Exhibit 10.17
EMPLOYMENT,
SEVERANCE AND BONUS AGREEMENT
This Employment, Severance and Bonus Agreement (the "AGREEMENT") is entered into
this 13th day of August, 2002, by and between AIRNET COMMUNICATIONS CORPORATION,
a Delaware corporation (the "COMPANY"), and XXXXX X. XXXXX (the "EMPLOYEE").
RECITALS:
A. The Employee is an at-will employee of the Company in the capacity of Chief
Executive Officer and President at the behest of the Board of Directors, and has
entered into with the Company an Employment Letter Agreement dated August 17,
2001, (the "EMPLOYMENT LETTER").
B. The Company and Employee desire to amend and restate in its entirety the
Employment Letter.
C. The Company also recognizes that the possibility that a sale of the Company
could occur which may jeopardize Employee's continued employment with the
Company, and that such possibility, and the uncertainty and questions which it
may raise, may result in the distraction of the Employee to the detriment of the
Company or otherwise.
D. In order to encourage the Employee to maintain his continued attention and
dedication to his duties and responsibilities, the Company desires to enter into
this Agreement with the Employee setting forth terms and conditions as to the
termination of the Employee in connection with a sale of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and the monies to be paid hereunder, the parties
agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the following meanings:
"ACQUISITION PRICE" means the aggregate sum of money and/or fair market
value of property (valued as of the date of closing) to be paid by an acquiring
party to the Company or to its stockholders in connection with a Sale of the
Company. For purposes of this Agreement, if the acquiring party is then a
current stockholder or an affiliate of a current stockholder ("CURRENT
STOCKHOLDER ACQUIRING PARTY") which is (a) acquiring the assets of the Company
in a transaction in which the Current Stockholder Acquiring Party receives no
distribution of money or property with respect to its stock or a distribution
which is less than the per-share amount received by other stockholders holding
the same class or series of shares, (b) engaging in a merger, consolidation or
other business combination with AirNet Communications Corporation in which
AirNet Communications Corporation is not the continuing or surviving corporation
and
in which the Current Stockholder Acquiring Party receives no money or property
in exchange for its shares or an amount of money or property which is less than
the per-share amount received by other stockholders holding the same class or
series of shares, or (c) acquiring shares of Company stock from stockholders but
not from itself or the current stockholder affiliated with the Current
Stockholder Acquiring Party, the amount of the Acquisition Price shall include
the value of the shares of Company stock held by such Current Stockholder
Acquiring Party based on the same value per share that will be paid or
distributed to stockholders owning the same class or series of shares.
"BONUS POOL PROCEEDS" means moneys distributed from the ABP (as defined
in Section 5.1) and/or MBP (as defined in Section 5.1).
"CAUSE" means the Employee's intentional bad faith act or omission,
felony conviction, or gross dereliction of duty, which is materially harmful or
damaging to the Company.
"CHANGE OF CONTROL" means the acquisition by any individual, entity or
group of 50% or more of the outstanding voting securities of the Company or 50%
or more of the combined voting power of then outstanding voting securities of
the Company entitled to vote generally in the election of directors.
"COMPANY" means AirNet Communications Corporation or, in the event of a
Sale of the Company, the successor(s) in interest to AirNet Communications
Corporation.
"COMPETING BUSINESS" shall mean any one or more of the following: (i)
any business in which the Company engages as of the date of this Agreement; or
(ii) any other business in which the Company engages in before the termination
of the Agreement.
"GOOD REASON" shall mean, without the Employee's written consent, of
any of the following circumstances:
(a) The Employee is assigned a new position which entails a
reduction in the nature of Employee's authority with respect to the operation of
the Company's business compared to Employee's position in effect on (i) the date
of this Agreement or (ii) immediately prior to the Termination Event or Sale of
the Company Termination Event, as applicable, whichever position is greater or
more senior;
(b) A reduction in the Employee's Base Salary or Employee's
Override Bonus as in effect on (i) the date of this Agreement or (ii)
immediately prior to the Termination Event or Sale of the Company Termination
Event, as applicable, whichever is greater, or an adverse change in benefits or
perquisites other than a change that is generally applicable to all executive
employees;
(c) The Company's requirement that the Employee's site of
principal employment be more than twenty-five miles from the offices at which
the Employee was principally employed on the date of this Agreement; or
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(d) The Employee is assigned duties inconsistent with the
status of the position that the Employee held on (i) the date of this Agreement
or (ii) immediately prior to the Termination Event or the Sale of the Company
Termination Event, as applicable, whichever is greater, or an adverse alteration
in the nature or status of the Employee's responsibilities or in the quality or
amount of office accommodations provided to the Employee, from those in effect
immediately prior to such Termination Event or Sale of the Company Termination
Event, as applicable, which shall constitute a constructive demotion.
