EXHIBIT 10.3
Wireless Facilities, Inc.
Executive Change in Control Agreement
This Executive Change in Control Agreement (the "Agreement") is made as of
May 11, 2001, between Wireless Facilities, Inc., a Delaware corporation (the
"Company") and Wm. Xxxxxxxx Xxxxxx ("Executive").
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Whereas, capitalized terms used herein shall have the meanings set forth in
Section 3 herein;
Whereas, the Company, by means of this Agreement, seeks (i) to retain the
services of Executive, and (ii) to provide incentives for Executive to exert
maximum efforts for the success of the Company even in the face of a potential
Change in Control; and
Whereas, the Company desires to provide Executive with protection of
certain benefits in the event of the termination of his or her Continuous
Service in connection with a Change in Control.
Now, Therefore, in consideration of the mutual covenants and promises set
forth herein, the Company and Executive hereby agree as follows:
1. Acceleration in the Event of a Change in Control. If a Change in
Control (as defined herein) occurs, then immediately upon the effective date of
such Change in Control the vesting and exercisability of fifty percent (50%) of
the unvested Securities held by Executive as of the such date shall be
accelerated, and any reacquisition or repurchase rights held by the Company with
respect to such Securities shall lapse. The balance of such unvested Securities
shall vest quarterly over the following eighteen (18) months, (i.e., one-sixth
(1/6th) of such unvested shares shall vest at the end of each three- (3-) month
period from the effective date of such Change of Control), unless such remaining
unvested Securities would have vested sooner in accordance with the terms of the
grant thereof. In addition, and notwithstanding the above, within the period
beginning one (1) month prior to the effective date of such Change in Control
and ending eighteen (18) months after the effective date of such Change in
Control, if Executive's Continuous Service terminates due to an involuntary
termination thereof by the Company (including death or Disability) without Cause
or due to a Constructive Termination, then all unvested Securities held by
Executive as of the date of such termination of Continuous Service shall be
accelerated, and any reacquisition or repurchase rights held by the Company with
respect to such Securities shall lapse, as appropriate.
2. Pooling Limitation. Notwithstanding the foregoing, if acceleration of
vesting and exercisability (or lapse of reacquisition or repurchase rights)
provided for in Section 1 herein would cause a Change in Control transaction
that is intended to be accounted for as a "pooling-of-interests" transaction to
become ineligible for such accounting treatment under generally accepted
accounting principles as determined by the Accountants prior to the Change in
Control, such acceleration shall not occur.
3. Definitions. For purposes of this Agreement only, capitalized terms
used herein shall have the following meanings:
(a) "Accountants" means the Company's independent certified public
accountants.
(b) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Section 424(e) and (f) respectively, of the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means, with respect to Executive, the occurrence of any of the
following: (i) such Executive's conviction of any felony or any crime involving
fraud or dishonesty; (ii) such Executive's participation (whether by affirmative
act or omission) in a fraud, act of dishonesty or other act of misconduct
against the
Company and/or its Affiliates; or (iii) such Executive's violation of any
fiduciary duty or duty of loyalty owed to the Company and/or its Affiliates.
Notwithstanding the foregoing, such Executive's death or Disability shall not
constitute Cause as set forth herein. The determination that a termination is
for Cause shall be by the Board in its sole and exclusive judgment and
discretion.
(e) "Change in Control" means: (i) a sale of all or substantially all of
the assets of the Company; (ii) a merger or consolidation in which the holders
of the Company's outstanding voting stock immediately prior to such transaction
own, immediately after such transaction, securities representing less than fifty
percent (50%) of the voting power of the Company or other entity surviving such
transaction; or (iii) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or subsidiary of the Company or other
entity controlled by the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the election of
Directors; provided, however, that subparagraphs 2(e)(ii) and 2(e)(iii) shall
not apply to a merger effected exclusively for the purpose of changing the
domicile of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Common Stock" means the common stock of the Company.
