increase either or both such annual base salary or target opportunity. Any such review of Employee's annual compensation shall take into account any change in Employee's responsibilities, increases in the cost of living, performance by the Employee, and other factors that the Board of Directors deems pertinent. 5. Other Employee Benefits. (a) Vacation and Sick Leave. Employee shall be entitled to reasonable paid annual vacation periods and sick leave in accordance with Company's applicable vacation and sick leave policies prevailing from time to time. (b) Regular Reimbursed Business Expenses. Company shall reimburse Employee for all expenses and disbursements reasonably incurred by Employee in the performance of Employee's duties during the Period of Employment, and provide such other facilities or services as Company and Employee may, from time to time, agree are appropriate, all in accordance with Company's established policies. (c) Employee Benefit Plans. In addition to the cash compensation provided for in Section 4 hereof, Employee, subject to meeting eligibility provisions and to the provisions of this Agreement, shall be entitled to participate in Company's employee benefit plans, as presently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. (d) Executive Compensation Plans. In addition to the cash compensation provided for in Section 4 hereof and the employee benefits provided for in paragraph (c) of this Section, Employee, subject to meeting eligibility provisions and to the provisions 3 of this Agreement, shall be entitled to participate in Company's executive compensation plans, as currently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. (e) Additional Benefits. In addition to the cash compensation provided for in Section 4 hereof and participation in the employee benefit and executive compensation plans provided in paragraphs (c) and (d) of this Section, Employee shall be entitled to the additional benefits set forth in Exhibit A for the periods and on the terms set forth in such Exhibit A.] 6. Termination. (a) Termination by Company Without Cause. If Company should terminate the Period of Employment without Cause as defined below, in addition to any other compensation and benefits payable as provided for hereunder, Company shall pay to Employee on the termination date a lump sum amount equal to (i) all accrued but unpaid base salary as of the termination date, plus (ii) the pro rata amount of Employee's annual bonus (if any) for the portion of the fiscal year preceding the termination date that would have been payable to Employee if Employee had been employed for the entire fiscal year, determined on the basis of actual performance achieved by the Company through the termination date and the performance objectives established for such fiscal year, pro rated to reflect the portion of the fiscal year preceding the termination date, plus (iii) a payment of Employee's annual base pay, at the annual rate in effect on the termination date for a period of months equal to 1.5 times the number of 4 years of service with the Company and its affiliates completed by Employee prior to Employee's termination; provided that the lump sum payment subject to this subsection (iii) shall not be less than twelve (12) month's base pay and shall not be more than eighteen (18) month's base pay, plus (iv) a payment equal to one years' bonus at target; provided, however, that such payments enumerated in subsections (ii) through (iv) above are conditioned on Employee's execution of Company's Severance and General Release Agreement in a form acceptable to Company and continued compliance with the other provisions of this Agreement. "Cause" shall mean the willful and continued failure by Employee to use reasonable effort to substantially perform Employee's duties with Company (other than any such failure resulting from incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Employee by Company which specifically identifies the manner in which Company believes Employee has not substantially performed his duties; conviction of, or plea of nolo contendere to, a felony; habitual abuse of drugs or alcohol in the discretion of the Board of Directors; fraud, material dishonesty or gross misconduct in connection with the business of Company. (b) Termination by Company for Cause. If Company shall terminate the Period of Employment for Cause, Employee will be entitled only to be paid that portion of the base annual salary due and not yet paid to the Employee for the month in which the termination is made. (c) Voluntary Termination by Employee. Employee shall have the right, upon 60 days' prior written notice given to Company, to terminate the Period of Employment. If Employee should terminate the Period of 5 Employment, Employee will be entitled only to be paid that portion of the base annual salary otherwise payable to Employee under paragraph (a) (i) of Section 6 through the end of the month in which the Period of Employment is terminated. No additional amounts shall be payable to Employee (except as and to the extent otherwise required at law or under the express terms and conditions of any employee benefit plan in which Employee participates). (7) Confidential Information. Employee agrees to keep secret and retain in the strictest confidence all confidential matters which relate to Company or any affiliate of Company, including, without limitation, customer lists, client lists, trade secrets, pricing policies and other business affairs of Company and any affiliate of Company learned by Employee from Company or any such affiliate or otherwise before or after the date of this Agreement, and not to disclose any such confidential matter to anyone outside Company or any of its affiliates, whether during or after Employee's period of service with Company, except as may be required by a court of law, by any governmental agency having supervisory authority over the business of Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him or her to divulge, disclose or make accessible such information. Employee agrees to give Company advance written notice of any disclosure pursuant to the preceding sentence and to cooperate with any efforts by Company to limit the extent of such disclosure. Upon request by Company, Employee agrees to deliver promptly to Company upon termination of Employee's services for Company, or at any time thereafter as Company may request, all Company or affiliate memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents 6 (and all copies thereof) relating to Company's or any affiliate's business and all property of Company or any affiliate associated therewith, which Employee may then possess or have under Employee's control, other than personal notes, diaries, rolodexes and correspondence. (8) Non-competition and Non-solicitation. (a) Without the consent in writing of the Board of Directors of the Company, during the period of Employee's employment with the Company and upon termination of Employee's employment for any reason whatsoever, Employee will not for a period of a minimum of twelve (12) months thereafter and a maximum of eighteen (18) months thereafter (the restrictive period being commensurate with the number of months of severance being paid to Employee pursuant to Section 6 (a) (iii)) (i) engage in, or carry on, directly or indirectly, either for himself or as a member of a partnership or as a stockholder, investor, officer or director of a corporation or as an employee, agent, associate, adviser or consultant of any person, partnership or corporation, any business in competition with the business carried on by Company or any of its affiliates or (ii) employ or seek to employ any person then