<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
|_| 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 0-26747
AIRONET WIRELESS COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 34-1758180
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3875 EMBASSY PARKWAY, AKRON, OHIO 44333
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(330) 664-7900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
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) Yes [X] No [ ], and (2) has been
subject to such filing requirements for the past 90 days Yes |X| No |_|.
At November 12, 1999 there were 14,202,910 shares of Registrant's
Common Stock outstanding.
<PAGE> 2
AIRONET WIRELESS COMMUNICATIONS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1999
and March 31, 1999.................................................................. 3
Consolidated Statements of Operations for the
Three-Month and Six-Month Periods Ended September 30, 1999 and 1998................. 4
Consolidated Statements of Cash Flows for the
Three-Month Periods Ended September 30, 1999 and 1998............................... 5
Notes to the Consolidated Financial Statements.......................................... 6
Item 2. Management's Discussions and Analysis of Financial Condition
and Results of Operation............................................................ 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................... 26
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................................................ 28
Item 6. Exhibits and Reports on Form 8-K......................................................... 29
Signatures .................................................................................... 32
Exhibit Index.................................................................................... 33
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AIRONET WIRELESS COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, MARCH 31,
1999 1999
(UNAUDITED)
---------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 48,008 $ 6,137
Accounts receivable, trade, net 5,375 4,242
Accounts receivable, other 680 243
Receivable from affiliate 4,051 3,609
Inventories 5,039 4,625
Deferred tax asset 802 733
Prepaid expenses and other 678 404
Income taxes receivable 282 620
-------- --------
Total current assets 64,915 20,613
Property and equipment, net 2,717 2,381
Deferred tax asset 932 882
Intangible assets, net 2,725 3,191
Other long-term assets 5 131
-------- --------
Total assets $ 71,294 $ 27,198
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,838 $ 4,618
Payable to affiliate 1,015 2,085
Income taxes payable 239 30
Deferred tax liability -- 10
Accrued liabilities 4,599 3,358
-------- --------
Total current liabilities 10,691 10,101
Line of credit -- 2,500
-------- --------
Total liabilities 10,691 12,601
Stockholders' equity:
Common stock, $.01 par value per share; 60,500,000
shares authorized; 14,203,544 shares issued and 142 96
outstanding
Additional paid-in capital 63,638 19,101
Accumulated deficit (3,177) (4,600)
-------- --------
Total stockholders' equity 60,603 14,597
-------- --------
Total liabilities and stockholders' equity $ 71,294 $ 27,198
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
AIRONET WIRELESS COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Non-affiliate $ 10,298 $ 5,049 $ 19,763 $ 11,211
Affiliate product 3,231 2,470 4,724 3,904
Affiliate royalty 1,445 2,460 2,890 4,341
-------- -------- -------- --------
Total revenues 14,974 9,979 27,377 19,456
-------- -------- -------- --------
Cost of revenues:
Non-affiliate 5,800 3,541 11,097 7,449
Affiliate 2,420 2,072 3,570 3,286
-------- -------- -------- --------
Total cost of revenues 8,220 5,613 14,667 10,735
-------- -------- -------- --------
Gross profit:
Non-affiliate 4,498 1,508 8,666 3,762
Affiliate product 811 398 1,154 618
Affiliate royalty 1,445 2,460 2,890 4,341
-------- -------- -------- --------
Total gross profit 6,754 4,366 12,710 8,721
-------- -------- -------- --------
Operating expenses:
Sales and marketing 2,432 1,274 4,791 2,756
Research and development 1,758 1,527 3,516 3,151
General and administrative 1,067 898 1,848 1,998
Goodwill amortization 216 216 432 432
-------- -------- -------- --------
Total operating expenses 5,473 3,915 10,587 8,337
-------- -------- -------- --------
Income from operations 1,281 451 2,123 384
Interest (income), net (372) -- (389) (10)
-------- -------- -------- --------
Income before income taxes 1,653 451 2,512 394
Provision for income taxes 675 618 1,089 540
-------- -------- -------- --------
Net income (loss) $ 978 ($ 167) $ 1,423 ($ 146)
======== ======== ======== ========
Net income (loss) per common share:
Basic $ 0.08 ($ 0.02) $ 0.13 ($ 0.02)
-------- -------- -------- --------
Diluted $ 0.07 ($ 0.02) $ 0.12 ($ 0.02)
-------- -------- -------- --------
Weighted average shares used in calculating
net income (loss) per common share:
Basic 12,303 9,339 10,838 9,277
-------- -------- -------- --------
Diluted 13,480 9,339 12,051 9,277
-------- -------- -------- --------
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
AIRONET WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................................... $ 1,423 $ (146)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................................................. 606 653
Amortization ................................................................. 561 577
Provision for doubtful accounts .............................................. 163 156
Provision for inventory obsolescence ......................................... 655 96
Deferred income taxes ........................................................ (129) (109)
Stock compensation expense ................................................... 224 780
Changes in other assets and liabilities:
Accounts receivable, trade ................................................ (1,296) 882
Accounts receivable, other ................................................ (437) (2,259)
Receivable from affiliate ............................................... (442) (1,534)
Inventories ............................................................. (1,069) (633)
Prepaid expenses and other assets ....................................... (274) (89)
Income taxes receivable ................................................. 338 --
Other long-term assets .................................................. (12) (46)
Accounts payable ........................................................ 220 575
Payable to affiliate .................................................... (1,260) 121
Income taxes payable .................................................... 209 650
Accrued liabilities ..................................................... 1,241 680
-------- --------
Total adjustments ..................................................... (702) 500
-------- --------
Net cash provided by operating activities ............................. 721 354
Cash flows from investing activities:
Capital expenditures ............................................................ (942) (563)
Purchases of intangible assets .................................................. (95) --
-------- --------
Net cash used in investing activities ................................. (1,037) (563)
-------- --------
Cash flows from financing activities:
Payable to affiliate ............................................................ -- (3,648)
Net proceeds from sales of stock ................................................ 45,664 1,918
Line of credit .................................................................. (2,500) 2,500
Options exercised ............................................................... 202 --
Deferred offering costs ......................................................... (1,179) --
-------- --------
Net cash provided by financing activities ............................. 42,187 770
-------- --------
Net (decrease) increase in cash and cash equivalents ............................... 41,871 561
Cash and cash equivalents at beginning of period ................................... 6,137 2,864
-------- --------
Cash and cash equivalents at end of period ......................................... $ 48,008 $ 3,425
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE> 6
AIRONET WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The financial information herein includes the accounts of Aironet
Wireless Communications, Inc. and its subsidiaries (the "Company"). The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all financial information and disclosures
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, these unaudited consolidated financial
statements reflect all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the consolidated statement of
financial position as of September 30, 1999 and the related statements of
operations and cash flows for the three-month and six-month periods ended
September 30, 1999 and 1998. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full year. For
further information refer to the Consolidated Financial Statements and the Notes
thereto included in the Company's Registration Statement on Form S-1, as amended
(Registration No. 333-78507), filed with the Securities and Exchange Commission
on May 14, 1999 and which became effective on July 29, 1999 (the "Registration
Statement") and Form 10-Q filed September 10, 1999.
The Company has no items of other comprehensive income.
NOTE 2 -- INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
---- ----
(IN THOUSANDS)
<S> <C> <C>
Purchased components........................................................... $ 3,915 $ 3,723
Work-in-process................................................................ 401 290
Finished goods................................................................. 723 612
---------- ----------
$ 5,039 $ 4,625
========== ==========
</TABLE>
NOTE 3 -- NET INCOME PER COMMON SHARE
Basic net income per common share is based on the weighted average
number of common shares outstanding during the period. Diluted net income per
common share is based on the weighted average number of common shares
outstanding during the period plus, if dilutive, the incremental number of
common shares issuable on a pro forma basis upon the exercise of employee and
non-employee stock options and stock purchase warrants, assuming the proceeds
are used to repurchase outstanding shares at the average market price during the
quarter. A reconciliation of the denominators of the basic and diluted per share
computations is provided below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
SEPTEMBER 30, SEPTEMBER 30,
-------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares outstanding - basic ................ 12,303 9,339 10,838 9,277
Additional shares potentially issuable for
stock options and stock purchase warrants ...................... 1,177 -- 1,213 --
------ ------ ------ ------
Weighted average common shares outstanding - diluted .............. 13,480 9,339 12,051 9,277
====== ====== ====== ======
</TABLE>
6
<PAGE> 7
For the three months ended September 30, 1999 and 1998, 0 and 1,032,737
respectively, of stock options and stock purchase warrants were not included in
the diluted per share computations due to not being "in the money." For the six
months ended September 30, 1999 and 1998, 0 and 1,032,737 respectively, of stock
options and stock purchase warrants were not included in the diluted per share
computations due to not being "in the money." The computations of net income per
common share for all periods presented do not include the effects of any
dilutive incremental common shares related to stock options granted or common
stock warrants issued with exercise rights that are contingent, so long as the
contingency is not resolved.
NOTE 4 -- STOCKHOLDERS' EQUITY AND STOCK WARRANTS AND OPTIONS
STOCKHOLDER RIGHTS AGREEMENT
On April 12, 1999, the Board of Directors adopted and approved a
stockholder "Rights Plan" and the Board declared a dividend of one common stock
purchase right on each share of common stock outstanding prior to the
effectiveness of the plan; thereafter, shares are issued pursuant to the plan
with a purchase right. The Company's Stockholders approved the Rights Plan on
May 7, 1999. The Rights Plan is designed to deter abusive market manipulation or
unfair takeover tactics and to prevent an acquirer from gaining control of the
Company without offering a fair price to all stockholders. Each purchase right,
when exercisable, entitles the registered holder to purchase one share of common
stock at a price of $125 per share, subject to adjustment. The purchase rights
become exercisable in the event the Company is a party to certain merger or
business combination transactions, as defined, or in the event an "acquiring
person," as defined, becomes a beneficial owner of 15% or more of the Company's
outstanding common stock. In these circumstances, each holder of a share right
(other than the acquiring person) will have the right to receive shares of the
acquiring company or the Company, as appropriate, having a market value of two
times the exercise price of the purchase right. The rights expire ten years from
the effective date of the plan unless earlier redeemed by the Company. The
rights can be redeemed at a price of $.001 per right.
CAPITAL STOCK
On August 27, 1999, the Company's underwriters exercised their option
to purchase an additional 846,800 shares to cover over-allotments sold by the
underwriters in our Initial Public Offering ("Offering"), of which 564,562
shares were sold by the Company and 282,238 shares were sold by Telxon, as a
selling stockholder. The closing of this transaction took place on September 1,
1999 with proceeds to the Company of $5,775,469.26.
NOTE 5 -- SUBSEQUENT EVENTS
Effective October 19, 1999, Aironet's Board of Directors entered into
Change of Control agreements with five of its executives. Pursuant to these
agreements, should an executive be terminated without cause or resigns with good
cause within two years of a change of control, that executive will receive
severance pay equivalent to one or two times the executive's prior years' annual
compensation and receive benefit plan coverage for a period of up to two years
from change in control.
Effective October 29, 1999, the Compensation Committee of Aironet's
Board of Directors adopted the First Amendment to the Aironet Wireless
Communications, Inc, 1999 Employee Stock Purchase Plan. The amendment changes
the commencement of the initial payment period from the first day of the first
month following our initial public offering to the first pay day in November
1999 and makes a technical change relating to foreign subsidiaries.
Pursuant to an Agreement and Plan of Merger and Reorganization dated as
of November 8, 1999 (the "Merger Agreement") by and among Cisco Systems, Inc.
("Cisco"), Aironet and Osprey Acquisition Corporation, a wholly-owned subsidiary
of Cisco ("Merger Sub"), Merger Sub will merge (the "Merger") with and into
Aironet, with the separate corporate existence of Merger Sub ceasing and Aironet
continuing as the surviving corporation and a wholly-owned subsidiary of Cisco.
