[LETTERHEAD]
ADAPTIVE BROADBAND CORPORATION
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is entered into as of July 2, 1999 (the "Effective
Date"), between ADAPTIVE BROADBAND CORPORATION, a Delaware corporation ("ADAP")
and Xxxxxxx Xxxx (the "Employee").
RECITAL
The Employee serves as ADAP's Vice President, General Counsel. ADAP and the
Employee desire to set forth the terms of the Employee's severance compensation
if the Employee's employment is ended as a result of a Change in Control. If a
Change in Control occurs, the Employee and other key employees may be more
vulnerable to dismissal or other negative consequences without regard to the
quality of their past or prospective service. The Board of Directors (the
"Board") believes that it is in the best interest of ADAP and its stockholders
to ensure fair treatment to ADAP's key executives and to reduce any adverse
effects upon their performance that may be caused by the perceived risks of a
merger, acquisition or other major structural change.
The parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms will
have the meanings set forth below.
1.1 A "CHANGE IN CONTROL" will occur if (a) any Person (as
defined in Section 2(a)(2) of the Securities Act of
1933, as amended) other than ADAP, is or becomes the
beneficial owner, directly or indirectly (including by
holding securities which are exercisable for or
convertible into shares of capital stock of ADAP), of 30
% or more of the combined voting power of the
outstanding shares of capital stock of ADAP entitled to
vote generally in the election of directors ; or, (b) a
Transaction is consummated; or, (c) Continuing Directors
cease to constitute at least a majority of the Board:
or, (d) a majority of the ADAP's Outside Directors
determine that a Change in Control has occurred.
1.2 "CONTINUING DIRECTORS" shall mean the directors of ADAP
in office on January 1, 1999 and any successor to any
such director whose nomination or selection was approved
by a majority of the directors in office at the time of
the director's nomination or selection and who is not an
"affiliate" or "associate" (as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended)
of any person who is the beneficial owner, directly or
indirectly (including by holding securities which are
exercisable for or convertible into shares of capital
stock of ADAP), of 10% or more of the combined voting
power of the outstanding shares of capital stock of ADAP
entitled to vote generally in the election of directors.
1.3 "DISABILITY" means that the Employee has met the
qualifications for ADAP's long-term disability benefit.
1.4 "GOOD REASON" includes any of the following:
(a) the assignment to the Employee of duties
inconsistent with, or a substantial alteration in
the nature or status of, the Employee's
responsibilities immediately before a Change in
Control;
(b) a reduction in the Employee's salary or other
benefits as in effect on the date of a Change in
Control;
(c) the Employee's relocation to a work site requiring
an increase in one-way commute from Employee's
residence of more than thirty-five (35) miles; or
(d) a breach by ADAP of this Agreement if the breach has
not been cured within 30 days after written notice
by the Employee to ADAP setting forth with
specificity the nature of the breach.
1.5 "OUTSIDE DIRECTOR" is a member of ADAP's Board of Directors
who is not, and who during the past six months was not, an
employee or officer of ADAP.
1.6 "TERMINATION FOR CAUSE" is termination of the Employee's
employment as a result of (a) the Employee's willful
misconduct or the Employee's dishonesty towards, fraud
upon, crime against or
deliberate or attempted injury or bad faith action with
respect to ADAP; or (b) the Employee's conviction for a
felony (whether in connection with ADAP's affairs or
otherwise).
1.7 "TERMINATION UPON A CHANGE IN CONTROL" is (a) termination by
the Employee of Employee's employment for Good Reason within
one year after the occurrence of a Change in Control; or (b)
declination by the Employee of an offer of employment from
ADAP, or ADAP's successor, for Good Reason at the time of a
Change in Control if the Employee would not have been
permitted to remain in Employee's existing position
following such declination; or (c) termination by ADAP, or
ADAP's successor, of the Employee's employment within one
year after the occurrence of a Change in Control other than
a Termination for Cause or a termination resulting from the
Employee's death or Disability. The one-year period provided
for herein shall be six months in the event that a Change in
Control arises out of a Transaction defined in Section 1.8
(c) hereof.
1.8 "TRANSACTION" is (a) a consolidation or merger of ADAP if
the shareholders of ADAP immediately before the merger or
consolidation do not immediately after the merger or
consolidation own equity securities of the surviving or
acquiring corporation or a parent party possessing 50% or
more of the voting power of the surviving or acquiring
corporation or parent party; (b) a sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of 50% or more of the assets of ADAP; or (c)
the sale or other disposition of business units within any
12-month period that contributed for that 12-month period
more than 45% of ADAP's revenues. The Transaction
requirements defined in parts (b) and (c) above shall
specifically exclude the sale of the Information Systems
division and its associated assets, and the designated
percentage thresholds for assets and revenues stated herein
(50% and 45%, respectively) shall be calculated without
including this division's assets or revenues in the base.
2. TERM. If no Change in Control has occurred, this Agreement will expire on
December 31, 2000. If a Change in Control occurs prior to December 31,
2000, this Agreement will continue in effect, and will not terminate,
until either the Employee has received the severance compensation
provided for below or has ceased to be eligible for such compensation by
reason of there not having been a Termination Upon a Change in Control.