employed by Company or any of its affiliates. Notwithstanding the preceding sentence, Employee shall not be prohibited from owning less than one percent (1%) of any publicly traded corporation (whether or not such corporation is in competition with Company or its affiliates). The competitive restrictions imposed upon Employee by this Section 8 shall be waived if, following a Change in Control of Employer, Employee is terminated by the successor employer other than for Cause. For purpose of this Agreement, a Change in Control shall have 7 occurred when an unaffiliated entity shall have acquired greater than a 50% interest in Employer. (b) During the period of Employee's employment with the Company and thereafter during the restrictive period applicable in Section 8 (a) above, Employee shall not directly or indirectly, for his or her own account or for the account of any other person anywhere in the world, solicit or otherwise attempt to establish any business relationship of a nature that is competitive with the business or relationship of the Company or any of its affiliates with any person throughout the world which is or was a customer, client or distributor of the Company or any of its affiliates at any time during which Employee was employed by the Company (in the case of any such activity during such time) or during the twelve-month period preceding the date of termination (in the case of any activity after the date of termination), other than any such solicitation on behalf of the Company or any of its affiliates during Employee's employment with the Company. It is the intention of the parties hereto that the restrictions contained in this Section be enforceable to the fullest extent permitted by applicable law. Therefore, to the extent any court of competent jurisdiction shall determine that any portion of the foregoing restrictions is excessive, such provision shall not be entirely void, but rather shall be limited or revised only to the extent necessary to make it enforceable. Employee confirms that all restrictions in this Section are reasonable and valid and hereby waives all defenses to the strict enforcement thereof by Company. 9. Remedy. Should Employee engage in or perform, either directly or indirectly, any of the acts prohibited by Sections 7 and 8 hereof, it is agreed that Company shall be entitled to full injunctive relief, to be issued by any competent court of equity, enjoining and restraining Employee and each and every other person, firm organization, association, or 8 corporation concerned therein, from the continuance of such violative acts. The foregoing remedy available to Company shall not be deemed to limit or prevent the exercise by Company of any or all further rights and remedies which may be available to Company hereunder or at law or in equity. 10. Governing Law. This Agreement is governed by and is to be construed and enforced in accordance with the laws of the State of Maryland, without reference to rules relating to conflicts of law. If under such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto or, if that is not possible, to be omitted from this Agreement; the invalidity of any such portion shall not affect the force, effect and validity of the remaining portion hereof. 11. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person, or five (5) days after deposit thereof in the U.S. mails, postage prepaid, for delivery as registered or certified mail, addressed to the respective party at the address set forth below or to such other address as may hereafter be designated by like notice; provided that no such notice shall be required for the headquarters move anticipated in June 2002. Unless otherwise notified as set forth above, notice shall be sent to each party as follows: (a) Employee, to: To the Employee at his principal place of business (b) Company, to: Acterna Corporation 20410 Observation Drive Germantown, Maryland 20876 Attention: General Counsel In lieu of personal notice or notice by deposit in the U.S. mail, a party may give notice by confirmed telegram, telex or fax, which shall be effective upon receipt. 9 12. Miscellaneous. (a) Entire Agreement. This Agreement constitutes the entire understanding between Company and Employee relating to employment of Employee by Company and supersedes and cancels all prior written and oral agreements and understandings with respect to the subject matter of this Agreement. This Agreement may be amended but only by a subsequent written agreement of the parties. This Agreement shall be binding upon and shall inure to the benefit of Employee, Employee's heirs, executors, administrators and beneficiaries, and Company and its successors. Withholding Taxes. All amounts payable to Employee under this Agreement shall be subject to applicable withholding of income, employment and other taxes. 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the year and day first above written. ACTERNA CORPORATION By: /s/ John R. Peeler ------------------------------------- John R. Peeler President /s/ John Ratliff ------------------------------------- John Ratliff 11 EX-10 4 jd7-22_goshorn.txt 10.29 Exhibit 10.29 EMPLOYMENT AGREEMENT AGREEMENT, dated as of May 9, 2002, by and between Acterna Corporation or an affiliate ("Company"), and Rick Goshorn ("Employee"). WHEREAS, Employee has been employed in a critical managerial position with Company; and WHEREAS, Company and Employee wish to set forth the terms of the Employee's continued employment by Company; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration including but not limited to options to purchase common stock of the Company being granted to Employee in conjunction with this Agreement, the parties hereto agree as follows: 1. Employment. Company hereby employs Employee, and Employee agrees to serve as an Employee of Company, on the terms and conditions set forth in this Agreement. 2. Period of Employment. The "Period of Employment" shall be the period commencing on May 9, 2002 and ending on February 1, 2003; provided, however, that commencing on February 1, 2003 and on the first day of February of each year thereafter, the term of the Agreement shall automatically be extended for one additional year unless at least 30 calendar days prior to any such date, Company or Employee shall have given notice in accordance with Section 11 hereof that such extension shall not occur. 1 3. Duties During the Period of Employment. During the Period of Employment, Employee shall serve as General Counsel of the Company, or such other position as shall be assigned to Employee by the Board of Directors, and shall have such duties and responsibilities as are assigned to Employee by the Board of Directors of the Company commensurate with such position. Employee shall devote Employee's full business time, attention and efforts to the affairs of the Company during the Period of Employment, provided, however, that Employee may engage in other activities, such as activities involving professional, charitable, educational, religious and similar types of organizations, speaking engagements, membership on the board of directors of such other organizations as the Company may from time to time agree to, and similar types of activities, to the extent that such other activities, either individually or collectively, do not, in the sole and reasonable discretion of the Company, inhibit or prohibit the performance of Employee's duties under this Agreement, or conflict in any material way with the business of the Company and its affiliates. 