At the effective time of the Merger (the "Effective Time"), each share of
Aironet's common stock issued and outstanding immediately prior to the Effective
Time will be converted automatically into the right to receive 0.63734 shares of
Cisco's common stock, and the Aironet stock will be deregistered and delisted.
The value of the
7
<PAGE> 8
transaction based on the trading price of Cisco's common stock on the date of
the Merger Agreement is approximately $799 million.
The consummation of the Merger is subject to various conditions
precedent, including (i) approval of the Merger Agreement by the stockholders of
Aironet and (ii) expiration or early termination of the waiting period required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Aironet has granted Cisco an option to acquire 2,826,375 shares of its
common stock, at an exercise price of $48 per share, exercisable upon the
occurrence of certain events and has agreed to pay Cisco a fee of $25 million if
the Merger is not consummated and certain events have occurred. In addition,
certain stockholders of Aironet have agreed to vote in favor of the approval of
the Merger Agreement.
In connection with the Merger Agreement, Aironet's Board of Directors
adopted Amendment No. 1 to the Stockholder Rights Agreement dated November 8,
1999. The amendment assures that the purchase rights associated with Aironet's
common stock do not become exercisable as a result of Aironet entering into the
Merger Agreement, consummating the Merger or in the event that Telxon
Corporation transfers its shares of Aironet to a wholly owned subsidiary of
Telxon prior to the Merger. In addition, the Company entered into an Agreement
with Telxon and Cisco dated as of November 8, 1999, pursuant to which certain of
Telxon's agreements with Aironet terminate at the Effective Time of the Merger
and certain other agreements will come into force.
Also in connection with the Merger, Aironet's Board of Directors took
action not to accelerate outstanding options other than those granted under the
1999 Stock Option Plan for Non-Employee Directors and not to cash out any
outstanding options which will be assumed by Cisco. Aironet's employee benefit
plans will not be assumed by Cisco, rather after the Merger eligible employees
will be able to participate in Cisco's benefit plans.
On October 18, 1999, Aironet's Board of Directors granted options under
the 1999 Omnibus Stock Incentive Plan to purchase 105,000 shares of the
Company's common stock.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
ACT OF 1934, AS AMENDED. SUCH STATEMENTS ARE BASED UPON MANAGEMENTS' CURRENT
EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. ANY STATEMENTS CONTAINED
HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE
FORWARD-LOOKING STATEMENTS. FOR EXAMPLE, THE WORDS "BELIEVES," "ANTICIPATES,"
"PLANS," "EXPECTS," "INTENDS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. AIRONET'S ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DISCREPANCY INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "OTHER FACTORS AFFECTING OPERATING
RESULTS, LIQUIDITY AND CAPITAL RESOURCES" BELOW, AS WELL AS RISK FACTORS
INCLUDED IN THE REGISTRATION STATEMENT. ALL FORWARD-LOOKING STATEMENTS IN THIS
DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO AIRONET AS OF THE DATE HEREOF AND
AIRONET ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.
OVERVIEW
Aironet designs, develops and markets high speed, standards-based
wireless local area networking solutions. Our products utilize advanced radio
frequency and data communication technologies to connect users to computer
networks ranging in size and complexity from enterprise-wide LANs to home
networks. Each of our product families is designed around our Microcellular
Architecture, a distributed wireless network designed to support the unique
requirements of mobile computing. Our wireless LAN solutions are used as
extensions of existing enterprise networks, enabling personal computer users to
maintain a wireless network connection anywhere throughout a building or around
a campus. In addition, our LAN adapters are configurable as peer-to-peer
wireless networks for providing shared access to files, peripherals and the
Internet in small office/home office environments.
We sell indirectly through a network of distributors, resellers and
OEMs. We have a dedicated OEM sales organization. The typical OEM sales cycle
involves six months during which evaluations and negotiations over price and
sometimes volume levels take place. Our distributors sell product to our
resellers. Our distributors generally maintain inventory to fulfill orders from
8
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our resellers. We have a dedicated sales organization to support our resellers
in their efforts to sell to end users. Resellers have a choice of directly
purchasing through us or through our distributors.
We recognize revenues from sales to resellers and OEMs at the time we
ship the products. We are a party to contracts with our major distributors,
wherein we either reserve against revenues from our sales to distributors or
defer revenue recognition, depending on the nature and scope of the
distributor's return right. Distributors under contract are afforded price
protection. We reserve against revenue for those price protections, provided to
the distributors under contract. We believe that these rights of return and
price protections are standard negotiated terms provided by manufacturers to
large distributors of high tech products.
9
<PAGE> 10
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, our operating
results expressed as a percentage of our total revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
SEPTEMBER 30, SEPTEMBER 30,
-------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Non-affiliate.........................................................69% 51% 72% 58%
Affiliate product.....................................................22 25 17 20
Affiliate royalty......................................................9 24 11 22
----- ----- ----- -----
Total revenues...................................................100 100 100 100
----- ----- ----- -----
Cost of revenues.........................................................55 56 54 55
----- ----- ----- -----
Gross profit.............................................................45 44 46 45
Operating expenses:
Selling and marketing.................................................16 13 17 14
Research and development..............................................12 15 13 16
General and administrative.............................................7 9 7 11
Goodwill amortization.....................................................2 2 1 2
.............................................................----- ----- ----- -----
Total operating expenses.................................................37 39 38 43
----- ----- ----- -----
Income (loss) from operations.............................................8 5 8 2
Interest expense (income), net...........................................(3) 0 (1) 0
----- ----- ----- -----
Income (loss) before income taxes........................................11 5 9 2
----- ----- ----- -----
Provision (benefit) for income taxes......................................4 6 4 3
----- ----- ----- -----
Net income................................................................7 (1) 5 (1)
</TABLE>
The following table presents, for the periods indicated, costs of
revenues and gross profits specifically as a percentage of non-affiliate,
affiliate product and affiliate royalty revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cost of revenues:
Non-affiliate.........................................................56% 70% 56% 66%
Affiliate product.....................................................75 84 76 84
Affiliate royalty....................................................--- --- --- ---
Gross profit:
Non-affiliate.........................................................44% 30% 44% 34%
Affiliate product.....................................................25 16 24 16
Affiliate royalty....................................................100 100 100 100
</TABLE>
10
<PAGE> 11
THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS
AND SIX MONTHS ENDED SEPTEMBER 30, 1998
Revenues
Total Revenues. Total revenues increased 50% from $10.0 million in the
three months ended September 30, 1998 to $15.0 million in the three months ended
September 30, 1999, and increased 41% from $19.5 million in the six months ended
September 30, 1998 to $27.4 in the six months ended September 30, 1999. These
increases resulted primarily from increased sales of our high speed (11 Mbps)
and IEEE 802.11 products to our non-affiliate customers.
During the three months ended September 30, 1999, we derived 21% of our
total revenues from sales to customers outside the United States, compared to
23% of our total revenues in the three months ended September 30, 1998.
International revenues grew 33% from $2.3 million in the three months ended
September 30, 1998 to $3.1 million in the three months ended September 30, 1999.
During the six months ended September 30, 1999, we derived 24% of our
total revenues from sales to customers outside the United States, compared to
22% of our total revenues in the six months ended September 30, 1998.
International revenues grew 54% from $4.3 million in the six months ended
September 30, 1998 to $6.7 million in the six months ended September 30, 1999.
These increases were due primarily to increased sales of our high
speed and IEEE 802.11 based products. Our foreign sales are made in U.S.
dollars, and therefore the adoption of the Euro as an European currency should
not have a direct impact on our foreign exchange.
Non-affiliate. Non-affiliate revenues grew 104% from $5.0 million in
the three months ended September 30, 1998 to $10.3 million in the three months
ended September 30, 1999, and 76% from $11.2 million in the six months ended
September 30, 1999 to $19.8 million for the six months ended September 30, 1999.
Increased non-affiliate revenues resulted from the continued success of our new
high speed (11Mbps) 4800 Turbo DS in-building wireless LAN product line and the
BR500 building-to-building product line.
As a percentage of total revenues, non-affiliate revenues increased
from 51% in the three months ended September 30, 1998 to 69% in the three months
ended September 30, 1999 and from 58% to 72% in the comparable six month
periods. This increase was as the result of higher non-affiliate sales and lower
revenues from our affiliate.
Affiliate. Affiliate revenues are derived from Telxon Corporation and
consist of product and royalty revenues. As a percentage of total revenues,
affiliate revenues decreased from 76% in fiscal year 1997 to 55% in fiscal year
1998 and 37% in fiscal year 1999. Affiliate revenues as a percentage of total
revenues were 31% during the three months ended September 30, 1999 compared to
49% for the three months ended September 30, 1998 and 24% for the three months
ended June 30, 1999. For the comparable six-month periods, the percentage
declined from 42% to 28%.
This continued decrease is due in large part to a significant increase
in product sales to non-affiliate customers and reflects the market acceptance
of our newer, high speed and standards-compliant products and growth of our
customer base. This decrease is also due in part to a decrease in affiliate
royalty revenue, offset in part by an increase in affiliate product revenue.
Affiliate Product. Product revenues from Telxon increased 31% from $2.5
million in the three months ended September 30, 1998 to $3.2 million in the
three months ended September 30, 1999 and increased 21% from $11.2 million to
$19.8 million for the comparable six month periods. This increase was primarily
due to increased sales to Telxon of our IEEE 802.11-based product lines: 4800
Turbo DS series, 4500 series and 3500 series.
Affiliate Royalty. Royalty revenues from Telxon decreased 41% from $2.5
million in the three months ended September 30, 1998 to $1.4 million in the
three months ended September 30, 1999 and decreased 33% from $4.3 million to
$2.9 million for the comparable six month period. In the fiscal quarter ended
March 31, 1999, the License, Rights and Supply agreement with Telxon was amended
to provide for a decreasing fixed royalty, instead of a per unit royalty. The
fixed royalty permits us to
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recognize affiliate royalty income on a straight-line basis and resulted in
lower royalty revenue in the three month and six-month periods ended September
30, 1999 compared to the three months and six months ended September 30, 1998.
Gross Profit
Total Gross Profit. Our total gross profit increased 55% from $4.4
million in the three months ended September 30, 1998 to $6.8 million in the
three months ended September 30, 1999, and increased 46% from $8.7 million for
the six month period ended September 30, 1998 to $12.7 million for the six month
period ended September 30, 1999.
Non-affiliate. Non-affiliate gross profit as a percentage of revenue
increased to 44% in the three months ended September 30, 1999 from 30% in the 3
months ended September 30, 1998. For the six month's ended September 30, 1999,
non-affiliate gross profit percentage was 44% as compared to 34% for the six
month's ended September 30, 1998. These increases resulted primarily from the
success of our new high speed BR500 building-to-building product lines and the
4800 Turbo DS in-building wireless LAN product line as well as cost reductions
on our other 802.11 compliant products.
Affiliate Product. Affiliate gross profit as a percentage of revenue
increased to 25% in the three months ended September 30, 1999 from 16% in the 3
months ended September 30, 1998. For the six month's ended September 30, 1999,
non-affiliate gross profit percentage was 24% as compared to 16% for the six
month's ended September 30, 1998. This is primarily due to changes in product
mix.
Affiliate Royalty. Each dollar of royalty revenues results in an
equivalent gross profit because there is a de minimus cost of revenues
associated with royalties. Royalty gross profit decreased 41% from $2.5 million
in the three months ended September 30, 1998 to $1.4 million in the three months
ended September 30, 1999 and decreased 33% from $4.3 million in the six months
ended September 30, 1998 to $2.9 million for the six months ended September 30,
1999. In the fiscal quarter ended March 31, 1999, the License, Rights and Supply
agreement with Telxon was amended to recognize royalty income on a straight-line
basis instead of a per unit basis. This resulted in lower royalty gross profit
in the three-month and six-month periods ended September 30, 1999 compared to
the three-month and six-month periods ended September 30, 1998.
