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EXHIBIT 10.14
PROXIM, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into by and between ▇▇▇▇▇ Messenger (the "Employee") and Proxim, Inc., a
Delaware corporation (the "Company"), effective as of October 19, 1998 (the
"Effective Date").
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain severance benefits upon Employee's termination of employment following a
Change of Control which provide the Employee with enhanced financial security
and provide incentive and encouragement to the Employee to remain with the
Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section
6 below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that
all of the obligations of the parties hereto with respect to this Agreement have
been satisfied.
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law, except as may otherwise be specifically provided under the terms
of any written formal employment agreement between the Company and Employee (an
"Employment Agreement").
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3. Severance Benefits.
(a) Termination Following Change of Control. If the Employee's
employment terminates at any time within twenty-four (24) months following a
Change of Control, then, subject to Sections 4 and 5, the Employee shall be
entitled to receive the following severance benefits and no other compensation,
severance or benefits:
(i) Involuntary Termination; Not for Cause Termination. If the
Employee's employment is terminated as a result of Involuntary Termination
(whether such termination is initiated by the Company or by the Employee), or as
a result of termination by the Company other than for Cause, then the Employee
shall receive the following severance benefits from the Company:
(A) Severance Payments. Cash payments in an amount equal to
one hundred percent (100%) of the Employee's Annual Compensation (as defined
below) for a period of twelve (12) months following the date of termination of
such Employee.
(B) Continued Employee Benefits. One hundred percent (100%)
Company-paid health, dental, vision and life insurance coverage at the same
level of coverage as was provided to such employee immediately prior to the
Change of Control (the "Company-Paid Coverage"), for a period of twelve (12)
months after the date of termination of such Employee. Company-Paid Coverage
shall not include the percentage of the payment for such insurance as
contributed by the Employee immediately prior to the Employee's termination (the
"Contribution Percentage"). Company-Paid Coverage is expressly contingent upon
timely payment of the Contribution Percentage by the Employee. If Employee's
health insurance coverage included the Employee's dependents immediately prior
to the Employee's termination, then Employees' Company-Paid Coverage shall
include health insurance coverage for such dependents, subject to timely
payments of the Contribution Percentage, as above. For purposes of the
continuation health coverage required under Section 4980B of the Code ("COBRA"),
the date of the "qualifying event" giving rise to an Employee's COBRA election
period (and that of his "qualifying beneficiaries") shall be the last date on
which the Employee receives Company-Paid Coverage under this Agreement. If the
Employee obtains comparable or better coverage prior to the lapse of the
specified Company-Paid Coverage period, the Employee must inform the Company in
writing within 30 days thereof and Company-Paid Coverage will thereupon be
canceled immediately.
(C) Options; Restricted Stock. In the event that the
Employee is entitled to severance benefits pursuant to subsection 3(a)(i), then
upon such termination, in addition to any portion of the Employee's stock
options that were exercisable immediately prior to such termination, or
restricted stock that was not subject to the right of repurchase held by the
Company, such unvested options shall vest immediately upon termination, and such
restricted stock shall immediately be released from the Company's right of
repurchase.
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(D) Outplacement Assistance. Employee shall be entitled to
reasonable, pre-approved Company-paid outplacement assistance, including job
counseling and referral services, for a period of six (6) months following the
date of termination of employment, not to exceed a total of $10,000.
(b) Timing of Severance Payments. The severance payment or payments
to which Employee is entitled shall be paid by the Company to Employee as salary
continuation on the same basis and timing as in effect immediately prior to the
Change of Control. If Employee should die before all amounts payable to him or
her have been paid, such unpaid amounts shall be paid to Employee's designated
beneficiary, if living, or otherwise to the personal representative of
Employee's estate.
(c) Voluntary Resignation; Termination For Cause. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not an Involuntary Termination), or if the Employee is terminated for Cause,
then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company's then
existing severance and benefits plans and practices or pursuant to other written
agreements with the Company.
(d) Disability; Death. If the Company terminates the Employee's
employment as a result of the Employee's Disability, or such Employee's
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company's then existing written
severance and benefits plans and practices or pursuant to other written
agreements with the Company.