3. TERMINATION UPON A CHANGE IN CONTROL. If a Termination Upon a Change in
Control
occurs, the Employee will immediately be paid all (a) accrued salary,
(b) bonus compensation equal to the higher of (i) the annual EIP bonus
based on ADAP's operating plan as approved by the Board during the
first quarter of the fiscal year during which the Change in Control
occurs, provided that the EVA growth for such fiscal year as of the
most recently completed fiscal quarter is equal to that specified in
the operating plan for such period, or (ii) the annual bonus or other
equivalent incentive compensation payment established for the Employee
by ADAP's successor and based on the operating plan of ADAP's
successor at the beginning of the bonus's performance period during
which Employee's termination occurs, (c) vested deferred compensation
(other than pension plan or profit sharing plan benefits, which will
be paid in accordance with the applicable plan), unless the Employee
is eligible for a delayed payout as authorized by the plan, (d)
benefits then due under any plans of ADAP or ADAP's successor in which
the Employee is a participant, (e) accrued Personal Time Off pay or
vacation pay and (f) reimbursements for any appropriate business
expenses incurred by the Employee in connection with his duties, all
to the date of termination ("Accrued Compensation"). Repayment of any
existing company loans shall be extended if necessary to delay
repayment until the beginning of regular employment during the period
of severance compensation provided for in Section 4. The Employee will
also be entitled to the severance compensation described in Section 4.
4. SEVERANCE COMPENSATION. If a Termination Upon a Change in Control
occurs, ADAP shall pay monthly severance compensation to the Employee
for a period ending 24 months after termination, or ending 12 months
after termination if the Termination Upon a Change in Control (i) is
initiated by the Employee as specified in Sections 1.7 (a) or 1.7 (b)
and (ii) is by reason of a Transaction defined in Section 1.8 (c), in
an aggregate amount determined by adding (a) the Employee's monthly
base salary at the time of termination and (b) an amount equal to the
monthly `Perk Pot' benefit to which the Employee was entitled as an
officer of ADAP at the time of the Change in Control, and (c) the
amount of $2400.00 in lieu of other employee benefits (including
health benefits) the Employee was receiving from ADAP at the time of
the Change in Control. If the Employee begins regular employment prior
to the expiration of the aforesaid 24 month period, or 12 month period
if the Termination Upon a Change in Control (i) is initiated by the
Employee as specified in Sections 1.7 (a) or 1.7 (b) and (ii) is by
reason of a Transaction defined in Section 1.8 (c), then the severance
compensation provided for in this Section 4 shall end as of the later
of (i) the date of such regular employment or (ii) the date which is
one-half the number of months past he beginning of severance
compensation provided for in this Section 4. Employee agrees to
promptly notify ADAP of any such regular employment and to reimburse
ADAP for any payments made by ADAP hereunder that cover any period
during which the Employee was a regular employee.
5. ACCELERATION OF OPTIONS. If a Termination Upon a Change in Control
occurs, all stock options held by the Employee immediately before the
termination will become fully vested and the stock options will be
exercisable for the periods specified with respect to termination of
employment in the plans covering the options.
6. OTHER BENEFITS. Neither this Agreement nor the severance compensation
that it provides for will reduce any amounts otherwise payable, or in any
way diminish the Employee's rights as an employee of ADAP, whether
existing now or hereafter, under any benefit, incentive, retirement,
stock option, stock bonus or stock purchase plan or under any employment
agreement or other plan or arrangement, provided, however, that the
rights granted to the Employee and the obligations assumed by ADAP under
this Agreement will be in lieu of, and not in addition to, any severance
or other termination payments to which the Employee may be entitled under
any employment agreement or other plan or arrangement that the Employee
may now or hereafter have with ADAP.
7. EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment. It does not impose on ADAP any obligation to retain the
Employee as an employee, to change the status of the Employee's
employment or to change ADAP's policies regarding termination of
employment.
8. MISCELLANEOUS.
a. SEVERABILITY. If a court or other body of competent jurisdiction
determines that any provision of this Agreement is invalid or
unenforceable, that provision will be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement will be deemed
valid and enforceable to the fullest extent possible.
b. WITHHOLDING. Compensation and benefits to the Employee under this
Agreement will be reduced by all federal, state, local and other
withholdings or similar taxes as required by applicable law.
c. ARBITRATION. The parties will submit all controversies, claims and
matters of difference in any way related to this Agreement, its
performance or breach, to arbitration in San Francisco,
California, according to the rules and practices of the American
Arbitration Association from time to time in effect. Any awards in
such arbitration shall be final and binding on all parties. The
arbitrators shall allocate the costs of the arbitration in such
manner as they deem equitable. The arbitrators may require the
reimbursement of all or a portion of the reasonable legal fees
incurred by the prevailing party in the arbitration proceeding and
any legal proceedings which are taken to enforce the arbitral
award.
d. ENTIRE AGREEMENT: MODIFICATIONS. (i) This Agreement is the entire
agreement between the parties with respect to the matters covered
hereby, and may be amended, modified, superseded or canceled, or
its terms waived, only by a written instrument executed by each
party or, in the case of a waiver, by the
party waiving compliance. (ii) Failure of a party at any time
to require performance of any provision of this Agreement will
not affect the right at a later time to enforce the same. (iii)
No waiver of a breach of this Agreement, whether by conduct or
otherwise, in any one or more instances will be construed as a
further or continuing waiver of the breach or of any other term
of this Agreement. (iv) This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of
the parties hereto.
e. APPLICABLE LAW. This Agreement will be construed under and
governed by the laws of the State of California without regard or
reference to the rules of conflicts of law that would require the
application of the laws of any other jurisdiction.
9. Prior Severance Agreement. The Employee and ADAP (named "California
Microwave, Inc." prior to April 29, 1999) acknowledge their prior
severance agreement dated May 26, 1998. The Employee and ADAP hereby
terminate such prior severance agreement as of the day immediately prior
to the Effective Date of this Agreement, and neither the Employee nor
ADAP shall have any rights or obligations thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
ADAPTIVE BROADBAND CORPORATION
/s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxxxxx X. Xxxxxxxx Xxxxxxx Xxxx
Chairman and Chief Executive Officer Vice President, General Counsel