Operating Expenses
Sales and Marketing. Our sales and marketing expenses increased 91%
from $1.3 million in the three months ended September 30, 1998 to $2.4 million
in the three months ended September 30, 1999, and increased 74% from $2.8
million in the six months ended September 30, 1998 to $4.8 million in the six
months ended September 30, 1999. This increase is primarily due to increases in
headcount and associated expenses along with increased emphasis on our
value-added reseller program.
As a percentage of total revenues, sales and marketing expenses
increased from 13% in the three months ended September 30, 1998 to 16% in the
three months ended September 30, 1999 and increased from 14% in the six months
ended September 30, 1998 to 18% for the six months ended September 30, 1999. We
expect that sales and marketing expenses will increase in absolute dollars as we
expand our branding program and further develop our sales channels, but will
vary from quarter to quarter due to timing of trade shows, advertising programs,
and product launches during the year.
Research and Development. Research and development expenses increased
15% from $1.5 million in the three months ended September 30, 1998 to $1.8
million in the three months ended September 30, 1999 and increased 12% from $3.2
million in the six months ended September 30, 1998 to $3.5 million for the six
months ended September 30, 1999. This increase resulted primarily from increases
in engineering headcount.
As a percentage of total revenues, research and development expenses
decreased from 15% in the three months ended September 30, 1998 to 12% in the
three months ended September 30, 1999 and from 16% for the six months ended
September 30, 1998 to 13% for the six months ended September 30, 1999. We expect
that research and development expenses will increase in absolute dollars as we
expand our offering of high speed networking solutions.
General and Administrative. Our general and administrative expenses
increased 19% from $0.9 million in the three months ended September 30, 1998 to
$1.1 million in the three months ended September 30, 1999. Approximately half of
the
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increase over prior year related to incremental expenses related to being a
public company in the current year along with increases in headcount.
Our general and administrative expenses decreased 8% from $2.0 million
for the six month period ended September 30, 1998 to $1.8 million for the six
month period ended September 30, 1999. Included in the six month period ended
September 30, 1998 is $0.8 million of non-cash compensation expense while there
is only $0.2 million of non-cash compensation expense included in the six month
period ending September 30, 1999. After consideration of this impact, general
and administrative expenses increased $0.4 million. Approximately half of this
increase is due to new hires while the rest is due to required insurance expense
and other expenses related to being a public company in the current year.
Provision for Income Taxes
Our effective income tax rate of 137% exceeded the statutory rate for
the three months ended September 30, 1998 primarily due to various permanent
items such as goodwill, state taxes, foreign rate differential, and
non-deductible compensation expense resulting from the exercise of specific
stock options paid for by a note to us in February 1998. Our effective income
tax rate for the three months ended September 30, 1999 was 41% which exceeded
the statutory rate primarily due to various permanent items such as goodwill,
state taxes, and the foreign rate differential.
LIQUIDITY AND CAPITAL RESOURCES
On July 30, 1999, we concluded the Offering of 6,000,000 shares of
common stock, in which we sold 4 million shares of common stock and received
approximately $40.9 million in cash after underwriter discounts and commissions
but prior to deduction of unpaid offering expenses. A portion of the proceeds
from the Offering was used to repay approximately $2.5 in outstanding debt
under our line of credit, with the balance remaining for general corporate
purposes. We believe that the proceeds of the Offering, cash and cash
equivalents balances generated from operations and our existing line of credit
will be sufficient to meet our operating and capital expenditure requirements
for at least the next twelve months. To the extent necessary, we may also
satisfy capital needs through bank borrowings and capital leases if these
sources are available on satisfactory terms. We may also from time to time
consider the acquisition of complementary technologies, although we have no
present commitments or agreements with respect to any specific acquisitions.
Any specific acquisitions could be of a size that would require us to raise
additional funds through the issuance of additional equity or debt securities.
There can be no assurance that these funds, if required, would be available on
terms acceptable to us, if at all.
As of September 30, 1999 we have no outstanding debt.
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<PAGE> 14
YEAR 2000 READINESS DISCLOSURE
Year 2000 issues result from the fact that many computer programs were
written with date-sensitive codes that utilize only the last two digits of a
date rather than all four digits to refer to a particular year. As the year 2000
approaches, these computer programs may be unable to process accurately date-
dependent information, as a program might interpret the year 2000 as 1900.
The potential for Year 2000 issues arise primarily in three areas:
- - the products we sell, which might be date dependent and, as a result,
improperly operate;
- - our dependence on vendors and contract manufacturers for components and
subassemblies that might be impacted by the Year 2000 issues, and their
inability to provide us with goods on a timely basis and within
specifications due to their unresolved Year 2000 issues; and
- - our internal use of hardware or software computing resources which
improperly recognize the true date and which could cause us to, among
other things, improperly process customer orders or business
information, and could result in failure of our internal systems.
In the fiscal quarter ended March 31, 1999, we hired an independent
Year 2000 consultant to augment our internal efforts to complete a plan for
systematically assessing our Year 2000 exposure. Our assessment plan has been
completed, and we are now taking actions consistent with that plan.
How Far Along Are We?
We have completed testing of 100% of our critical systems and a
majority of our non-critical systems, with the following results.
Our Products. We have evaluated our product line for year 2000 issues
and found that our products are not date-dependent, and we will be making no
Year 2000 product revisions.
Vendors. We have obtained a Year 2000 compliance response from 72% of
our vendors. We continue to request vendor certifications from our remaining
vendors.
Internal Systems. Consistent with the results of our readiness
assessment, we have performed a live Year 2000 test of our payables, receivables
and financial reporting systems, and our manufacturing, purchasing and sales
systems. Of these systems, two add-on software packages which perform non-
critical functions had Year 2000 deficiencies. These deficiencies have been
corrected. We have completed testing of our desktop PCs. Of these PCs, only one
PC was not Year 2000 compliant. This PC has been upgraded and is currently Year
2000 compliant. Laboratory PCs will not be tested as they are known not to be
Year 2000 compliant and they perform only non date sensitive tasks. Our computer
servers have been fully tested. One unit was not Year 2000 compliant and was
replaced in July 1999.
Year 2000 Problems Experienced to Date
We have experienced no Year 2000 problems to date. No information
technology projects have been deferred due to our Year 2000 efforts.
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Timetable
Our Year 2000 readiness plan is task oriented by department. We use no
independent verification or validation process to assure reliability, risks or
costs estimates. The following table illustrates our Year 2000 readiness.
<TABLE>
<CAPTION>
CATEGORY TESTING PROBLEMS DETECTED REMEDIATION
- -------- ------- ----------------- -----------
<S> <C> <C> <C>
Internal Systems 100% completed Two add-on software packages, Software packages and the PC
one PC and one computer server have been upgraded and the
server was replaced in July 1999
Products 100% completed None to date None required to date
Vendors Response received from None to date None required to date
72% of vendors
</TABLE>
Cost of Remediation. We currently estimate that our Year 2000
assessment efforts and correction of any internal Year 2000 issues identified
during our assessment, will total less than $100,000; however, in the event we
discover a Year 2000 issue which was previously unanticipated, we could incur
costs far in excess of this amount which would have a material adverse effect on
our business and financial results.
Will We Be Ready?
Most Likely Consequences of Year 2000 Problems. We expect to identify
and resolve all Year 2000 problems that could materially adversely affect our
business operations. However, we believe that it is not possible to determine
with complete certainty that all Year 2000 problems affecting us have been
identified or corrected. The number of devices and systems that could be
affected and the interactions among these devices and systems are too numerous
to address. In addition, no one can accurately predict which Year 2000
problem-related failures will occur or the severity, timing, duration or
financial consequences of these potential failures. We believe that a
significant number of operational inconveniences and inefficiencies for us, our
contract manufacturers and our customers will divert management's time and
attention, financial and human resources from ordinary business activity if any
of these Year 2000 problem related failures occur. Contingency Plans. We
continue to discus contingency plans to be implemented if our efforts to
identify and correct Year 2000 problems are not effective. We have begun to
formalize our contingency plan and will test the plan when complete. Depending
on the systems affected, these plans could include:
- - accelerated replacement of affected equipment or software;
- - short to medium-term use of backup equipment and software or other
redundant systems;
- - increased work hours for our personnel or the hiring of additional
information technology staff; and
- - the use of contract personnel to correct, on an accelerated basis, any
Year 2000 problems that arise or to provide interim alternate solutions
for information system deficiencies.
Our implementation of any of these contingency plans could have a
material adverse effect on our business, financial condition and results of
operations.
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<PAGE> 16
OTHER FACTORS AFFECTING OPERATING RESULTS, LIQUIDITY AND CAPITAL RESOURCES
WE MAY NOT COMPLETE OUR MERGER WITH CISCO
If our Merger with Cisco is not completed for any reason, we may be
subject to a number of material risks, including the following: (i) Aironet may
be required to pay Cisco a termination fee of $25 million, (ii) the option
granted to Cisco by Aironet may become exercisable, under certain
circumstances, (iii) the price of Aironet common stock may decline to the
extent that the current market price of Aironet common stock reflects a market
assumption that the merger will be completed and (iv) costs related to the
merger, such as legal, accounting and financial advisor fees, must be paid even
if the merger is not completed. In addition, Aironet's customers may, in
response to the announcement of the merger, delay or defer purchasing
decisions. Any delay or deferral in purchasing decisions by Aironet customers
could have a material adverse effect on Aironet's business, regardless of
whether or not the merger is ultimately completed. Similarly, current and
prospective Aironet employees may experience uncertainty about their future
role with Cisco until Cisco's strategies with regard to Aironet are announced
and executed. This may adversely affect Aironet's ability to attract and retain
key management, sales, marketing and technical personnel. Further, if the
merger is terminated and Aironet's board of directors determines to seek
another merger or business combination, there can be no assurance that it will
be able to find a partner willing to pay an equivalent or more attractive price
than that which would be paid in the merger. In addition, while the merger
agreement is in effect and subject to certain limited exceptions, Aironet is
prohibited from soliciting, initiating or encouraging or entering into certain
extraordinary transactions, such as merger, sale of assets or other business
combination, with any party other than Cisco.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS AND
PROSPECTS
We were incorporated in 1993 and therefore have only a short operating
history for you to evaluate. Your evaluation of our business and results of
operations must take into account this short operating history, which may not be
indicative of future results. Our business and prospects should also be
considered in light of the risks frequently encountered by companies in their
early stages of development in new and rapidly evolving markets. Because of our
short existence, our limited operating history as an independent company,
fluctuations in our past results, past operating deficits and the early stage of
development of our market, we cannot assure you that we will sustain
profitability.
Only since March 1998 has our business operated without the financial
support of Telxon. A significant portion of the revenues reflected in our
financial statements are still earned from Telxon based on agreed upon prices
determined when Telxon was our majority stockholder. For the periods presented,
our financial statements do not represent our performance as an independent
company. In the future, loss of this revenue for any reason could adversely
affect our results of operations. We lease two facilities from Telxon and are
parties to various agreements with Telxon, including our license and sales
agreement. Arrangements with Telxon cannot be considered to be arm's length, and
therefore they do not necessarily reflect terms which could have been negotiated
with unrelated third parties. As a large stockholder and customer, Telxon may be
able to assert influence over us, which could impact our business or prevent us
from realizing benefits in some situations.