4. Current Cash Compensation As compensation for Employee's services hereunder, during the Period of Employment Employee will be entitled to receive an annual base salary at the rate of $285,000. Employee shall also be entitled to participate in Company's annual bonus plan, under which he or she shall have an annual target bonus opportunity of 50% of Employee's annual rate of base salary as in effect at the beginning of the fiscal year for which the bonus is payable. The Company shall review Employee's annual rate of base salary and target annual bonus opportunity at least annually and, in light of such review, may, in the discretion of the Board of Directors of the Company, (which Board may, for these purposes and all other purposes of this Agreement, delegate to officers of the Company its 2 duties and discretion hereunder) increase either or both such annual base salary or target opportunity. Any such review of Employee's annual compensation shall take into account any change in Employee's responsibilities, increases in the cost of living, performance by the Employee, and other factors that the Board of Directors deems pertinent. 5. Other Employee Benefits. (a) Vacation and Sick Leave. Employee shall be entitled to reasonable paid annual vacation periods and sick leave in accordance with Company's applicable vacation and sick leave policies prevailing from time to time. (b) Regular Reimbursed Business Expenses. Company shall reimburse Employee for all expenses and disbursements reasonably incurred by Employee in the performance of Employee's duties during the Period of Employment, and provide such other facilities or services as Company and Employee may, from time to time, agree are appropriate, all in accordance with Company's established policies. (c) Employee Benefit Plans. In addition to the cash compensation provided for in Section 4 hereof, Employee, subject to meeting eligibility provisions and to the provisions of this Agreement, shall be entitled to participate in Company's employee benefit plans, as presently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. (d) Executive Compensation Plans. In addition to the cash compensation provided for in Section 4 hereof and the employee benefits provided for in paragraph (c) of this Section, Employee, subject to meeting eligibility 3 provisions and to the provisions of this Agreement, shall be entitled to participate in Company's executive compensation plans, as currently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. (e) Additional Benefits. In addition to the cash compensation provided for in Section 4 hereof and participation in the employee benefit and executive compensation plans provided in paragraphs (c) and (d) of this Section, Employee shall be entitled to the additional benefits set forth in Exhibit A for the periods and on the terms set forth in such Exhibit A. 6. Termination. (a) Termination by Company Without Cause. If Company should terminate the Period of Employment without Cause as defined below, in addition to any other compensation and benefits payable as provided for hereunder, Company shall pay to Employee on the termination date a lump sum amount equal to (i) all accrued but unpaid base salary as of the termination date, plus (ii) the pro rata amount of Employee's annual bonus (if any) for the portion of the fiscal year preceding the termination date that would have been payable to Employee if Employee had been employed for the entire fiscal year, determined on the basis of actual performance achieved by the Company through the termination date and the performance objectives established for such fiscal year, pro rated to reflect the portion of the fiscal year preceding the termination date, plus (iii) a payment of Employee's annual base pay, at the annual rate in effect on the termination date for a period of months equal to 1.5 times the number of years of 4 service with the Company and its affiliates completed by Employee prior to Employee's termination; provided that the lump sum payment subject to this subsection (iii) shall not be less than twelve (12) month's base pay and shall not be more than eighteen (18) month's base pay, plus (iv) a payment equal to one years' bonus at target; provided, however, that such payments enumerated in subsections (ii) through (iv) above are conditioned on Employee's execution of Company's Severance and General Release Agreement in a form acceptable to Company and continued compliance with the other provisions of this Agreement. "Cause" shall mean the willful and continued failure by Employee to use reasonable effort to substantially perform Employee's duties with Company (other than any such failure resulting from incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Employee by Company which specifically identifies the manner in which Company believes Employee has not substantially performed his duties; conviction of, or plea of nolo contendere to, a felony; habitual abuse of drugs or alcohol in the discretion of the Board of Directors; fraud, material dishonesty or gross misconduct in connection with the business of Company. (b) Termination by Company for Cause. If Company shall terminate the Period of Employment for Cause, Employee will be entitled only to be paid that portion of the base annual salary due and not yet paid to the Employee for the month in which the termination is made. (c) Voluntary Termination by Employee. Employee shall have the right, upon 60 days' prior written notice given to Company, to terminate the Period of Employment. If Employee should terminate the Period of 5 Employment, Employee will be entitled only to be paid that portion of the base annual salary otherwise payable to Employee under paragraph (a) (i) of Section 6 through the end of the month in which the Period of Employment is terminated. No additional amounts shall be payable to Employee (except as and to the extent otherwise required at law or under the express terms and conditions of any employee benefit plan in which Employee participates). (7) Confidential Information. Employee agrees to keep secret and retain in the strictest confidence all confidential matters which relate to Company or any affiliate of Company, including, without limitation, customer lists, client lists, trade secrets, pricing policies and other business affairs of Company and any affiliate of Company learned by Employee from Company or any such affiliate or otherwise before or after the date of this Agreement, and not to disclose any such confidential matter to anyone outside Company or any of its affiliates, whether during or after Employee's period of service with Company, except as may be required by a court of law, by any governmental agency having supervisory authority over the business of Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him or her to divulge, disclose or make accessible such information. Employee agrees to give Company advance written notice of any disclosure pursuant to the preceding sentence and to cooperate with any efforts by Company to limit the extent of such disclosure. Upon request by Company, Employee agrees to deliver promptly to Company upon termination of Employee's services for Company, or at any time thereafter as Company may request, all Company or affiliate memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents 6 (and all copies thereof) relating to Company's or any affiliate's business and all property of Company or any affiliate associated therewith, which Employee may then possess or have under Employee's control, other than personal notes, diaries, rolodexes and correspondence. (8) Non-competition and Non-solicitation. (a) Without the consent in writing of the Board of Directors of the Company, during the period of Employee's employment with the Company and upon termination of Employee's employment for any reason whatsoever, Employee will