(h) "Continuous Service" means that Executive's service with the Company
or an Affiliate, whether as an employee, Director or consultant, is not
interrupted or terminated. Neither a change in the capacity in which Executive
renders service to the Company or an Affiliate as an Employee, Consultant or
Director, nor a change in the entity for which Executive renders such service,
shall be deemed to interrupt or terminate Executive's Continuous Service
provided that there is not otherwise any interruption or termination of service.
(i) "Constructive Termination" means the occurrence of any of the
following events, conditions or actions taken by the Company without Cause and
without Executive's consent:
(i) a change in Executive's material responsibilities which represents an
adverse change from Executive's responsibilities (ii) a reduction in
Executive's annual cash compensation (including base salary and guaranteed
and discretionary bonus level(s); (iii) the Company's requiring Executive
to relocate to any place outside a fifty (50) mile radius of Executive's
current work site, except for reasonably required travel on the business of
the Company or its Affiliates which is not materially greater than
Executive's then existing travel requirements; (iv) the failure by the
Company to (A) continue in effect (without reduction in benefit level
and/or reward opportunities) any material compensation or employee benefit
plan in which Executive was participating, unless such plan is replaced
with a plan that provides substantially equivalent compensation or benefits
to Executive (it being understood that changes to any such plans
necessitated by the need to conform Executive's and the Company's other
employees', as a whole, compensation and benefits packages to those of the
surviving corporation and/or acquiror (as applicable) shall not alone
constitute Constructive Termination unless such changes result in a
substantial reduction in Executive's annual cash compensation as described
in subsection (ii) above), or (B) provide Executive with compensation and
benefits, in the aggregate, at least substantially similar (in terms of
benefit levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which Executive
was participating; (v) the Executive's death or Disability; or (vi) the
failure of the Company to obtain an agreement, satisfactory to Executive,
from any successors and assigns to assume and agree to perform the
obligations created under this Agreement.
(j) "Director" means a member of the Board of Directors of the Company.
(k) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
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(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Securities" means shares of the Company's capital stock, options or
other rights to purchase or otherwise acquire shares of the Company's capital
stock (including any security exercisable or exchangeable for, or convertible
into, capital stock of the Company).
4. Parachute Payments.
(a) In the event that the acceleration of vesting and exercisability
and/or the lapse of reacquisition or repurchase rights provided for in Section 1
and benefits otherwise payable to Executive (i) constitute "parachute payments"
within the meaning of Section 280G of the Code, or any comparable successor
provisions, and (ii) but for this section would be subject to the excise tax
imposed by Section 4999 of the Code, or any comparable successor provisions (the
"Excise Tax"), then Executive's benefits hereunder shall be either
(i) provided to Executive in full, or
(ii) provided to Executive as to such lesser extent which would result
in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, when taking into account applicable federal,
state, local and foreign income and employment taxes, the Excise Tax, and any
other applicable taxes, results in the receipt by Executive, on an after-tax
basis, of the greatest amount of benefits, notwithstanding that all or some
portion of such benefits may be taxable under the Excise Tax. Unless the Company
and Executive otherwise agree in writing, any determination required under this
section shall be made in writing in good faith by the Accountants. In the event
of a reduction of benefits hereunder, Executive shall be given the choice of
which benefits to reduce. For purposes of making the calculations required by
this section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code, and other applicable
legal authority. The Company and Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this section.
(b) If, notwithstanding any reduction described in this Section 4, the IRS
determines that Executive is liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that Executive challenges the final IRS
determination, a final judicial determination, a portion of the payment equal to
the "Repayment Amount." The Repayment Amount with respect to the payment of
benefits shall be the smallest such amount, if any, as shall be required to be
paid to the Company so that Executive's net after-tax proceeds with respect to
any payment of benefits (after taking into account the payment of the Excise Tax
and all other applicable taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be zero if a
Repayment Amount of more than zero would not result in Executive's net after-tax
proceeds with respect to the payment of such benefits being maximized. If the
Excise Tax is not eliminated pursuant to this paragraph, Executive shall pay the
Excise Tax.