FLUCTUATIONS IN OUR OPERATING RESULTS MAY ADVERSELY AFFECT THE TRADING PRICE OF
OUR COMMON STOCK
Our quarterly and annual operating revenues, expenses and operating
results may fluctuate due to a number of factors including:
- - the timing and cancellation of customer orders;
- - our ability to introduce new products and technologies on a timely
basis;
- - market acceptance of our and our customers' products;
- - introduction of products by our competitors;
- - the level of orders received which can be shipped in a quarter;
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<PAGE> 17
- - the timing of our investments in research and development;
- - the timing and provision of pricing protection and returns from our
distributors;
- - whether our customers buy from a distributor, an OEM or directly from
us;
- - cost and availability of components and subassemblies;
- - competitive pressures on selling prices;
- - finished product availability and quality;
- - general economic conditions; and
- - changes in product mix.
Our business is characterized by short-term orders and shipment
schedules. We have experienced difficulties efficiently managing our production
and inventory levels because, among other reasons, customers can typically
cancel or reschedule orders without significant penalty. Since we do not have a
substantial, noncancellable backlog, we typically plan our production and
inventory levels based on internal forecasts of customer demand, which are
highly unpredictable and can fluctuate substantially. Significant customer
cancellations or unforeseen fluctuations in customer demand could cause us to
over or under produce products, which could lead to overstocking or to
frustrating customer expectations, either of which could negatively affect
operating results or cause significant variations in our operating results from
quarter to quarter.
DECLINING SELLING PRICES OF NETWORKING EQUIPMENT MAY ADVERSELY AFFECT OUR
REVENUES
Historically, average selling prices of networking equipment have
decreased over the life of a product. As a result, the average selling prices of
our products should be expected to decrease in the future, which may adversely
affect our operating results if we do not correspondingly decrease our costs.
OUR OPERATING RESULTS WILL SUFFER IF SALES DO NOT INCREASE AS ANTICIPATED TO
SUPPORT THE EXPENSES OF EXPANDING OUR BUSINESS
Because our operating expenses for personnel, new product development
and inventory continue to increase, we must continue to generate increased sales
to offset these increased expenses. We have limited ability to reduce expenses
quickly in response to any revenue shortfalls. In response to anticipated long
lead times to obtain inventory and materials from our contract manufacturers and
suppliers, we have in the past and may continue to need to order in advance of
anticipated customer demand. This advance ordering has and may continue to
result in higher inventory levels, and we have and will continue to depend on an
increase in customer demand. Any significant shortfall in customer demand would
adversely impact our quarterly and annual operating results.
IF THE WIRELESS NETWORKING MARKET DOES NOT CONTINUE TO EVOLVE, OR IF OUR PRODUCT
DEVELOPMENT DOES NOT KEEP PACE WITH ITS EVOLUTION, DEMAND FOR OUR PRODUCTS MAY
DECLINE SIGNIFICANTLY
The wireless networking market is at an early stage of development, is
rapidly evolving and its future is uncertain. Demand and market acceptance for
recently introduced wireless networking products and services like ours are
subject to a high level of uncertainty. It is likely that new wireless LAN
products will not be generally accepted unless they operate at higher speeds and
are sold at competitive prices. We cannot predict whether the wireless
networking market will continue to develop in a way that sufficient demand for
our products will emerge and become sustainable. Our prospects must be evaluated
in light of the uncertainties relating to the new and evolving market in which
we operate. If the wireless networking market does not develop sufficiently, or
if our products are not sufficiently accepted, our business, financial condition
and operating results will suffer.
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<PAGE> 18
WE MAY NOT SUCCEED OR MAY LOSE SIGNIFICANT MARKET SHARE AS A RESULT OF THE
INTENSE COMPETITION IN THE WIRELESS LAN MARKET
The market for our products is very competitive, and we expect that
competition will increase in the future. Increased competition could adversely
affect our revenues and profitability through pricing pressure, loss of market
share and other factors. This market has historically been dominated by
relatively few companies, including Lucent, Proxim and BreezeCom. We believe we
will encounter competition from a number of other companies that develop, or
have announced plans to develop, wireless networking products. We believe that
our success will depend in part on our ability to compete favorably in the
following areas:
- - expertise and familiarity with 2.4 GHz spread spectrum technology,
wireless data communication protocols and LAN technology;
- - product performance, features, functionality and reliability;
- - price/performance characteristics;
- - timeliness of new product introductions;
- - adoption of emerging industry standards;
- - customer service and support;
- - size and scope of distribution network; and
- - brand name.
We have also historically faced competitive pressure from companies
that have increased their brand awareness by dedicating significant resources to
marketing and advertising.
We face the risk that our competitors may introduce faster, more
competitively priced products. Many of our current and potential competitors
have significantly greater financial, marketing, research, technical and other
resources. If we are unable to compete successfully, we could experience price
reductions, reduced operating margins and loss of market share, any of which
could have a material adverse effect on our business and operating results.
OUR SUCCESS DEPENDS ON THE TIMELY DEVELOPMENT OF NEW PRODUCTS
We derive substantially all of our product revenues from sales of
products for wireless networking solutions. This market is characterized by:
- - intense competition;
- - rapid technological change;
- - short product life cycles; and
- - emerging industry standards.
We have in the past experienced delays in product development which
resulted in delayed commercial introduction of new products. These kinds of
delays could be repeated and could have an adverse effect on our business. The
development of new wireless LAN products is highly complex. Our success in
developing and introducing new products depends on a number of factors,
including:
- - accurate new product definition;
- - timely completion and introduction of new product designs;
- - achievement of cost efficiencies in design and manufacturing; and
- - market acceptance of the new products.
We cannot guarantee that we will be successful in these efforts or that
our competitors will not be more successful, which, in either case, would have a
material adverse effect on our business and results of operations.
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WE RELY ON LIMITED SOURCES OF KEY COMPONENTS AND IF WE ARE UNABLE TO OBTAIN
THESE COMPONENTS WHEN NEEDED, WE WILL NOT BE ABLE TO DELIVER OUR PRODUCTS TO OUR
CUSTOMERS ON TIME
We rely on Atmel Corporation, M/A-COM, Raytheon Company,
Hewlett-Packard Company, Harris Semiconductor and Sawtek, Inc. as our critical
sole source suppliers. Although we have been informed by some of these suppliers
that they have redundant manufacturing facilities, there is no assurance that
they will be able to manufacture or provide these components in a timely way.
Should any supply disruption occur, we may not be able to develop an alternative
source for these components.
We have experienced limited delays and shortages in the supply of other
less critical components which have slowed the manufacturing schedule of our
products or caused us to revise or adjust these schedules. We could experience
delays and shortages in the future. We generally do not maintain a significant
inventory of components and do not have long-term supply contracts with our
suppliers. Our reliance on sole or limited source suppliers involves several
risks, including:
- - suppliers could increase component prices significantly, without notice
and with immediate effect;
- - suppliers could discontinue the manufacture or supply of components or
delay delivery of components used in our products for reasons such as
inventory shortages, new product offerings, increased cost of
materials, destruction of manufacturing facilities, labor disputes and
bankruptcy; and
- - in order to compensate for potential component shortages or
discontinuance, we may in the future decide to hold more inventory than
is immediately required, resulting in increased inventory costs.
Though we have not in the past experienced any significant delays in
shipping or sales of product due to delays or shortages of components, if our
suppliers were unable to deliver or ration components to us, we could experience
interruptions and delays in product manufacturing, shipping and sales. This
could result in our inability to fulfill customer orders, the cancellation of
orders for our products, substantial delays in our product shipments, increased
manufacturing costs and increased product prices. Further, we might not be able
to develop alternative sources for these components in a timely way, if at all,
and might not be able to modify our products to accommodate alternative
components.
These factors could damage our relationships with current and
prospective customers lasting longer than any underlying shortage or
discontinuance. Any of these risks, if realized, could materially and adversely
affect our business operating results and financial condition.
A LIMITED NUMBER OF CUSTOMERS ACCOUNT FOR A SIGNIFICANT PORTION OF OUR REVENUES
AND DECREASED DEMAND BY THESE CUSTOMERS WOULD ADVERSELY AFFECT OUR REVENUES
Historically, a relatively small number of customers, especially
Telxon, have accounted for a significant portion of our total revenues in any
particular period. Two of our customers, Telxon, and Business Partner Solutions,
Inc. each accounted for over 10% of our total revenues for the three months
ended September 30, 1999 and for the six months ended September 30, 1999. For
the three months and six months ended September 30, 1999, Telxon accounted for
31% and 28% of our total revenues respectively. Our four largest customers
accounted for 59% and 54% of our non-affiliate revenues or 41% and 39% of our
total revenues for the same periods. We have no long-term volume purchase
commitments from any of our customers. We anticipate that sales of our products
to relatively few customers will continue to account for a significant portion
of our total revenues, because our customers generally resell our products to
end users. Due to these factors, some of the following may reduce our operating
results:
- - reduction, delay or cancellation of orders from one or more of our
significant customers;
- - development by one or more of our significant customers of other,
competitive sources of supply;
- - selection by one or more of our significant customers of equipment
manufactured by one of our competitors as a preferred solution;
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<PAGE> 20
- - loss of one or more of our significant customers or a disruption in our
sales and distribution channels to these customers; or
- - failure of one of our significant customers to make timely payment of
our invoices.
We cannot be certain that these significant customers will continue
purchasing levels of previous periods and a decline in these levels for any
reason would negatively affect our revenues.
WE MUST EXPAND OUR DISTRIBUTION CHANNELS IN ORDER TO INCREASE SALES OF OUR
PRODUCTS
To increase revenues, we believe we must increase the number of our
distribution partners. Our strategy includes an effort to reach a greater number
of end users through indirect channels. We are currently investing, and plan to
continue to invest, significant resources to develop these indirect channels.
This could adversely affect our operating results if we do not generate the
revenues necessary to offset these investments. We will be dependent upon the
acceptance of our products by distributors and their active marketing and sales
efforts relating to our products. The distributors to whom we sell our products
are independent and are not obligated to deal with us exclusively or to purchase
any specified amount of our products. Because we do not generally fulfill orders
by end users of our products sold through distributors, we will be dependent
upon the ability of distributors to accurately forecast demand and maintain
appropriate levels of inventory. If we are unable to expand our distribution
channels, we may not be able to increase sales of our product.
OUR DISTRIBUTORS MAY NOT GIVE PRIORITY TO OUR PRODUCTS WHICH MIGHT RESULT IN
LOWER PRODUCT SALES
We expect that our distributors will also sell competing products.
These distributors may not continue, or may not give a high priority to,
marketing and supporting our products. This and other channel conflicts could
result in diminished sales through the indirect channel and adversely affect our
operating results. Additionally, because lower prices are typically charged on
sales made through indirect channels, increased indirect sales could adversely
affect our average selling prices and result in lower gross margins.
COMPLIANCE WITH EXISTING AND POTENTIAL INDUSTRY STANDARDS MAY BE DIFFICULT AND
COSTLY
We have developed and continue to develop our products to comply with
existing industry standards and anticipated future standards. We may not
introduce products that comply with future industry standards on a timely basis.
In particular, we expend, and intend to continue to expend, substantial
resources in developing products and product features that are designed to
conform to the IEEE 802.11 wireless LAN standard, as well as to other industry
standards that have not yet been formally adopted. Further, our high speed 4800
Turbo DS series of products is designed to conform with the proposed high speed
addition to the IEEE 802.11 standard. Our products may fail to meet future
industry standards or the standards ultimately adopted by the industry may vary
from those anticipated by us.
We participated in the promulgation of the IEEE 802.11 standard through
two of our senior officers who are members of the IEEE 802.11 Standards
Committee. Companies participating in the promulgation of the IEEE 802.11
standard have represented to the IEEE that they will grant licenses to their
patents on a fair and equitable basis if those patents are required to implement
products that comply with the standard. Our ability to market IEEE 802.11
compliant products may depend upon our ability to obtain these licenses from the
other participating companies. Our failure to obtain any required license at a
commercially reasonable cost could have a material adverse effect on our
competitive position and results of operations.