not for a period of a minimum of twelve (12) months thereafter and a maximum of eighteen (18) months thereafter (the restrictive period being commensurate with the number of months of severance being paid to Employee pursuant to Section 6 (a) (iii)) (i) engage in, or carry on, directly or indirectly, either for himself or as a member of a partnership or as a stockholder, investor, officer or director of a corporation or as an employee, agent, associate, adviser or consultant of any person, partnership or corporation, any business in competition with the business carried on by Company or any of its affiliates or (ii) employ or seek to employ any person then employed by Company or any of its affiliates. Notwithstanding the preceding sentence, Employee shall not be prohibited from owning less than one percent (1%) of any publicly traded corporation (whether or not such corporation is in competition with Company or its affiliates). The competitive restrictions imposed upon Employee by this Section 8 shall be waived if, following a Change in Control of Employer, Employee is terminated by the successor employer other than for Cause. For purpose of this Agreement, a Change in Control shall have occurred when an unaffiliated entity shall have acquired greater than a 50% interest in Employer. 7 (b) During the period of Employee's employment with the Company and thereafter during the restrictive period applicable in Section 8 (a) above, Employee shall not directly or indirectly, for his or her own account or for the account of any other person anywhere in the world, solicit or otherwise attempt to establish any business relationship of a nature that is competitive with the business or relationship of the Company or any of its affiliates with any person throughout the world which is or was a customer, client or distributor of the Company or any of its affiliates at any time during which Employee was employed by the Company (in the case of any such activity during such time) or during the twelve-month period preceding the date of termination (in the case of any activity after the date of termination), other than any such solicitation on behalf of the Company or any of its affiliates during Employee's employment with the Company. It is the intention of the parties hereto that the restrictions contained in this Section be enforceable to the fullest extent permitted by applicable law. Therefore, to the extent any court of competent jurisdiction shall determine that any portion of the foregoing restrictions is excessive, such provision shall not be entirely void, but rather shall be limited or revised only to the extent necessary to make it enforceable. Employee confirms that all restrictions in this Section are reasonable and valid and hereby waives all defenses to the strict enforcement thereof by Company. 9. Remedy. Should Employee engage in or perform, either directly or indirectly, any of the acts prohibited by Sections 7 and 8 hereof, it is agreed that Company shall be entitled to full injunctive relief, to be 8 issued by any competent court of equity, enjoining and restraining Employee and each and every other person, firm organization, association, or corporation concerned therein, from the continuance of such violative acts. The foregoing remedy available to Company shall not be deemed to limit or prevent the exercise by Company of any or all further rights and remedies which may be available to Company hereunder or at law or in equity. 10. Governing Law. This Agreement is governed by and is to be construed and enforced in accordance with the laws of the State of Maryland, without reference to rules relating to conflicts of law. If under such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto or, if that is not possible, to be omitted from this Agreement; the invalidity of any such portion shall not affect the force, effect and validity of the remaining portion hereof. 11. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person, or five (5) days after deposit thereof in the U.S. mails, postage prepaid, for delivery as registered or certified mail, addressed to the respective party at the address set forth below or to such other address as may hereafter be designated by like notice; provided that no such notice shall be required for the headquarters move anticipated in June 2002. Unless otherwise notified as set forth above, notice shall be sent to each party as follows: (a) Employee, to: To the Employee at his principle place of business (b) Company, to: Acterna Corporation 20410 Observation Drive Germantown, Maryland 20876 Attention: Corporate Vice President of Human Resources In lieu of personal notice or notice by deposit in the U.S. mail, a party may give notice by confirmed telegram, telex or fax, which shall be effective upon receipt. 9 12. Miscellaneous. (a) Entire Agreement. This Agreement constitutes the entire understanding between Company and Employee relating to employment of Employee by Company and supersedes and cancels all prior written and oral agreements and understandings with respect to the subject matter of this Agreement. This Agreement may be amended but only by a subsequent written agreement of the parties. This Agreement shall be binding upon and shall inure to the benefit of Employee, Employee's heirs, executors, administrators and beneficiaries, and Company and its successors. Withholding Taxes. All amounts payable to Employee under this Agreement shall be subject to applicable withholding of income, employment and other taxes. 10 The parties hereto have executed this Agreement as of the year and day first above written. ACTERNA CORPORATION By: /s/ John R. Peeler -------------------------------- John R. Peeler President /s/ Rick Goshorn -------------------------------- Rick Goshorn General Counsel 11 EX-10 5 mv7-28_turner.txt 10.30 Exhibit 10.30 EMPLOYMENT AND NON-COMPETITION AGREEMENT AGREEMENT, dated as of January 18, 2002 by and between Itronix Corporation or an affiliate ("Company"), and Thomas Turner ("Employee"). WHEREAS, Employee has a desire to join the Company in a managerial position; and WHEREAS, Company and Employee wish to set forth the terms of the Employee's employment by Company; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration including but not limited to options to purchase common stock of the Company being granted to Employee in conjunction with this Agreement, the parties hereto agree as follows: 1. Employment. Company hereby employs Employee, and Employee agrees to serve as an employee of Company, on the terms and conditions set forth in this Agreement. 2. Period of Employment. The "Period of Employment" shall be the period commencing on January 18, 2002 and ending on January 18, 2003; provided, however, that commencing on January 18, 2003 and on the 18th day of January of each year thereafter, the term of the Agreement shall automatically be extended for one additional year unless at least 30 calendar days prior to any such date, Company or Employee shall have given notice in accordance with Section 11 hereof that such extension shall not occur. 3. Duties During the Period of Employment. During the Period of Employment, Employee shall serve as President and CEO of the Company, or such other position as shall be assigned to Employee by the Board of Directors, and shall have such duties and responsibilities as are assigned to Employee by the Board of Directors of the Company commensurate with such position. Employee shall devote Employee's full business time, attention and efforts to the affairs of the Company during the Period of Employment, provided, however, that Employee may engage in other activities, such as activities involving professional, charitable, educational, religious and similar types of organizations, speaking engagements, membership on the board of directors of such other organizations as the Company may from time to time agree to, and similar types of activities, to the extent that such other activities, either individually or collectively, do not, in the sole and reasonable discretion of the Company, inhibit or prohibit the performance of Employee's duties under this Agreement, or conflict in any material way with the business of the Company and its affiliates. 