"NET SALES PROCEEDS FROM THE SALE OF THE COMPANY" means net sales
proceeds available for distribution to stockholders of the Company from the Sale
of the Company, after deducting transaction expenses relating directly to the
Sale of the Company including attorneys fees, accounting fees, and underwriting
or brokerage commissions.
"PERSON" means an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization and any government,
governmental department or agency or political subdivision thereof.
"PROTECTED TERRITORY" shall mean any state within the United States or
other country in which the Company or any of its subsidiaries provides any of
its services or sells or distributes any of its products as of the date of this
Agreement or thereafter.
"SALE OF THE COMPANY" shall mean (i) a sale or exchange of all or
substantially all of the assets (including a sale, disposition, or exchange in a
liquidation) or (ii) a sale or exchange of all or substantially all of the
outstanding capital stock of the Company resulting in a Change of Control of the
Company or (iii) a merger, consolidation or other business combination
(excluding any issuance of previously un-issued voting securities from the
Company in connection with an investment in the Company by a Series B Holder or
any third party) resulting in a Change of Control of AirNet Communications
Corporation, as a result of which AirNet Communications Corporation is not the
continuing or surviving corporation.
"SERIES B HOLDER" shall mean the holders of the Company's Series B
Convertible Preferred Stock.
SECTION 2. EMPLOYMENT.
2.1 BASE SALARY. The Company hereby retains Employee at an annual base
salary of $250,000 (the "BASE SALARY"). The Base Salary shall be paid in
accordance with the Company's ordinary and customary payroll practices, which
may be amended from time to time.
2.2 BONUS. In addition to the Base Salary, Employee shall receive an
override bonus equal to 0.425% of all Company sales ("Override Bonus"). The
Override Bonus shall be paid quarterly in arrears by the Company to Employee. In
addition, the Employee as CEO shall be entitled annually to participate in any
management and employee bonus programs established by the Company's Board of
Directors and to receive a CEO bonus under such programs if Employee meets the
goals established by the Company's Board of Directors.
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2.3 LIFE INSURANCE. As long as Employee can pass the required physical
and is insurable at reasonable and customary rates, the Company hereby agrees to
purchase a $3,000,000 term life insurance policy covering Employee and to
maintain such policy as long as Employee remains in the employ of the Company.
Employee shall have the right, in his sole discretion, to designate the
beneficiaries under the term life insurance policy purchased by under this
Section 2.3.
SECTION 3. TERMINATION EVENTS.
3.1 TERMINATION. The Company retains its right to terminate Employee's
employment with or without Cause.
3.2 TERMINATION EVENT. Each of the following events shall be a
"TERMINATION EVENT:"
(a) The termination of the Employee without Cause; or
(b) The resignation of Employee upon no less than two weeks'
written notice to the Company under circumstances constituting Good Reason to
resign.
3.3 SALE OF THE COMPANY TERMINATION EVENT. Each of the following events
which occur (i) at any time following execution of a letter of intent or
definitive agreement for the Sale of the Company and on or before consummation
of such transaction, (ii) within 135 days prior to any consummated Sale of the
Company, or (iii) within twelve months following the Sale of the Company, shall
be a "SALE OF THE COMPANY TERMINATION EVENT:"
(a) The termination of the Employee without Cause; or
(b) The resignation of Employee upon no less than two weeks'
written notice to the Company under circumstances constituting Good Reason to
resign.
SECTION 4. SEVERANCE; NON-COMPETE AND NON-SOLICITATION.
4.1 SEVERANCE AMOUNT. Upon a Termination Event or Sale of the Company
Termination Event, the Company shall pay the Employee an amount (the "Severance
Payment") equal to twelve (12) months salary plus benefits in a lump sum within
three (3) days from the date of the Termination Event of Sale of Company
Termination Event, based on the greater of the base salary of Employee as of the
date of this Agreement or the then current base salary of Employee as of the
effective date of termination. If the same event meets the definition of both a
Termination Event and Sale of the Company Termination Event, Employee shall be
entitled to receive only one Severance Payment for such event. In addition, upon
a Termination Event or Sale of the Company Termination Event, the next two years
of scheduled vesting for Employee's stock options to purchase Company common
stock will accelerate and be vested upon either of such events, in accordance
with the Amendment to Incentive Stock Option Agreement between Employee and the
Company.