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EXISTING AND POTENTIAL WIRELESS LAN STANDARDS MAY NOT ACHIEVE MARKET ACCEPTANCE
AND MAY LOWER BARRIERS TO MARKET ENTRY, EITHER OF WHICH WOULD HAVE A NEGATIVE
IMPACT ON OUR BUSINESS
Because we develop our products to comply with industry standards,
sales of our products could decline if these standards do not gain market
acceptance or if consumers ultimately prefer to purchase products which do not
comply with these standards, or which comply with new or competing standards, or
which are based on proprietary designs. Also, product standardization may have
the effect of lowering barriers to entry in the markets in which we seek to sell
our products, by diminishing product differentiation. This would increase
competition based upon criteria such as the relative size and marketing skills
of competitors and we may not compete favorably.
COMPLIANCE WITH VARYING GOVERNMENT REGULATIONS IN MULTIPLE JURISDICTIONS WHERE
WE SELL PRODUCTS MAY BE DIFFICULT AND COSTLY
In the United States, our products are subject to various Federal
Communications Commission rules and regulations. Current FCC regulations permit
license-free operation in certain FCC-certified bands in the radio frequency
spectrum. FCC rules require compliance with administrative and technical
requirements as a condition to the operation or marketing of devices that emit
radio frequency energy, such as our products. Our products comply with Part 15
of the current FCC regulations permitting license-free operation of radio
devices in the 902-928 MHz and 2.4-2.4835 GHz radio frequency bands.
The Part 15 regulations are designed to minimize the probability of interference
to the other users of those frequency bands and accord Part 15 systems secondary
status. In order of priority, the primary users of those band widths are the
following:
- - devices which use radio waves to produce heat rather than to
communicate;
- - governmental uses;
- - vehicle monitoring systems; and
- - amateur radio.
In the event of interference between a primary user in those band
widths and a Part 15 user, the primary user can require the Part 15 user to
curtail transmissions that create interference. Our products are also subject to
regulatory requirements in markets outside the United States, where we have
limited experience in gaining regulatory approval. The regulatory environment in
which we operate subjects us to several risks, including:
- - if users must cease use of our products because their operation causes
interference to authorized users of the radio frequency spectrum, or
authorized users cause interference which must be accepted by users of
our products, market acceptance of our products and our results of
operations could be adversely affected;
- - regulatory changes, including changes in the allocation of available
radio frequency spectrum or requirements for licensed operation, may
significantly impact our operations by rendering current products
non-compliant or restricting the applications and markets served by our
products; and
- - we may not be able to comply with all applicable regulations in each of
the countries where our products are sold or proposed to be sold, and
we may need to modify our products to meet local regulations.
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OUR SUCCESS DEPENDS ON OBTAINING AND PROTECTING INTELLECTUAL PROPERTY
Our success depends in part on our ability to obtain and preserve
patent and other intellectual property rights covering our products and
development and testing tools. The process of seeking patent protection can be
time consuming and expensive. We cannot assure you that:
- - patents will issue from currently pending or future applications;
- - our existing patents or any new patents will be sufficient in scope to
provide meaningful protection or any commercial advantage to us;
- - foreign intellectual property laws will protect our intellectual
property rights; or
- - others will not independently develop similar products, duplicate our
products or design around any patents issued to us.
Intellectual property rights are uncertain and involve complex legal
and factual questions. Though we are not aware of any third party intellectual
property rights that would prevent our use and sale of our products, we may
unknowingly infringe the proprietary rights of others. Any infringement could
result in significant liability to us. If we do infringe the proprietary rights
of others, we could be forced to either seek a license to those intellectual
property rights or alter our products so that they no longer infringe those
proprietary rights. A license could be very expensive to obtain or may not be
available at all. Similarly, changing our products or processes to avoid
infringing the rights of others may be costly or impractical.
We also rely on trade secrets, proprietary know-how and confidentiality
provisions in agreements with employees and consultants to protect our
intellectual property. Other parties may not comply with the terms of their
agreements with us, and we may not be able to adequately enforce our rights
against these parties.
WE COULD BECOME SUBJECT TO LITIGATION REGARDING INTELLECTUAL PROPERTY RIGHTS
WHICH COULD SERIOUSLY HARM OUR BUSINESS
Any dispute regarding intellectual property, whether ours or that of
another company, may result in legal proceedings. These types of proceedings may
be costly and time consuming for us, even if we eventually prevail. If we do not
prevail, we might be forced to pay significant damages, the prevailing party's
litigation expenses and obtain a license or stop making the subject product.
IF WE FAIL TO MANAGE OUR GROWTH, OUR BUSINESS, FINANCIAL CONDITION AND PROSPECTS
COULD BE SERIOUSLY HARMED
We have expanded our operations in recent years, and we anticipate that
further expansion will be required to address potential growth in our customer
base and market opportunities, as well as to provide corporate services
previously provided to us by Telxon. This expansion has placed, and future
expansion is expected to place, a significant strain on our management,
technical, operational, administrative and financial resources. We have recently
hired new employees, including a number of key managerial and operations
personnel, who have not yet been fully integrated into our operations.
Our current and planned expansion of personnel, systems, procedures and
controls may be inadequate to support our future operations. We may be unable to
attract, retain, motivate and manage required personnel, including finance,
administrative and operations staff, or to successfully identify, manage and
exploit existing and potential market opportunities because of inadequate
staffing. We may also be unable to manage further growth in our multiple
relationships with our OEMs, distributors and other third parties. If we are
unable to manage growth effectively, our business, financial condition and
results of operations could be adversely affected.
22
<PAGE> 23
OUR INTERNATIONAL OPERATIONS MAY BE ADVERSELY AFFECTED BY ADDITIONAL RISKS
UNIQUE TO THOSE MARKETS
Revenues from customers outside of the United States accounted for
approximately 21% and 24% of our total revenues for the three months ended
September 30, 1999 and six months ended September 30,1999 respectively. We
anticipate that revenues from customers outside of the United States will
continue to account for a significant portion of our total revenues for the
foreseeable future. Expansion of our international operations has required, and
will continue to require, significant management attention and resources. In
addition, we remain heavily dependent on distributors to market, sell and
support our products internationally. Our international operations are subject
to additional risks, including the following:
- - difficulties of staffing and managing foreign operations;
- - longer customer payment cycles and greater difficulties in collecting
accounts receivable;
- - unexpected changes in regulatory requirements, exchange rates, trading
policies, tariffs and other barriers;
- - uncertainties of laws and enforcement relating to the protection of
intellectual property;
- - language barriers;
- - potential adverse tax consequences; and
- - political and economic instability.
We currently sell products in countries that have recently experienced
significant problems with their economies, the value of their currency,
availability of credit and their ability to engage in foreign trade in general,
including in Russia and Japan. We are unable to determine whether economic
downturns in any particular country will adversely effect our business or
results of operations. We cannot predict the impact that any future fluctuations
in foreign currency exchange rates or the adoption of the Euro, the single
European currency introduced in January 1999, may have on our operating results
and financial condition.
RISKS RELATING TO YEAR 2000 ISSUES MAY ADVERSELY AFFECT OUR BUSINESS
Many existing computer systems and software products do not properly
recognize dates after December 31, 1999. This "Year 2000" problem could result
in miscalculations, data corruption, system failures or disruptions of
operations. We reasonably expect that at worst these disruptions could result in
our inability to process transactions, manufacture and ship products, send
invoices or engage in similar normal business activities for an indefinite
period of time, which could impair our viability.
The Year 2000 problem could also affect embedded systems, such as
building security systems, machine controllers, telephone switches and other
equipment. Our systems may suffer from date related problems, and if so, we may
need to upgrade or replace our computer systems, software and other equipment,
which could result in significant expenditures.
Neither our current products nor our prior products utilize internal
calendars that are dependent upon the input of, or reference to, a specific
date, and we do not anticipate designing any products that are date dependent.
Furthermore, the purchasing patterns of our customers or potential customers may
be affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures may
result in reduced funds available for network equipment and other purchases,
which could have a material adverse effect on our business, operating results
and financial condition.
We rely on numerous third parties who may not be Year 2000 compliant.
This includes our contract manufacturers, our sole and limited source component
suppliers and other vendors, and our distributors, resellers and OEMs. Failure
of any of these third parties to be Year 2000 compliant could require us to
incur significant unanticipated expenses to remedy any resulting problems or to
replace the affected third party. This could reduce our revenues and could have
a material adverse effect on our business, operating results and financial
condition. To date, we have not developed contingency plans for those
eventualities.
23
<PAGE> 24
WE ARE DEPENDENT ON KEY PERSONNEL AND IF WE ARE UNABLE TO HIRE OR RETAIN
NEEDED PERSONNEL, OUR ABILITY TO DO BUSINESS PROFITABLY COULD BE HARMED
There are a limited number of skilled design, process and testing
engineers and marketing professionals involved in the wireless data
communication industry. The competition for these employees is intense. Skilled
professionals often move among the various competitors in this industry. Our
future growth depends in large part on retaining our current employees and
attracting new technical, marketing and management personnel. The loss of key
employees or failure to attract new key employees could materially affect our
business.
RECENTLY HIRED KEY EMPLOYEES MAY NOT SUCCESSFULLY INTEGRATE INTO OUR MANAGEMENT
TEAM
We have recently hired a number of our officers, including our Senior
Vice President and Chief Financial Officer in January 1999, and Senior Vice
President, Sales and Marketing in August 1998. These individuals have not
previously worked together and are in the process of integrating as a
management team, together and with existing management. There can be no
assurances that they will be able to effectively work together or successfully
manage any growth we experience.
THERE MAY BE POTENTIAL HEALTH AND SAFETY RISKS RELATED TO OUR PRODUCTS WHICH
COULD NEGATIVELY AFFECT PRODUCT SALES
There has been public concern regarding the potential health and safety
risks of electromagnetic emissions. Our wireless networking products emit
electromagnetic radiation, but we do not believe that our products pose a safety
concern. If safety or health issues do arise, product sales could decline or
cease. These issues could have a material adverse effect on our business and
results of operations. Even if safety concerns ultimately prove to be without
merit, negative publicity could have a material adverse effect on our ability to
market products.
OUR COMMON STOCK PRICE MAY BE VOLATILE
The stock market has experienced significant price and volume
fluctuations, and the market prices of technology companies have been highly
volatile. Our stock price may also be volatile.
DELAWARE LAW AND OUR CORPORATE DOCUMENTS INCLUDE ANTI-TAKEOVER PROVISIONS WHICH
MAY LIMIT THE VALUE STOCKHOLDERS CAN REALIZE FROM OUR STOCK
Our corporate documents and applicable provisions of the Delaware
General Corporation Law could discourage, delay or prevent a third party or
significant stockholder from acquiring or gaining control of us. These
provisions:
- - authorize the issuance of preferred stock with rights senior to those
of common stock, which our Board of Directors can create and issue
without prior stockholder approval;
- - prohibit stockholder action by written consent;
- - establish advance notice requirements for submitting nominations for
election to the Board of Directors and for proposing matters that can
be acted upon by stockholders at a meeting; and
- - establish staggered terms for members of the Board of Directors.
In addition, we are a party to a Rights Agreement, pursuant to which
each share of our common stock includes a companion purchase right. Under
circumstances controlled by our Board of Directors, the purchase rights may
impose severe impediments to any person seeking to acquire us or gain control
over us. Any of these anti-takeover provisions could lower the market price of
the common stock and could deprive our stockholders of the opportunity to
receive a premium for their shares in the event that we are sold.