4. Current Cash Compensation. As compensation for Employee's services hereunder, during the Period of Employment Employee will be entitled to receive an annual base salary at the rate of $225,000. Employee shall also be entitled to participate in Company's annual bonus plan, under which he or she shall have an annual target bonus opportunity of 100% of Employee's annual rate of base salary as in effect at the beginning of the fiscal year for which the bonus is payable. During the first year of employment Employee shall receive a bonus of no less than $150,000. The Company shall review Employee's annual rate of base salary and target annual bonus opportunity at least annually and, in light of such review, may, in the discretion of the Board of Directors of the Company, (which Board may, for these purposes and all other purposes of this Agreement, delegate to officers of the Company its duties and discretion hereunder) increase either or both such annual base salary or target opportunity. Any such review of Employee's annual compensation shall take into account any change in Employee's responsibilities, increases in the cost of living, performance by the Employee, and other factors that the Board of Directors deems pertinent. 5. Other Employee Benefits. (a) Vacation and Sick Leave. Employee shall be entitled to reasonable paid annual vacation periods and sick leave in accordance with Company's applicable vacation and sick leave policies prevailing from time to time. (b) Regular Reimbursed Business Expenses. Company shall reimburse Employee for all expenses and disbursements reasonably incurred by Employee in the performance of Employee's duties during the Period of Employment, and provide such other facilities or services as Company and Employee may, from time to time, agree are appropriate, all in accordance with Company's established policies. (c) Employee Benefit Plans. In addition to the cash compensation provided for in Section 4 hereof, Employee, subject to meeting eligibility provisions and to the provisions of this Agreement, shall be entitled to participate in Company's employee benefit plans, as presently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. (d) Executive Compensation Plans. In addition to the cash compensation provided for in Section 4 hereof and the employee benefits provided for in paragraph (c) of this Section, Employee, subject to meeting eligibility provisions and to the provisions of this Agreement, shall be entitled to participate in Company's executive compensation plans, as currently in effect or as they may be modified, altered, curtailed or supplemented by Company from time to time. 6. Termination. (a) Termination by Company Without Cause. If Company should terminate the Period of Employment without Cause as defined below, in addition to any other compensation and benefits payable as provided for hereunder, Company shall pay to Employee on the termination date a lump sum amount equal to (i) all accrued but unpaid base salary as of the termination date, plus (ii) the pro rata amount 2 of Employee's annual bonus (if any) for the portion of the fiscal year preceding the termination date that would have been payable to Employee if Employee had been employed for the entire fiscal year, determined on the basis of actual performance achieved by the Company through the termination date and the performance objectives established for such fiscal year, pro rated to reflect the portion of the fiscal year preceding the termination date, plus (iii) a payment of Employee's base pay, at the annual rate in effect on the termination date for a period of months equal to 1.5 times the number of years of service with the Company and its affiliates completed by Employee prior to Employee's termination; provided that the lump sum payment subject to this subsection (iii) shall not be less than twelve (12) months' base pay and shall not be more than eighteen (18) months' base pay, provided, however, that such payments enumerated in subsections (ii) through (iii) above are conditioned on Employee's execution of Company's severance and general release agreement in a form acceptable to Company and continued compliance with the other provisions of this Agreement. "Cause" shall mean the willful and continued failure by Employee to use reasonable effort to substantially perform Employee's duties with Company (other than any such failure resulting from incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Employee by Company which specifically identifies the manner in which Company believes Employee has not substantially performed his duties; conviction of, or plea of nolo contendere to, a felony; habitual abuse of drugs or alcohol in the discretion of the Board of Directors; fraud, material dishonesty or gross misconduct in connection with the business of Company. (b) Termination by Company for Cause. If Company shall terminate the Period of Employment for Cause, Employee will be entitled only to be paid that portion of the base annual salary due and not yet paid to the Employee for the month in which the termination is made. (c) Voluntary Termination by Employee. Employee shall have the right, upon 90 days' prior written notice given to Company, to terminate the Period of Employment. If Employee should terminate the Period of Employment, Employee will be entitled only to be paid that portion of the base annual salary otherwise payable to Employee under paragraph (a) (i) of Section 6 through the end of the month in which the Period of Employment is terminated. No additional amounts shall be payable to Employee (except as and to the extent otherwise required at law or under the express terms and conditions of any employee benefit plan in which Employee participates). 7. Confidential Information. Employee agrees to keep secret and retain in the strictest confidence all confidential matters which relate to Company or any affiliate of Company, including, without limitation, customer lists, client lists, trade secrets, pricing policies and other business affairs of Company and any affiliate of Company learned by Employee from Company or any such affiliate or otherwise before or after the date of this Agreement, and not to disclose any such confidential matter to anyone outside Company or any of its affiliates, whether during or after Employee's period of service with Company, except as may be required by a court of law, by any governmental agency having 3 supervisory authority over the business of Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him or her to divulge, disclose or make accessible such information. Employee agrees to give Company advance written notice of any disclosure pursuant to the preceding sentence and to cooperate with any efforts by Company to limit the extent of such disclosure. Upon request by Company, Employee agrees to deliver promptly to Company upon termination of Employee's services for Company, or at any time thereafter as Company may request, all Company or affiliate memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) relating to Company's or any affiliate's business and all property of Company or any affiliate associated therewith, which Employee may then possess or have under Employee's control, other than personal notes, diaries, rolodexes and correspondence. 