(c) Notwithstanding any other provision of this Section 4, if (i) there is
a reduction in the payment of benefits as described in this section, (ii) the
IRS later determines that Executive is liable for the Excise Tax, the payment of
which would result in the maximization of Executive's net after-tax proceeds
(calculated as if Executive's benefits had not previously been reduced), and
(iii) Executive pays the Excise Tax, then the Company shall pay to Executive
those benefits which were reduced pursuant to this section contemporaneously or
as soon as administratively possible after Executive pays the Excise Tax so that
Executive's net after-tax proceeds with respect to the payment of benefits is
maximized.
(d) If Executive either (i) brings any action to enforce Executive's
rights pursuant to this Section 4, or (ii) defends any legal challenge to
Executive's rights hereunder, Executive shall be entitled to recover attorneys'
fees
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and costs incurred in connection with such action, regardless of the outcome of
such action; provided, however, that in the event such action is commenced by
Executive, the court finds the claim was brought in good faith.
5. Adjustments Upon Changes in Capital Stock. All references to
Securities referenced in this Agreement shall include and shall be appropriately
adjusted by the Company to reflect any stock split, stock dividend, stock
combination or other change in the Common Stock which may be made by the Company
after the date of this Agreement.
6. Notices. Any notices provided for in this Agreement shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to Executive, five (5) days after deposit in
the United States mail, postage prepaid, addressed to Executive at the address
specified in the corporate records of the Company or at such other address as
Executive hereafter designates by written notice to the Company.
7. Miscellaneous.
(a) The rights and obligations of Executive under this Agreement may not
be transferred or assigned without the prior written consent of the Company.
(b) This Agreement is meant to supplement the terms of any and all
founder's stock purchase agreement(s), restricted stock purchase agreement(s),
stock option agreement(s), warrants or other agreements covering the purchase or
other acquisition of Securities by Executive (collectively, the "Securities
Acquisition Agreements") whether now or hereafter existing. To the extent that
the terms and conditions of any Securities Acquisition Agreement are
inconsistent with the terms set forth herein, the terms and conditions of this
Agreement shall be controlling. This Agreement shall not be superseded by any
subsequent agreement unless such subsequent agreement is in writing, signed by
Executive and such subsequent agreement specifically states that it is intended
to supersede this Agreement and specifically references this "Executive Change
in Control Agreement" by name.
(c) Any failure by the Company or Executive to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent either the Company or Executive
from thereafter enforcing each and every other provision of this Agreement. The
rights granted the Company and Executive herein are cumulative and shall not
constitute a waiver of either the Company's or Executive's right to assert all
other legal remedies available to it under the circumstances.
(d) Executive agrees upon request to execute any further documents or
instruments necessary or desirable to carry out the purposes or intent of this
Agreement.
(e) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.
(f) Subject to the provisions of subsection 7(b) herein, this Agreement,
in whole or in part, may be modified, waived or amended upon the written consent
of the Company and Executive.
(g) By Executive's signature below, Executive represents that he or she is
familiar with the terms and provisions of this Agreement, and hereby accepts
this Agreement subject to all of the terms and provisions set forth herein.
Executive has reviewed this Agreement in its entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement.
8. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, regardless of the law that
might be applied under applicable principles of conflicts of law.
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9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
EXECUTIVE WIRELESS FACILITIES, INC.
/s/ Wm. Xxxxxxxx Xxxxxx /s/ Xxxxxx Xxxxxx, CEO
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Signature Signature
Wm. Xxxxxxxx Xxxxxx Xxxxxx Xxxxxx
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Print Name Print Name and Title
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Schedule I
The Company has also entered into Change of Control Agreements dated as of
May 11, 2001 with Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx. These Change of Control
Agreements are identical to the Change of Control Agreement between the Company
and Xxxx Xxxxxx, except as to the parties thereto.
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