24
<PAGE> 25
THE NUMBER OF OUR SHARES WHICH ARE PUBLICALLY TRADED MAY INCREASE IN THE NEAR
FUTURE
Over six million of our total outstanding shares are restricted from
immediate resale but may be sold into the market in the near future, which could
cause the market price of our common stock to drop significantly, even if our
business is doing well All of our officers, directors, stockholders, warrant
holders and each holder of more than 5,000 options have executed lock up
agreements in which they agreed not to sell any shares of common stock during
the period ending 180 days after the date of the prospectus in the Registration
Statement. This restriction can be waived by the underwriters at any time
without notice to us, our stockholders or the public in general.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes and, to a lesser
extent, foreign currency fluctuations. We are experiencing increases in our
sales into foreign markets of products manufactured in the United States.
Foreign currency fluctuations could effect the price competitiveness and margins
of foreign sales. We have not entered into interest rate or foreign currency
transactions for speculative purposes or otherwise. Our foreign currency
exposures were immaterial at September 30, 1999.
Our exposure to interest rate changes also results from investment of
funds in excess of current operating requirements. We invest our funds in
short-term, interest-bearing, investment grade securities. Our interest income
is sensitive to changes in the general level of U.S. interest rates. Due to the
nature of our short-term investments, we have concluded that there is no
material market risk exposure. Therefore, no quantitative tabular disclosures
are required.
25
<PAGE> 26
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) We are furnishing the following information with regard to all
securities sold by us during the period covered by this report that were not
registered under the Securities Act of 1933. We granted options to purchase an
aggregate of 105,000 shares of common stock, at exercise prices ranging from $25
to $30 per share. The sales of these securities were deemed to be exempt from
registration under the Securities Act of 1933 in reliance on Section 4(2) or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act of 1933, as transactions by an issuer not involving a
public offering or transactions pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to, or for sale
in connection with, any distribution thereof, and appropriate legends were
affixed to share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationships with us, to
information about us.
(d) We are furnishing the following information with respect to the use
of proceeds from our initial public offering. A Registration Statement on Form
S-1, as amended (Registration No. 333- 78507), was initially filed with the
Securities and Exchange Commission on May 14, 1999, was declared effective on
July 29, 1999 and the offering commenced on July 30, 1999. The managing
underwriters for the offering were Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated, Prudential Securities and CIBC World Markets.
Of the 6,000,000 shares of common stock, $0.01 par value, offered, we
sold 4,000,000 shares and a selling stockholder sold 2,000,000 shares. In
addition, our underwriters exercised their option to purchase an additional
846,800 shares to cover over-allotments sold by the underwriters in the
Offering, of which we sold 564,562 shares and a selling stockholder sold
282,238. We received no proceeds from the shares sold by the selling
stockholder. Payment of expenses from the proceeds were to persons other than
our directors, officers, general partners or their associates, persons owning
10% or more of our equity securities or affiliates of the Company. The following
table sets forth approximate proceeds and expenses.
<TABLE>
<CAPTION>
<S> <C>
Our aggregate public offering price..................................... $ 50,210,182
Selling stockholder's aggregate public offering price................... $ 25,104,618
Our underwriting discounts and commissions.............................. $ 3,514,713
Selling stockholder's underwriting discounts and commissions............ $ 1,757,323
Our offering expenses................................................... $ 2,336,591
Our aggregate net proceeds.............................................. $ 44,358,878
</TABLE>
During the period covered by this report we used approximately $320,000 of the
Offering proceeds for working capital.
26
<PAGE> 27
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1*** Agreement and Plan of Merger and Reorganization dated as of November
8, 1999 by and among Cisco Systems, Inc., a California corporation,
Osprey Acquisition Corporation, a Delaware corporation, and Aironet
Wireless Communications, Inc., a Delaware corporation
3.1** Amended and Restated Certificate of Incorporation of Aironet Wireless
Communications, Inc.
3.2* Second Amended and Restated Bylaws of Aironet Wireless
Communications, Inc.
4.1* Specimen of certificate for shares of Aironet's common stock
4.2** Rights Agreement between Aironet Wireless Communications, Inc. and
Harris Trust and Savings Bank, as Rights Agent, dated as of June 25,
1999, including form of rights certificate
4.2.1*** Amendment No. 1 to Rights Agreement dated November 8, 1999
4.3* Warrant certificate issued to Furneaux & Company, LLC
4.4 Registration Rights Agreement by and among Aironet and certain of its
security holders, dated as of March 31, 1998 included as Exhibit
10.4.3 to Aironet's Registration Statement on Form S-1, as amended
(Registration No. 333-78507)
4.5 Stock Option Agreement dated as of November 8, 1999 by and between
Cisco Systems, Inc. and Aironet Wireless Communications, Inc.
incorporated by reference to Exhibit 99.1 to Aironet's Current Report
on Form 8-K filed on November 12, 1999
4.6 Form of Stockholder Agreement dated as of November 8, 1999 by and
among Cisco Systems, Inc., Osprey Acquisition Corporation and certain
stockholders of Aironet Wireless Communications, Inc. incorporated by
reference to Exhibit 99.2 to Aironet's Current Report on Form 8-K
filed on November 12, 1999
10.1 Aironet's Compensation and Benefits Plans
10.1.1* Aironet Wireless Communications, Inc. 1996 Stock Option Plan
10.1.2* Amended and Restated Aironet Wireless Communications, Inc. 1996 Stock
Option Plan
10.1.3* First Amendment to Amended and Restated Aironet Wireless
Communications, Inc. 1996 Stock Option Plan
10.1.4* Aironet Wireless Communications, Inc. 1999 Employee Stock Purchase
Plan
10.1.4.1+ First Amendment to the Aironet Wireless Communications, Inc. 1999
Employee Stock Purchase Plan
10.1.5* Aironet Wireless Communications, Inc. 1999 Omnibus Stock Incentive
Plan
10.1.6* Aironet Wireless Communications, Inc. 1999 Stock Option Plan for
Non-Employee Directors
10.1.7* Employment Agreement between Aironet and Roger J. Murphy, Jr.
10.1.8* Employment Letter Agreement between Aironet and Richard G. Holmes
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.1.9* Employment Letter Agreement between Aironet and Ronald B. Willis
10.1.10* Employment Letter Agreement between Aironet and Harvey A. Ikeman
10.1.11* Promissory Note made by Roger J. Murphy, Jr. to the order of Aironet
in the principal amount of $372,000
10.1.11.1* Amendment to Promissory Note, included as Exhibit 10.1.11
10.1.12* Telxon's Retirement & Uniform Matching Profit Sharing Plan, as
amended (in which Aironet's employees participate pursuant to the
Services Agreement included as Exhibit 10.7)
10.1.12.1* Supplemental Participation Agreement and Certificate of Resolution to
Telxon's Retirement & Uniform Matching Profit Sharing Plan, as
amended
10.1.13* Telxon 1995 Employee Stock Purchase Plan
10.1.14+ Change in Control Agreement between Aironet and Roger J. Murphy, Jr.
dated October 19, 1999
10.1.15+ Change in Control Agreement between Aironet and Richard G. Holmes
dated October 19, 1999
10.1.16+ Change in Control Agreement between Aironet and Ronald B. Willis
dated October 19, 1999
10.1.17+ Change in Control Agreement between Aironet and Harvey A. Ikeman
dated October 19, 1999
10.1.18+ Change in Control Agreement between Aironet and Donald I. Sloan dated
October 19, 1999
10.2 Material Leases
10.2.1* Lease between Aironet and Telxon Corporation for 91 Springside Drive,
Akron, Ohio, dated as of April 1, 1998
10.2.2* Sublease Agreement between Aironet and Telxon Corporation for 3875
Embassy Parkway, Bath, Ohio dated as of September 1, 1998
10.2.3* Lease renewal between Telxon Corporation and Aironet, dated June 16,
1999, for Lease included as Exhibit 10.2.1 and Sublease included as
10.2.2
10.3* Loan Agreement between Aironet and The Huntington National Bank,
dated as of July 24, 1998
10.3.1** First Amendment to Loan Agreement dated April 30, 1999 amending the
Loan Agreement included as Exhibit 10.3
10.4* Subscription Agreement by and among Aironet and the investors who
executed the same, dated as of March 31, 1998
10.4.1* Form of warrant issued pursuant to the Subscription Agreement
included as Exhibit 10.4
10.4.2* Stockholders Agreement by and among Aironet and its stockholders
party thereto, dated as of March 31, 1998, in connection with the
transactions under the Subscription Agreement included as Exhibit
10.4
10.4.2.1* Form of Addendum to Stockholders Agreement included as Exhibit 10.4.2
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.4.3* Registration Rights Agreement by and among Aironet and certain of its
security holders, dated as of March 31, 1998
10.4.3.1* Form of Addendum to Registration Rights Agreement included as Exhibit
10.4.3
10.4.3.2* Addendum by Telantis Venture Partners IV, Inc. to Registration Rights
Agreement included as Exhibit 10.4.3
10.5* License, Rights and Supply Agreement between Aironet and Telxon
Corporation, dated as of March 31, 1998
10.5.1* First Amendment to License, Rights and Supply Agreement dated as of
March 31, 1999
10.6* Tax Benefit and Indemnification Agreement between Aironet and Telxon
Corporation, dated as of March 31, 1998
10.6.1* Promissory Note made by Aironet to the order of Telxon Corporation
with the Tax Benefit and Indemnification Agreement included as
Exhibit 10.6
10.7* Services Agreement between Aironet and Telxon Corporation, dated as
of March 31, 1998
10.8* Assignment of Patent Applications made by Telxon Corporation in favor
of Aironet, dated as of March 30, 1998
10.9* Assignment of Patent Applications made by Aironet in favor of Telxon
Corporation, dated as of March 30, 1998
10.10* Cross Covenant Not to Sue between Aironet and Telxon Corporation,
dated as of March 31, 1998
10.11* AirAware Acknowledgment between Aironet and Telxon Corporation, dated
as of March 30, 1998
10.12* LM3000 Software Agreement between Aironet and Telxon Corporation,
dated as of March 30, 1998
10.13* Patent Continuation in Part Agreement between Aironet and Telxon
Corporation, dated as of March 30, 1998
10.14* Patent License Agreement between Aironet and Telxon Corporation,
dated as of March 30, 1998
10.15* Nondisclosure Agreement between Aironet and Telxon Corporation, dated
as of March 31, 1998
10.16+ Assignment of Patent Application made by Telxon Corporation in favor
of Aironet, dated as of August 4, 1999
10.17+ Patent License Agreement between Aironet and Telxon Corporation,
dated as of August 4, 1999
10.18+ Assignment of Canadian patent made by Telxon Corporation in favor of
Aironet, dated as of August 4, 1999
10.19+ Assignment of European patent made by Telxon Corporation in favor of
Aironet, dated as of August 4, 1999
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.20+ Deed of Assignment of Australian patent made by Telxon Corporation in
favor of Aironet, dated as of August 4, 1999
10.21+ Deed of Assignment of Israel patent made by Telxon Corporation in
favor of Aironet, dated as of August 4, 1999
10.22+ Agreement dated as of November 8, 1999 by and among Telxon
Corporation, Cisco Systems, Inc. and Aironet Wireless Communications,
Inc.
27+ Financial Data Schedule
</TABLE>
+Filed herewith.
*Incorporated by reference to this exhibit number to Aironet's Registration
Statement on Form S-1, as amended (Registration No. 333-78507) filed on May 14,
1999 and declared effective on July 29, 1999.
**Incorporated by reference to this exhibit number to Aironet's periodic report
on Form 10-Q for the fiscal quarter ended June 30, 1999.
***Incorporated by reference to this exhibit number to Aironet's current report
on Form 8-K filed on November 12, 1999.
(b) We filed no reports on Form 8-K during the quarter ended June 30, 1999.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements 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.
Dated: November 15, 1999 Aironet Wireless Communications, Inc.