8. Non-competition and Non-solicitation. (a) Without the consent in writing of the Board of Directors of the Company, during the period of Employee's employment with the Company and upon termination of Employee's employment for any reason whatsoever, Employee will not for a period of a minimum of twelve (12) months thereafter and a maximum of eighteen (18) months thereafter (the restrictive period being commensurate with the number of months of severance being paid to Employee pursuant to Section 6 (a) (iii)) (i) engage in, or carry on, directly or indirectly, either for himself or as a member of a partnership or as a stockholder, investor, officer or director of a corporation or as an employee, agent, associate, adviser or consultant of any person, partnership or corporation, any business in competition with the business carried on by Company or any of its affiliates or (ii) employ or seek to employ any person then employed by Company or any of its affiliates. Notwithstanding the preceding sentence, Employee shall not be prohibited from owning less than one percent (1%) of any publicly traded corporation (whether or not such corporation is in competition with Company or its affiliates). The competitive restrictions imposed upon Employee by this Section 8 shall be waived if, following a Change in Control of Employer, Employee is terminated by the successor employer other than for Cause. For purpose of this Agreement, a Change in Control shall have occurred when an unaffiliated entity shall have acquired greater than a 50% interest in Employer. (b) During the period of Employee's employment with the Company and thereafter during the restrictive period applicable in Section 8 (a) above, Employee shall not directly or indirectly, for his or her own account or for the account of any other person anywhere in the world, solicit or otherwise attempt to establish any business relationship of a nature that is competitive with the business or relationship of the Company or any of its affiliates with any person throughout the world which is or was a customer, client or distributor of the Company or any of its affiliates at any time during which Employee was employed by the Company (in the case of any such activity during such time) or during the twelve-month period preceding the date of termination (in the case of any activity after the date of termination), other than any such solicitation on 4 behalf of the Company or any of its affiliates during Employee's employment with the Company. It is the intention of the parties hereto that the restrictions contained in this Section be enforceable to the fullest extent permitted by applicable law. Therefore, to the extent any court of competent jurisdiction shall determine that any portion of the foregoing restrictions is excessive, such provision shall not be entirely void, but rather shall be limited or revised only to the extent necessary to make it enforceable. Employee confirms that all restrictions in this Section are reasonable and valid and hereby waives all defenses to the strict enforcement thereof by Company. 9. Remedy. Should Employee engage in or perform, either directly or indirectly, any of the acts prohibited by Sections 7 and 8 hereof, it is agreed that Company shall be entitled to full injunctive relief, to be issued by any competent court of equity, enjoining and restraining Employee and each and every other person, firm, organization, association, or corporation concerned therein, from the continuance of such violative acts. The foregoing remedy available to Company shall not be deemed to limit or prevent the exercise by Company of any or all further rights and remedies which may be available to Company hereunder or at law or in equity. 10. Governing Law. This Agreement is governed by and is to be construed and enforced in accordance with the laws of the State of Maryland, without reference to rules relating to conflicts of law. If under such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto or, if that is not possible, to be omitted from this Agreement; the invalidity of any such portion shall not affect the force, effect and validity of the remaining portion hereof. 11. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person, or five (5) days after deposit thereof in the U.S. mails, postage prepaid, for delivery as registered or certified mail, addressed to the respective party at the address set forth below or to such other address as may hereafter be designated by like notice. Unless otherwise notified as set forth above, notice shall be sent to each party as follows: (a) Employee, to: To the Employee at his principal place of business (b) Company, to: Acterna Corporation 20410 Observation Drive Germantown, Maryland 20876 Attention: General Counsel 5 In lieu of personal notice or notice by deposit in the U.S. mail, a party may give notice by confirmed telegram, telex or fax, which shall be effective upon receipt. 12. Miscellaneous. (a) Entire Agreement. This Agreement constitutes the entire understanding between Company and Employee relating to employment of Employee by Company and supersedes and cancels all prior written and oral agreements and understandings with respect to the subject matter of this Agreement. This Agreement may be amended but only by a subsequent written agreement of the parties. This Agreement shall be binding upon and shall inure to the benefit of Employee, Employee's heirs, executors, administrators and beneficiaries, and Company and its successors. Withholding Taxes. All amounts payable to Employee under this Agreement shall be subject to applicable withholding of income, employment and other taxes. 6 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the year and day first above written. ACTERNA CORPORATION, for and on behalf of ITRONIX CORPORATION By: /s/ Ned C. Lautenbach ------------------------------------- Ned C. Lautenbach, Chairman and CEO /s/ Thomas Turner ------------------------------------- Thomas Turner 7 EX-10 6 jd7-23retention_peeler.txt 10.31 Exhibit 10.31 TO: John Peeler, CEO & President DEPARTMENT: Human Resources FROM: Bill McDaniel DATE: December 12, 2002 SUBJECT: Acterna Corporation, Inc. Senior Management Retention Agreement - -------------------------------------------------------------------------------- This memorandum describes a payment (the "Payment") to be made available to you. The Payment is subject to the terms and conditions of the this memorandum, as set forth below. You will be eligible to receive a total of $1,000,000, earned and paid in three installments. The first installment will be paid on or about December 20, 2002 covering the period of December 20, 2002 -March 31, 2003; the remaining installments will be earned on April 1, 2003 and October 1, 2003, respectively, and paid on the next following regular payroll date (each, a "Payment Date") covering the period of April 1, 2003 - October 1, 2003. The first and second installments will be equal to twenty-five percent (25%) of the total Payment, the final installment will be the remaining fifty percent (50%) of the Payment. In order to receive each installment, you must sign this memorandum, adhere to its terms, and you must be employed with the Company on the applicable Payment Date. You earn each installment and the right to receive the applicable portion of the Payment only by remaining employed through the applicable Payment Date, and the continued employment period, as set forth below. By signing this memorandum and accepting each installment of the Payment you agree to repay 100% of each