(e) Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twenty-four (24) month period
following a Change of Control, then the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation except as provided in the
Employee=s Employment Agreement (if any) or under the Company's existing written
severance and benefits plans and practices or pursuant to any other written
agreements with the Company.
(f) Exclusive Remedy. In the event of a termination of Employee's
employment within twenty-four (24) months following a Change of Control, the
provisions of this Section 3 are intended to be and are exclusive and in lieu of
any other rights or remedies to which Employee or the Company may otherwise be
entitled, whether at law, tort or contract, in equity, or under this Agreement.
Employee shall be entitled to no benefits, compensation or other payments or
rights upon termination of employment following a Change in Control other than
those benefits expressly set forth in this Section 3, whichever shall be
applicable.
4. Limitation on Payments. In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 4, would be subject to the excise tax imposed by Section 4999 of the
Code, then the Employee's severance benefits under Section 3(a)(i) shall be
either
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(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax under Section
4999 of the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed by
Section 4999, results in the receipt by the Employee on an after-tax basis, of
the greatest amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section 4 shall be made in writing by the
Company's independent public accountants immediately prior to Change of Control
(the "Accountants"), whose determination shall be conclusive and binding upon
the Employee and the Company for all purposes. In the event of a reduction in
the benefits hereunder, Employee shall be given the choice of which benefits to
reduce. For purposes of making the calculations required by this Section 4, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Employee 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 4.
5. Covenants Not to Compete and Not to Solicit.
(a) Covenant Not to Compete. During the period in which Employee is
entitled to severance payments pursuant to this Agreement, Employee shall not
directly or indirectly engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership interest in,
or participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in a "Restricted Business" in
a "Restricted Territory" (as such terms are defined in Section 6 hereof). It is
agreed that ownership of not greater than 2% of the outstanding voting stock of
a publicly traded corporation shall not constitute a violation of this
provision.
(b) Covenant Not to Solicit. Until the Employee is no longer entitled
to severance payments pursuant to this Agreement, Employee will not directly or
indirectly
(i) solicit, encourage, or take any other action which is
intended to induce any other employee, independent contractor, customer or
supplier of the Company or its parent corporation to terminate his or her
relationship with the Company or its parent corporation; or
(ii) interfere in any manner with the contractual or employment
relationship between the Company or its parent corporation and any such
employee, independent contractor, customer or supplier of the Company or its
parent corporation.
(c) Representations. The parties intend that the covenants contained
in Sections 5(a) and (b) shall be construed as a series of separate covenants,
one for each county, city and state (or
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analogous entity) and country of the Restricted Territory. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms to the
covenant contained in the preceding paragraphs. If, in any judicial proceeding,
a court shall refuse to enforce any of the separate covenants (or any part
thereof) deemed included in said paragraphs, then such unenforceable covenant
(or such part) shall be deemed eliminated from this Agreement for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants (or portions thereof) to be enforced.
(d) Reformation. In the event that the provisions of this Section 5
should ever be deemed to exceed the time or geographic limitations, or the scope
of this covenant, permitted by applicable law, then such provisions shall be
reformed to the maximum time or geographic limitations, as the case may be,
permitted by applicable laws.
(e) Reasonableness of Covenants. Employee represents that he (i) is
familiar with the covenants not to compete and not to solicit, and (ii) is fully
aware of his obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of these
covenants.
6. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Annual Compensation. "Annual Compensation" means an amount equal
to the sum of Employee's (i) annual Company salary at the highest rate in effect
during the twelve (12) months immediately preceding the Change of Control or the
date of Involuntary Termination or termination by the Company other than for
Cause, whichever is highest and (ii) 100% of Employee's annual target bonus as
in effect immediately prior to the Change of Control or the date of Involuntary
Termination or termination by the Company other than for Cause, whichever is
highest.