By /s/ Richard G. Holmes
Richard G. Holmes
Senior Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
31
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
2.1*** Agreement and Plan of Merger and Reorganization dated as of November
8, 1999 by and among Cisco Systems, Inc., a California corporation,
Osprey Acquisition Corporation, a Delaware corporation, and Aironet
Wireless Communications, Inc., a Delaware corporation
3.1** Amended and Restated Certificate of Incorporation of Aironet Wireless
Communications, Inc.
3.2* Second Amended and Restated Bylaws of Aironet Wireless
Communications, Inc.
4.1* Specimen of certificate for shares of Aironet's common stock
4.2** Rights Agreement between Aironet Wireless Communications, Inc. and
Harris Trust and Savings Bank, as Rights Agent, dated as of June 25,
1999, including form of rights certificate
4.2.1*** Amendment No. 1 to Rights Agreement dated November 8, 1999
4.3* Warrant certificate issued to Furneaux & Company, LLC
4.4 Registration Rights Agreement by and among Aironet and certain of its
security holders, dated as of March 31, 1998 included as Exhibit
10.4.3 to Aironet's Registration Statement on Form S-1, as amended
(Registration No. 333-78507)
4.5 Stock Option Agreement dated as of November 8, 1999 by and between
Cisco Systems, Inc. and Aironet Wireless Communications, Inc.
incorporated by reference to Exhibit 99.1 to Aironet's Current Report
on Form 8-K filed on November 12, 1999
4.6 Form of Stockholder Agreement dated as of November 8, 1999 by and
among Cisco Systems, Inc., Osprey Acquisition Corporation and certain
stockholders of Aironet Wireless Communications, Inc. incorporated by
reference to Exhibit 99.2 to Aironet's Current Report on Form 8-K
filed on November 12, 1999
10.1 Aironet's Compensation and Benefits Plans
10.1.1* Aironet Wireless Communications, Inc. 1996 Stock Option Plan
10.1.2* Amended and Restated Aironet Wireless Communications, Inc. 1996 Stock
Option Plan
10.1.3* First Amendment to Amended and Restated Aironet Wireless
Communications, Inc. 1996 Stock Option Plan
10.1.4* Aironet Wireless Communications, Inc. 1999 Employee Stock Purchase
Plan
10.1.4.1+ First Amendment to the Aironet Wireless Communications, Inc. 1999
Employee Stock Purchase Plan
10.1.5* Aironet Wireless Communications, Inc. 1999 Omnibus Stock Incentive
Plan
10.1.6* Aironet Wireless Communications, Inc. 1999 Stock Option Plan for
Non-Employee Directors
10.1.7* Employment Agreement between Aironet and Roger J. Murphy, Jr.
10.1.8* Employment Letter Agreement between Aironet and Richard G. Holmes
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.1.9* Employment Letter Agreement between Aironet and Ronald B. Willis
10.1.10* Employment Letter Agreement between Aironet and Harvey A. Ikeman
10.1.11* Promissory Note made by Roger J. Murphy, Jr. to the order of Aironet
in the principal amount of $372,000
10.1.11.1* Amendment to Promissory Note, included as Exhibit 10.1.11
10.1.12* Telxon's Retirement & Uniform Matching Profit Sharing Plan, as
amended (in which Aironet's employees participate pursuant to the
Services Agreement included as Exhibit 10.7)
10.1.12.1* Supplemental Participation Agreement and Certificate of Resolution to
Telxon's Retirement & Uniform Matching Profit Sharing Plan, as
amended
10.1.13* Telxon 1995 Employee Stock Purchase Plan
10.1.14+ Change in Control Agreement between Aironet and Roger J. Murphy, Jr.
dated October 19, 1999
10.1.15+ Change in Control Agreement between Aironet and Richard G. Holmes
dated October 19, 1999
10.1.16+ Change in Control Agreement between Aironet and Ronald B. Willis
dated October 19, 1999
10.1.17+ Change in Control Agreement between Aironet and Harvey A. Ikeman
dated October 19, 1999
10.1.18+ Change in Control Agreement between Aironet and Donald I. Sloan dated
October 19, 1999
10.2 Material Leases
10.2.1* Lease between Aironet and Telxon Corporation for 91 Springside Drive,
Akron, Ohio, dated as of April 1, 1998
10.2.2* Sublease Agreement between Aironet and Telxon Corporation for 3875
Embassy Parkway, Bath, Ohio dated as of September 1, 1998
10.2.3* Lease renewal between Telxon Corporation and Aironet, dated June 16,
1999, for Lease included as Exhibit 10.2.1 and Sublease included as
10.2.2
10.3* Loan Agreement between Aironet and The Huntington National Bank,
dated as of July 24, 1998
10.3.1** First Amendment to Loan Agreement dated April 30, 1999, amending the
Loan Agreement included as Exhibit 10.3
10.4* Subscription Agreement by and among Aironet and the investors who
executed the same, dated as of March 31, 1998
10.4.1* Form of warrant issued pursuant to the Subscription Agreement
included as Exhibit 10.4
10.4.2* Stockholders Agreement by and among Aironet and its stockholders
party thereto, dated as of March 31, 1998, in connection with the
transactions under the Subscription Agreement included as Exhibit
10.4
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.4.2.1* Form of Addendum to Stockholders Agreement included as Exhibit 10.4.2
10.4.3* Registration Rights Agreement by and among Aironet and certain of its
security holders, dated as of March 31, 1998
10.4.3.1* Form of Addendum to Registration Rights Agreement included as Exhibit
10.4.3
10.4.3.2* Addendum by Telantis Venture Partners IV, Inc. to Registration Rights
Agreement included as Exhibit 10.4.3
10.5* License, Rights and Supply Agreement between Aironet and Telxon
Corporation, dated as of March 31, 1998
10.5.1* First Amendment to License, Rights and Supply Agreement dated as of
March 31, 1999
10.6* Tax Benefit and Indemnification Agreement between Aironet and Telxon
Corporation, dated as of March 31, 1998
10.6.1* Promissory Note made by Aironet to the order of Telxon Corporation
with the Tax Benefit and Indemnification Agreement included as
Exhibit 10.6
10.7* Services Agreement between Aironet and Telxon Corporation, dated as
of March 31, 1998
10.8* Assignment of Patent Applications made by Telxon Corporation in favor
of Aironet, dated as of March 30, 1998
10.9* Assignment of Patent Applications made by Aironet in favor of Telxon
Corporation, dated as of March 30, 1998
10.10* Cross Covenant Not to Sue between Aironet and Telxon Corporation,
dated as of March 31, 1998
10.11* AirAware Acknowledgment between Aironet and Telxon Corporation, dated
as of March 30, 1998
10.12* LM3000 Software Agreement between Aironet and Telxon Corporation,
dated as of March 30, 1998
10.13* Patent Continuation in Part Agreement between Aironet and Telxon
Corporation, dated as of March 30, 1998
10.14* Patent License Agreement between Aironet and Telxon Corporation,
dated as of March 30, 1998
10.15* Nondisclosure Agreement between Aironet and Telxon Corporation, dated
as of March 31, 1998
10.16+ Assignment of Patent Application made by Telxon Corporation in favor
of Aironet, dated as of August 4, 1999
10.17+ Patent License Agreement between Aironet and Telxon Corporation,
dated as of August 4, 1999
10.18+ Assignment of Canadian patent made by Telxon Corporation in favor of
Aironet, dated as of August 4, 1999
10.19+ Assignment of European patent made by Telxon Corporation in favor of
Aironet, dated as of August 4, 1999
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------
<S> <C>
10.20+ Deed of Assignment of Australian patent made by Telxon Corporation in
favor of Aironet, dated as of August 4, 1999
10.21+ Deed of Assignment of Israel patent made by Telxon Corporation in
favor of Aironet, dated as of August 4, 1999
10.22+ Agreement dated as of November 8, 1999 by and among Telxon
Corporation, Cisco Systems, Inc. and Aironet Wireless Communications,
Inc.
27+ Financial Data Schedule
</TABLE>
+Filed herewith.
*Incorporated by reference to this exhibit number to Aironet's Registration
Statement on Form S-1, as amended (Registration No. 333-78507) filed on May 14,
1999 and declared effective on July 29, 1999.
**Incorporated by reference to this exhibit number to Aironet's periodic report
on Form 10-Q for the fiscal quarter ended June 30, 1999.
***Incorporated by reference to this exhibit number to Aironet's current report
on Form 8-K filed on November 12, 1999.
<PAGE> 1
Exhibit 10.1.4.1
FIRST AMENDMENT TO
AIRONET WIRELESS COMMUNICATIONS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
RECITALS
A. The Aironet Wireless Communications, Inc. 1999 Employee Stock
Purchase Plan (the "Plan") was adopted by the Board of Directors of Aironet
Wireless Communications, Inc. (the "Company") on April 12, 1999 and approved by
the stockholders of the Company on May 7, 1998.
B. The Plan provides for certain eligibility requirements for
participation in the Plan and for an initial transitional Payment Period for the
implementation of the Plan;
C. As the Compensation Committee of the Board of Directors desires to
amend certain of these provisions, the Plan is hereby amended as follows:
1. PLAN AMENDMENT.
Section 3 of the Plan captioned "ELIGIBLE EMPLOYEES" is amended in its
entirety to read as follows:
3. ELIGIBLE EMPLOYEES. Each full-time employee of the Company
or any of its Participating Subsidiaries, and each part-time employee
thereof regularly working at least 20 hours per week or 40 hours every
two weeks, who has completed 12 months of continuous employment with
the Company and/or one or more of its Participating Subsidiaries and
whose Base Compensation does not exceed $150,000 shall be eligible to
receive options under this Plan to purchase Common Stock. Persons who
have been so employed for 12 months or more on the first day of a
Payment Period shall receive their options as of such day. The
determination of an employee's Plan eligibility with respect to the
Base Compensation limitation will be made only as of the beginning of
each Payment Period, based on the rate of Base Compensation he or she
is then receiving, without regard to any changes in his or her Base
Compensation that may subsequently be made during that Payment Period
(including any changes given retroactive effect to a date prior to the
commencement of the Payment Period). Except as otherwise provided in
Section 14, all other eligibility requirements must be satisfied at all
times throughout the Payment Period until and including the third
Friday of the last month of such Payment Period or, in the case of the
requirement that a participant be employed by the Company or a
Participating Subsidiary, up until and including the last Business Day
of such Payment Period (PROVIDED that, after the third Friday of the
last month of the Payment Period, satisfaction of said employment
conditions shall be determined without regard to the full-time and
part-time minimum hour requirements of the first sentence of this
Section 3, which full-time and part-time minimum shall apply for that
Payment Period only through said third Friday). All
<PAGE> 2
participating employees satisfying the eligibility requirements of the
Plan as of said third Friday or last Business Day of the Payment Period
as provided in the preceding sentence shall be entitled to purchase
shares on the last Business Day of such Payment Period as provided in
this Plan. Any employee eligible to and duly participating in the Plan
as of the beginning of a Payment Period but who at any time during that
Payment Period loses his or her status as an Eligible Employee will be
deemed to have lost such status, and to have withdrawn from
participation in the Plan as described in Section 10, effective as of
the beginning of the regular payroll period during which he or she
ceases to satisfy any such requirement; PROVIDED, however, that if such
ineligibility is the result of the termination of his or her
employment, the provisions of Section 15 shall, subject to the
provisions of Section 14, control over the initial provisions of this
sentence.
In no event may an employee be granted an option if such
employee, immediately after the option is granted, shall own stock
representing 5% or more of the total combined voting power or value of
all classes of stock of the Company. For purposes of determining stock
ownership under this paragraph, the rules of Section 425(d) of the Code
shall apply, and stock which the employee may purchase under
outstanding options shall be treated as stock owned by the employee.