installment of the Payment in the event you voluntarily terminate your employment prior to the next following Payment Date. Any repayment must be made within thirty (30) days following written demand by the Company. By accepting the Payment, you also authorize the Company to deduct from any other amounts owed to you by the Company, such amounts as may be necessary to satisfy your obligation to make repayment hereunder and all required withholdings. The required period of employment, and any Company right to repayment of the Payment hereunder, shall lapse in the event that the Company shall experience a change of control resulting in the sale of all or substantially all of the assets or stock of the Company; provided, however, if your employment with the Company is subject to an agreement or letter setting forth a definition of change of control, such definition shall apply for determining whether a change of control has occurred for this purpose. By signing this memorandum and accepting each installment of the Payment you understand and agree that your receipt of the Payment is confidential. Any disclosure of the terms or conditions of this memorandum will result in corrective action, including the forfeiture of any installment of the Payment previously received and any right to future installments; provided, however, you are permitted to discuss the terms of this memorandum and the Payment with your personal financial advisors, legal counsel and your spouse. Any forfeited installment of the Payment must be repaid to the Company within thirty (30) days of the Company's written demand for such payment. This memorandum becomes effective eight (8) days after you sign it (the "Effective Date"), unless you revoke your acceptance prior to such date, by providing written notice to the Company. In consideration of the Payment, you agree to release and forever discharge the Company, its affiliates, and its officers, directors, investors, stockholders, partners, employees, representatives and attorneys, successors, subsidiaries, related corporations, and any person or entity acting for or on behalf of the Company (the "Releasees") from liability for any claims, damages, or causes of action, both in law and in equity, which you or your personal representative, heirs, or assigns now has or may have, whether known or unknown, suspected or unsuspected, and whether asserted or not (hereinafter "Claims"), against the Releasees that may exist under any laws prohibiting discrimination, including, but not limited to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. ss. 2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss. 621 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et seq., or any other law relating to employment or discrimination in employment, or otherwise; provided, however, no Claims are released relating to the terms of this memorandum. This general release does not include Claims which may arise based on acts or omissions occurring after the Effective Date. The Payment is not intended or to be construed as being an addition to base salary or in calculations of benefits or salary increases. This memorandum does not provide you with any rights to continued employment. The parties acknowledge that this memorandum and the agreements of the parties included herein shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to conflict of law principals. Any litigation that may be brought by either party involving the enforcement of this memorandum or the rights, duties, or obligations contained herein, shall be brought exclusively in the State or federal courts sitting in Maryland. The parties acknowledge their agreement and acceptance of the terms of this memorandum by signing below. ACTERNA CORPORATION, INC. EMPLOYEE NAME By: /s/ William M. McDaniel /s/ John Peeler -------------------------------- ------------------------------ William M. McDaniel December 13, 2002 Vice President, Human Resources December 12, 2002 EX-10 7 jd7-23retention_ratliff.txt 10.32 Exhibit 10.32 TO: John Ratliff, Corporate VP, CFO DEPARTMENT: Human Resources FROM: Bill McDaniel DATE: December 12, 2002 SUBJECT: Acterna Corporation, Inc. Senior Management Retention Agreement - -------------------------------------------------------------------------------- This memorandum describes a payment (the "Payment") to be made available to you. The Payment is subject to the terms and conditions of the this memorandum, as set forth below. You will be eligible to receive a total of $2,000,000, earned and paid in three installments. The first installment will be paid on or about December 20, 2002 covering the period of December 20, 2002 -March 31, 2003; the remaining installments will be earned on April 1, 2003 and September 1, 2003, respectively, and paid on the next following regular payroll date (each, a "Payment Date") covering the period of April 1, 2003 - September 1, 2003. The first and second installments will be equal to twenty-five percent (25%) of the total Payment, the final installment will be the remaining fifty percent (50%) of the Payment. In order to receive each installment, you must sign this memorandum, adhere to its terms, and you must be employed with the Company on the applicable Payment Date. You earn each installment and the right to receive the applicable portion of the Payment only by remaining employed through the applicable Payment Date, and the continued employment period, as set forth below. By signing this memorandum and accepting each installment of the Payment you agree to repay 100% of each installment of the Payment in the event you voluntarily terminate your employment prior to the next following Payment Date. Any repayment must be made within thirty (30) days following written demand by the Company. By accepting the Payment, you also authorize the Company to deduct from any other amounts owed to you by the Company, such amounts as may be necessary to satisfy your obligation to make repayment hereunder and all required withholdings. The required period of employment, and any Company right to repayment of the Payment hereunder, shall lapse in the event that the Company shall experience a change of control resulting in the sale of all or substantially all of the assets or stock of the Company; provided, however, if your employment with the Company is subject to an agreement or letter setting forth a definition of change of control, such definition shall apply for determining whether a change of control has occurred for this purpose. By signing this memorandum and accepting each installment of the Payment you understand and agree that your receipt of the Payment is confidential. Any disclosure of the terms or conditions of this memorandum will result in corrective action, including the forfeiture of any installment of the Payment previously received and any right to future installments; provided, however, you are permitted to discuss the terms of this memorandum and the Payment with your personal financial advisors, legal counsel and your spouse. Any forfeited installment of the Payment must be repaid to the Company within thirty (30) days of the Company's written demand for such payment. This memorandum becomes effective eight (8) days after you sign it (the "Effective Date"), unless you revoke your acceptance prior to such date, by providing written notice to the Company. In consideration of the Payment, you agree to release and forever discharge the Company, its affiliates, and its officers, directors, investors, stockholders, partners, employees, representatives and attorneys, successors, subsidiaries, related corporations, and any person or entity acting for or on behalf of the Company (the "Releasees") from