(b) Cause. "Cause" shall mean (i) any act of dishonesty taken by
Employee and intended to result in substantial gain or personal enrichment of
the Employee, (ii) Employee personally engaging in knowing and intentional
illegal conduct which is injurious to the Company or its affiliates; (iii)
Employee's continued failure to substantially perform the duties and obligations
of his employment which are not remedied within thirty (30) days after written
notice thereof from the Board of Directors or Chief Executive Officer of the
Company to Employee; (iv) Employee being convicted of a felony, or committing an
act of dishonesty or fraud against, or the misappropriation of property
belonging to, the Company or its affiliates; (v) Employee's engagement in
repeated substance abuse which impairs his ability to perform the duties and
obligations of Employee's employment or impairs the reputation of the Company;
(vi) Employee personally engaging in any act of moral turpitude that impairs the
reputation of the Company; (vii) the performance by Employee of those acts
identified in Section 2924 of the California Labor Code; (viii) Employee's
commencement of employment with another employer while he is an employee of the
Company; or (ix) any material breach by Employee of any material provision of
this Agreement (or any confidentiality agreement or invention or proprietary
information agreement with the Company) which continues uncured for thirty (30)
days following notice thereof.
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(c) Change of Control. "Change of Control" means the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing forty percent (40%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least forty percent (40%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.
(d) Disability. "Disability" shall mean that the Employee has been
unable to perform his Company duties as the result of his incapacity due to
physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee's
legal representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days' written notice by the Company of its intention to terminate the
Employee's employment. In the event that the Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(e) Involuntary Termination. "Involuntary Termination" shall mean (i)
a reduction by the Company in the Base Pay of Employee as in effect immediately
prior to such reduction; (ii) without the Employee's express written consent,
the Company requires the Employee to change the location of his or her job or
office, so that he or she will be based at a location more than twenty-five (25)
miles from the location of his job or office immediately prior to the Change of
Control; (iii) the cost to the Company of Company-provided benefits to Employee,
taken as a whole, under plans, arrangements policies and procedures, materially
decreases below the cost of the Company-provided
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benefits to Employee immediately prior to the Change of Control, or the cost to
the Employee of such benefits materially increases above the cost to the
Employee immediately prior to the Change of Control; however, if such decrease
or increase results either from the Company's good faith exercise of business
judgment, a decrease that is implemented affecting the majority of Company's
employees, or in response to changes in federal or state law, such decrease or
increase shall not constitute Involuntary Termination; (iv) the significant
reduction of the Employee's duties, authority or responsibilities, relative to
the Employee's duties, authority or responsibilities as in effect immediately
prior to such reduction, or an assignment to Employee of such reduced duties,
authority or responsibilities; provided, however, that a reduction in duties
solely by virtue of the Company being acquired and made part of a larger entity
(as for example when the Chief Financial Officer of Proxim, Inc. remains as such
following a change of control and is not made the Chief Financial Officer of the
acquiring corporation) shall not constitute "Involuntary Termination"; (v) a
successor company fails or refuses to assume the Company's obligations under
this Agreement.
(f) Restricted Business. "Restricted Business" means the design,
manufacture, marketing or support of wireless local area data networking
products based on spread spectrum radio frequency technology.
(g) Restricted Territory. "Restricted Territory" means worldwide.
7. Successors.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
7(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. Notice.
(a) General. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and directed to the attention of its
President.
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(b) Notice of Termination. Any termination by the Company for Cause
or by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 8(a) of this Agreement. Such notice
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated, and shall
specify the termination date (which shall be not more than 30 days after the
giving of such notice). The failure by the Employee to include in the notice any
fact or circumstance which contributes to a showing of Involuntary Termination
shall not waive any right of the Employee hereunder or preclude the Employee
from asserting such fact or circumstance in enforcing his rights hereunder.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.
(b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto and supersedes in their entirety all prior
representations, understandings, undertakings or agreements (whether oral or
written and whether expressed or implied) of the parties with respect to the
subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws, but not the choice of law rules, of the State of California.
(e) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.
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(g) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year set
forth below.
COMPANY PROXIM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President and CFO
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Date: October 19, 1998
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EMPLOYEE By: /s/ ▇▇▇▇▇ Messenger
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Title: Vice President of Operations
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Date: October 19, 1998
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