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4.2 PAYMENT MITIGATION. The Severance Payment payable under this
Agreement shall be paid by the Company to the Employee in a lump sum and shall
be deemed fully earned by Employee, subject to withholding; provided that the
net amount after withholding shall be immediately deposited in escrow ("ESCROW
DEPOSIT") with a mutually acceptable third party ("ESCROW AGENT"). Subject to
the mitigation provisions of this Section 4.2, the Escrow Agent shall deliver to
Employee out of escrow one twelfth of the total amount originally deposited in
escrow on each month commencing 30 days from the Termination Event or Sale of
Company Termination Event. Employee agrees that in the event he earns any
salary, consulting fees, signing bonuses, or other compensation income from a
party other than the Company during this twelve (12) month period ("MITIGATION
PERIOD"), that the Company shall be entitled to reduce its Severance Payment
obligation, net of withholding, by the amount of such payments received by
Employee net of withholding ("OTHER NET COMPENSATION") and that Employee will
promptly notify the Company and the Escrow Agent of his receipt of Other Net
Compensation. If the Company and the Escrow Agent receive such notice or
otherwise verify that Employee has received Other Net Compensation during the
Mitigation Period, the Escrow Agent shall deliver to the Company from the Escrow
Deposit an amount equal to the Other Net Compensation received by Employee
during the Mitigation Period. Once disbursed by the Escrow Agent, Employee shall
be under no obligation to reimburse the Company any of those disbursed amounts
unless Employee has failed to disclose the receipt of any Other Net Compensation
during the Mitigation Period. Any scheduled monthly disbursements due from the
Escrow Agent shall be offset and reduced by the amount of Other Net Compensation
received by Employee during the Mitigation Period. The Employee and Company will
enter into a suitable escrow agreement with the Escrow Agent to carry out the
provisions of this Section 4.2. Employee is under no duty to seek employment or
other sources of compensation income during the Mitigation Period.
4.3 ADDITIONAL SEVERANCE BENEFITS. The Severance Payment described in
this Section 4 does not include nor replace any other benefits payable to or
received by the Employee upon a Sale of the Company as described in Section 5.
4.4 NON-COMPETITION/NON-SOLICITATION. In the event that Employee
resigns without Good Reason or is terminated for Cause, for a period of twelve
months (the "TERM") from the date of that resignation/termination Employee
agrees that Employee will not, singly, jointly, or as a partner, member,
employee, agent, officer, director, stockholder (except as a holder of not more
than two percent of the outstanding stock of any company listed on a national
securities exchange, or actively traded in a national over-the-counter market),
equity holder, lender, consultant, independent contractor, or joint venturer of
any other person, or in any other capacity, directly or beneficially: (i) own,
manage, operate, join, control, or participate in the ownership, management,
operation or control of, or permit the use of his name by, or work for, or
provide consulting, financial or other assistance to, or be connected in any
manner with, a Competing Business anywhere in the Protected Territory during the
Term; (ii) employ, retain or engage (as an employee, consultant or independent
contractor), or induce or attempt to induce to be employed, retained or engaged,
any Person who is or was an employee of the Company during the Term; (iii)
induce or attempt to induce any Person who, on the date hereof or at any time
hereafter during the Term, is an employee of the Company to terminate his or her
relationship
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with the Company; or (iv) induce or attempt to induce any Person
which is a customer of the Company, or which otherwise is a contracting party
with the Company, as of the date hereof or at any time hereafter during the Term
to terminate any written or oral agreement or understanding with the Company.
SECTION 5. ACQUISITION BONUS; GROSS-UP AMOUNT.
5.1 ACQUISITION BONUS.
(a) The Company has adopted an Amended and Restated the
Company Bonus Program, adopted as of the date hereof (the "BONUS POOL"). The
Company hereby agrees that Employee shall be entitled to receive from the moneys
allocated to the Acquisition Bonus Pool ("ABP") the following percentages of the
Net Sales Proceeds from the Sale of the Company:
ACQUISITION PRICE "PERCENTAGE PAYABLE TO EMPLOYEE"
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$0 to less than $10 million 0%
$10 to less than $20 million 3%
$20 million or more 5%
In the event that Employee does not receive an amount equal to the applicable
Percentage Payable to Employee of the Net Sales Proceeds from the Sale of the
Company from the ABP, he shall be entitled to receive the balance of the
applicable Percentage Payable to Employee from the Management and Employee Bonus
Pool (the "MBP"). Employee hereby acknowledges that the applicable Percentage
Payable to Employee of the Net Sales Proceeds from the Sale of the Company that
he receives under this paragraph plus any amounts under Section 5.2 is the total
amount to be paid to Employee under the Bonus Pool and Section 5.2.
Notwithstanding the foregoing, all amounts payable hereunder to Employee from
MBP shall be reduced by an amount equal to the value of the spread between the
option exercise price of the Employee's options and the per share price to be
distributed to the common shareholders in connection with the Sale of the
Company for those options held by Employee that are "in-the-money". By way of
illustration, if the Acquisition Price is $21,000,000 and the Net Sales Proceeds
are $19,000,000, then the 5% payable to Employee would be applied to the entire
$19,000,000 amount. The Employee would receive $950,000 as an acquisition bonus,
less an In-The-Money Option amount as calculated in Section 3 of the Bonus Pool,
plus the gross-up amount specified in Section 5.2.