liability for any claims, damages, or causes of action, both in law and in equity, which you or your personal representative, heirs, or assigns now has or may have, whether known or unknown, suspected or unsuspected, and whether asserted or not (hereinafter "Claims"), against the Releasees that may exist under any laws prohibiting discrimination, including, but not limited to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. ss. 2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss. 621 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et seq., or any other law relating to employment or discrimination in employment, or otherwise; provided, however, no Claims are released relating to the terms of this memorandum. This general release does not include Claims which may arise based on acts or omissions occurring after the Effective Date. The Payment is not intended or to be construed as being an addition to base salary or in calculations of benefits or salary increases. This memorandum does not provide you with any rights to continued employment. The parties acknowledge that this memorandum and the agreements of the parties included herein shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to conflict of law principals. Any litigation that may be brought by either party involving the enforcement of this memorandum or the rights, duties, or obligations contained herein, shall be brought exclusively in the State or federal courts sitting in Maryland. The parties acknowledge their agreement and acceptance of the terms of this memorandum by signing below. ACTERNA CORPORATION, INC. EMPLOYEE NAME By: /s/ William M. McDaniel /s /John Ratliff ----------------------------------- ------------------------------- William M. McDaniel December 13, 2002 Vice President, Human Resources December 12, 2002 If the terms of the above are not met (the banks are in disagreement or attempt to set aside the agreement), my resignation will be effective immediately (no 60 day wait period). See resignation note attached. /s/ John Ratliff Confirmed with Ned Lautenbach via phone call 12/16/02 12:05 PM. /s/ William M. McDaniel EX-10 8 jd7-23retention_goshorn.txt 10.33 Exhibit 10.33 TO: Rick Goshorn DEPARTMENT: Human Resources FROM: Bill McDaniel DATE: December 12, 2002 SUBJECT: Acterna Corporation, Inc. Senior Management Retention Agreement - -------------------------------------------------------------------------------- This memorandum describes a payment (the "Payment") to be made available to you. The Payment is subject to the terms and conditions of the this memorandum, as set forth below. You will be eligible to receive a total of $300,000, earned and paid in three installments. The first installment will be paid on or about December 20, 2002 covering the period of December 20, 2002 -March 31, 2003; the remaining installments will be earned on April 1, 2003 and October 1, 2003, respectively, and paid on the next following regular payroll date (each, a "Payment Date") covering the period of April 1, 2003 - October 1, 2003. The first and second installments will be equal to twenty-five percent (25%) of the total Payment, the final installment will be the remaining fifty percent (50%) of the Payment. In order to receive each installment, you must sign this memorandum, adhere to its terms, and you must be employed with the Company on the applicable Payment Date. You earn each installment and the right to receive the applicable portion of the Payment only by remaining employed through the applicable Payment Date, and the continued employment period, as set forth below. By signing this memorandum and accepting each installment of the Payment you agree to repay 100% of each installment of the Payment in the event you voluntarily terminate your employment prior to the next following Payment Date. Any repayment must be made within thirty (30) days following written demand by the Company. By accepting the Payment, you also authorize the Company to deduct from any other amounts owed to you by the Company, such amounts as may be necessary to satisfy your obligation to make repayment hereunder and all required withholdings. The required period of employment, and any Company right to repayment of the Payment hereunder, shall lapse in the event that the Company shall experience a change of control resulting in the sale of all or substantially all of the assets or stock of the Company; provided, however, if your employment with the Company is subject to an agreement or letter setting forth a definition of change of control, such definition shall apply for determining whether a change of control has occurred for this purpose. By signing this memorandum and accepting each installment of the Payment you understand and agree that your receipt of the Payment is confidential. Any disclosure of the terms or conditions of this memorandum will result in corrective action, including the forfeiture of any installment of the Payment previously received and any right to future installments; provided, however, you are permitted to discuss the terms of this memorandum and the Payment with your personal financial advisors, legal counsel and your spouse. Any forfeited installment of the Payment must be repaid to the Company within thirty (30) days of the Company's written demand for such payment. This memorandum becomes effective eight (8) days after you sign it (the "Effective Date"), unless you revoke your acceptance prior to such date, by providing written notice to the Company. In consideration of the Payment, you agree to release and forever discharge the Company, its affiliates, and its officers, directors, investors, stockholders, partners, employees, representatives and attorneys, successors, subsidiaries, related corporations, and any person or entity acting for or on behalf of the Company (the "Releasees") from liability for any claims, damages, or causes of action, both in law and in equity, which you or your personal representative, heirs, or assigns now has or may have, whether known or unknown, suspected or unsuspected, and whether asserted or not (hereinafter "Claims"), against the Releasees that may exist under any laws prohibiting discrimination, including, but not limited to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. ss. 2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss. 621 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et seq., or any other law relating to employment or discrimination in employment, or otherwise; provided, however, no Claims are released relating to the terms of this memorandum. This general release does not include Claims which may arise based on acts or omissions occurring after the Effective Date. The Payment is not intended or to be construed as being an addition to base salary or in calculations of benefits or salary increases. This memorandum does not provide you with any rights to continued employment. The parties acknowledge that this memorandum and the agreements of the parties included herein shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to conflict of law principals. Any litigation that may be brought by either party involving the enforcement of this memorandum or the rights, duties, or obligations contained herein, shall be brought exclusively in the State or federal courts sitting in Maryland. The parties acknowledge their agreement and acceptance of the terms of this memorandum by signing below. ACTERNA CORPORATION, INC. EMPLOYEE NAME By: /s/ William M. McDaniel /s/ Rick Goshorn/ ---------------------------------- ------------------------ William M. McDaniel December 12, 2002 Vice President, Human Resources December 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----