(b) Should a Current Stockholder Acquiring Party be the
purchaser in a Sale of the Company and that party does not receive, or waives
its right to receive, all or any portion of the purchase price otherwise payable
to stockholders, then and only in that event, the Net Sales Proceeds from the
Sale of the Company shall include the value of the shares of Company stock held
by such Current Stockholder Acquiring Party based on the same value per share
that will be paid or distributed to stockholders owning the same class or series
of shares (the " Value Adjustment"). The payment of bonuses applicable to this
Value Adjustment is an obligation of the Company and shall not reduce the amount
of Net Sales Proceeds from the Sale of the Company otherwise payable to
stockholders other than the Employee and other participants in the Bonus Pool.
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5.2 GROSS-UP AMOUNT. The Company shall provide an additional payment to
the Employee ("GROSS-UP PAYMENT") to cover all applicable excise taxes payable
by the Employee upon the distribution of any Bonus Pool Proceeds. The Gross-Up
Payment shall be payable from the consideration allocated to the ABP and/or the
MBP. The Company and Employee hereby agree, notwithstanding the foregoing that
the total amount paid to Employee under Section 5, including the Gross-Up
Payment, shall not exceed six and one quarter percent (6.25%) of the Net Sales
Proceeds from the Sale of the Company.
5.3 SEVERANCE BENEFITS. The payments under this Section 5 do not
include or replace any Severance Payment that may be payable to or received by
the Employee upon the occurrence of a Termination Event or a Sale of the Company
Termination Event, as described in Section 4.
SECTION 6. PARTIAL INVALIDITY.
The invalidity or unenforceability of a particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provisions were
omitted.
SECTION 7. TERMINATION OF AGREEMENT.
This Agreement shall terminate upon the earlier of: (i) the date the
Employee is terminated for Cause or resigns without Good Reason; (ii) twelve
months and one day after a Sale of the Company has occurred; or (iii) the fourth
(4th) anniversary of this Agreement. The obligations of Employee under Section
4.2 and 4.4 will survive termination of this Agreement.
SECTION 8. NO ORAL MODIFICATION.
Except as set forth in Section 9 below, no modification, amendment or
waiver of any of the provisions of this Agreement shall be deemed effective
unless made in writing specifically referring to this Agreement and duly signed
by each party hereto.
SECTION 9. MODIFICATION OF AGREEMENT.
In the event any provision of this Agreement is determined to be
invalid by any court or other entity of competent jurisdiction, such
provision(s) shall be deemed to have been amended and the parties hereto agree
to execute all documents necessary to evidence such amendment so as to eliminate
or modify any such invalid provision(s) so as to carry out the intent of this
Agreement enforceable in all respects as so modified.
SECTION 10. GOVERNING LAW/VENUE.
This Agreement shall be governed and construed by the provisions hereof
and in accordance with the laws of the State of Florida applicable to agreements
to be performed in the State of
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Florida. Venue for any litigation stemming from the construction and operation
of this Agreement shall be in Brevard County, Florida.
SECTION 11. ASSIGNABILITY.
This Agreement may not be assigned by either party, in whole or in
part, without the prior written consent of the party to be charged; provided,
however, that such prior written consent shall not be unreasonably withheld.
SECTION 12. BINDING EFFECT.
This Agreement shall be binding on the successors and assigns of either
party hereto, except that the Company shall not be relieved of any liability
hereunder upon the assignment, in connection with a Sale of the Company or
otherwise, of this Agreement. The Company agrees to obtain the consent of any
successor to be bound by this Agreement.
SECTION 13. ATTORNEYS' FEES.
In any suit brought by the Employee to enforce his rights under this
Agreement, if the Employee prevails, the Employee shall be entitled to
reasonable attorneys' fees and costs.
SECTION 14. COUNTERPARTS.
This Agreement may be signed and executed in one or more counterparts,
each which shall be deemed an original and all of which together shall
constitute one agreement.
SECTION 15. NOTICE.
Any consent, waiver, notice, demand, request, or other instrument
required or permitted to be given under this Agreement shall be deemed to have
been properly given when in writing and delivered in person or sent by certified
or registered mail, return receipt requested, postage prepaid, addressed:
If to the Company:
AirNet Communications Corporation
0000 Xxx Xxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
If to the Employee:
Xxxxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxx 00000
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Either party may change its address for notices by notice in the manner set
forth above.
SECTION 16. TERMINATION OF EMPLOYMENT LETTER.
Upon the execution and delivery of this Agreement by both the Company
and Employee, the Employment Letter shall be deemed terminated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMPANY:
AIRNET COMMUNICATIONS
CORPORATION, a Delaware corporation
By:
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Title:
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EMPLOYEE:
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Xxxxx X. Xxxxx
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