Section 27 of the Plan captioned "APPROVAL OF STOCKHOLDERS;
IMPLEMENTATION OF PLAN" is amended in its entirety to read as follows:
27. APPROVAL OF STOCKHOLDERS; IMPLEMENTATION OF PLAN. This
Plan was adopted by the Company's Board of Directors subject to and to
become effective only upon, approval hereof by the Company's
stockholders, which approval was obtained by written consent on May 7,
1999. The Plan shall begin operation using an initial transitional
Payment Period beginning on the first pay day in November 1999 and
ending December 31, 1999, for the purposes of which initial Payment
Period the Closing Price on the first pay day in November 1999 shall be
used as the initial Closing Price called for by Section 2 for purposes
of determining the Option Price, the first pay day in November 1999
shall be used as the date for measuring employee's length of continuous
service and Base Compensation for purposes of determining their
eligibility to participate in the Plan, and the first pay day in
November 1999 shall be used as the initial date as of which payroll
deductions shall begin to accumulate under the Plan. Except as
specifically provided in this Section 27, the Plan shall, during and
with respect to said initial Payment Period, be governed by and
administered in accordance with the provisions of the foregoing
Sections 1 through 26 of this Plan. With respect to all Payment Periods
beginning on or after January 1, 2000, the Payment Periods, related
determinations of the Option Price and employee eligibility and
accumulation of payroll deductions, and all other matters arising under
the Plan shall be governed by and administered in accordance with the
provisions of this
<PAGE> 3
Plan without regard to the transitional rules set forth for the initial
implementation of this Plan as set forth in this Section 27.
2. EFFECTIVENESS OF AMENDMENT. This Amendment was duly approved and
adopted by the Compensation Committee of the Board of Directors and became
effective on October 29, 1999.
3. Each initially capitalized term used but not defined in this
Amendment shall have the same meaning given to such term in the Plan.
4. Except as amended hereby, the provisions of the Plan shall remain
in full force and effect.
- END -
<PAGE> 1
EXHIBIT 10.1.14
[AIRONET LOGO]
October 19, 1999
Mr. Roger J. Murphy, Jr.
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, Ohio 44334
Dear Mr. Murphy:
Aironet Wireless Communications, Inc. (the "Company") considers the
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its stockholders. As a publicly
held corporation, the Company recognizes the possibility that a change in its
control may arise and that the uncertainty and questions which it may raise
among management may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, in order to induce
you to remain in the employ of the Company and to secure for the Company and its
stockholders the benefits of your continued attention and dedication during the
pendency of any proposed or attempted "Change in Control" (as defined below),
including your assessment and advice to the Company's Board of Directors (the
"Board") as to whether any such proposal would be in the best interests of the
Company and its stockholders, the Compensation Committee of the Board has
determined to extend to you the severance benefits set forth in this letter
agreement (this "Agreement"), which supplements any employment agreement now
existing or hereafter entered into between you and the Company (your "Employment
Agreement", if any) and any rights or benefits to which you may be entitled
under any Plans (as defined below), in the event your employment with the
Company is terminated subsequent to a Change in Control.
1. TERMINATION FOLLOWING A CHANGE IN CONTROL.
If, during the period commencing with an offer or other proposal of a
transaction or event which is ultimately consummated and when consummated
constitutes a Change in Control (the "Offer Period") and ending twenty-four (24)
months after such Change in Control shall have occurred, your employment by the
Company shall be terminated (1) by the Company other than for "Cause" or
"Disability" or at normal retirement age or (2) by you for "Good Reason" (as
each of the foregoing capitalized terms is defined below), then you shall be
entitled, notwithstanding any contrary provisions of your Employment Agreement
or any Plan, to receive the following benefits:
(a) Salary through the date of termination at the rate in effect
immediately prior thereto, plus any benefits or awards (whether to be provided
in cash, stock or other right or property) which have been earned or become
payable, but which have not yet been paid to you, pursuant to the terms of any
compensation plan, such as a bonus, incentive, stock option, restricted stock or
Aironet Wireless Communications, Inc.
3875 Embassy Parkway, P.O. Box 5292, Akron, OH 44334-0292
(330) 664-7900 Fax (330) 664-7922
<PAGE> 2
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 2
stock appreciation right plan, any benefit plan, such as a thrift, pension,
retirement, 401(k), profit-sharing, health, disability, accident or life
insurance plan, any vacation or relocation plan or policy or any other plan,
program or policy of the Company intended to benefit all, or any designated
group of, Company employees (each of the foregoing constituting a "Plan");
(b) severance payment equal to twice your annual cash compensation as
in effect immediately prior to the Change in Control, payable in a lump sum at
the later of (i) five (5) days after the Change in Control or (ii) five (5) days
after termination of employment, which severance pay shall be in addition to any
severance pay which may be payable to you under your Employment Agreement, if
any; and
(c) continued benefits (or if unavailable under the general terms and
provisions of the applicable Plan, their equivalent) for you and your
dependents, for a period terminating on the earliest of (a) two (2) years after
your employment termination, (b) the commencement date of equivalent benefits
from a new employer, or (c) your normal retirement date (after which the terms
of any retirement Plan shall govern), under all insured and self-insured
employee welfare benefit Plans in which you participated immediately prior to
such termination date, provided that you shall not be required to pay any amount
greater than the regular contribution made by you for such participation
immediately prior to such termination date.
During any Offer Period the Company may, in its discretion, hold your
rights hereunder in abeyance until the Change in Control actually occurs.
Except as specifically provided in Subparagraph (c) above, the amount
of any payment or benefits provided for in this Agreement shall not be reduced,
offset or subject to recovery by the Company by reason of by any compensation
earned by you as the result of your employment by another employer, by
retirement benefits, by any amount claimed to be owing by you to the Company or
otherwise.
2. "CHANGE IN CONTROL" DEFINED.
For purposes of this Agreement:
(a) A "Change in Control" is deemed to have occurred when (i) any
Person after the date of this agreement becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act")), directly or indirectly, of fifteen percent (15%) or more of
the combined voting power of the Company's Voting Securities or any Person who
on the date of this agreement is the beneficial owner of fifteen percent (15%)
or more of the combined voting power of the Company's Voting Securities becomes
the beneficial owner, directly or indirectly, of additional combined voting
power of Voting Securities in excess of that which is beneficially owned on the
date hereof, or (ii) the holders of the Company's
<PAGE> 3
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 3
securities entitled to vote thereon approve, or there otherwise occurs or is
commenced, a sale, lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of the Company, or any
merger, consolidation or reorganization to which the Company is a party and as
the result of which the Company's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving entity in
the election of directors, or (iii) "Continuing Directors" (as defined below)
cease for any reason to constitute at least a majority of the Board, or (iv) any
other event occurs which is of such a nature that would be required to be
reported as a change in control in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Exchange Act, or similar successor public filing; provided, however, that
any such event shall not be deemed to be a Change in Control as to you if it
results in you, or a group of Persons which includes you, acquiring, directly or
indirectly, fifteen percent (15%) of more of the combined voting power of the
Company's Voting Securities;
(b) "Continuing Directors" means and includes the persons constituting
the Board as of the date of this Agreement as well as each person who becomes a
director of the Company subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director or of the inclusion of such
person in such proxy statement as such a nominee, in any such case without
objection by any member of such approving majority of the then Continuing
Directors to the nomination of such person or the naming of such person as a
director nominee), for so long as each such director shall remain in office;
(c) "Person" means and includes any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excludes: (i) the Company; (ii) any
employee benefit plan sponsored by the Company and (iii) any Person which after
the date of this agreement becomes the beneficial owner, directly or indirectly,
of fifteen percent (15%) or more of the combined voting power of the Company's
Voting Securities and any Person who on the date of this agreement is the
beneficial owner of fifteen percent (15%) or more of the combined voting power
of the Company's Voting Securities and which hereafter becomes the beneficial
owner of additional combined voting power in excess of the that which is
beneficially owned on the date hereof, if, but only if, such voting power is not
acquired, intentionally or unintentionally, as a prelude to or in connection
with any other type of transaction, including the acquisition of additional
voting power, that would be considered a Change of Control hereunder and the
Board deems the acquisition of such voting power alone not to constitute a
Change in Control hereunder.
<PAGE> 4
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 4
(d) "Voting Securities" means the Company's Common Stock, par value
$0.01 per share, and any and all other then outstanding Company securities
ordinarily having the right to vote generally in the election of the Company's
directors.
3. GROUNDS FOR TERMINATION OF EMPLOYMENT.
(a) Termination of your employment based on "Disability" means
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless you return to the full-time
performance of your duties within thirty (30) days after the Company gives
written notice to you of its intent to terminate your employment due to such
absence, you shall have returned to the full-time performance of your duties.
(b) Termination of your employment for "Cause" means termination for
your dishonesty, conviction for any felony, grossly negligent or willful
misconduct in the work place, or material breach of your Employment Agreement,
if any, or of any material Company policy applicable to its employees generally.
(c) Any of the following shall constitute "Good Reason" for you to
terminate your employment:
(i) any change, without your prior written consent, in your status
(other than the fact that the Company may no longer be publicly traded),
positions or job responsibilities which you consider to be a reduction in, or
the assignment to you of any duties or responsibilities which you consider to be
inconsistent with, your status, positions or responsibilities as in effect
immediately prior to the Change in Control (other than as the result of your
death or the termination of your employment by the Company for Cause, Disability
or at normal retirement age or by you other than for Good Reason);
(ii) a reduction by the Company, without your prior written consent, in
your base salary, or in the level of benefits provided to you and your
dependents under any Plan, as in effect immediately prior to the Change in
Control;
(iii) the Company's requiring you, without your express written
consent, to be based anywhere other than, or to relocate from, the metropolitan
area where your office is located immediately prior to the Change in Control;
<PAGE> 5
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 5
Your right to terminate your employment pursuant to this Subparagraph
(c) shall not be affected by your incapacity due to physical or mental illness.
A termination of employment by you shall be for Good Reason if one of the
occurrences specified in this Subparagraph (c) shall have occurred,
notwithstanding that you may have an offer of employment from another employer
or any other reason(s) for terminating your employment with the Company.
4. TAXES.
(a) All payments to be made to you under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.
(b) Notwithstanding anything in this Agreement to the contrary, if any
portion of any of the payments and benefits provided for in this Agreement,
together with any other payments and benefits which you have the right to
receive from the Company, its successors or any Person whose actions result in a
Change in Control, would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), the Company shall pay to you, within five (5)
days of your receipt of such payments and benefits, such additional amounts as
are necessary so that, after taking into account any tax imposed by said Section
4999 or any successor statutory provision on any such Parachute Payments and on
any payments made pursuant to this Subparagraph (b), you are in the same
after-tax position in which you would have been if said Section 4999 or any
successor statutory provision did not apply and no payments were made pursuant
to this Subparagraph (b).
5. RESTRICTIVE COVENANTS AND ASSIGNMENT OF RIGHTS
In consideration of the rights granted to you in this Agreement, you
agree to the following, which are in addition to any other similar agreements
made by you in favor of the Company:
COVENANT NOT TO COMPETE
(a) RESTRICTED ACTIVITIES--DURATION. You agree that, in addition to
being operative while you are employed by the Company, the provisions of clauses
(i) through (iii) of this paragraph (a) shall be operative for a period of
twelve (12) months after you are no longer employed by the Company, regardless
of the time, manner or reasons for termination, or whether you leave the Company
or are terminated by the Company. During such periods, you will not, directly or
indirectly, acting alone or as a member of a partnership or as an owner,
director, officer, you, manager, representative or consultant of any corporation
or other business entity:
<PAGE> 6
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 6
(i) engage in any business in competition with or adverse to the
business that is conducted by the Company, or, without limiting the generality
of the foregoing, engage in any business which manufactures, sells, distributes,
services or supports products which are of type manufactured, sold, marketed,
serviced or supported by the Company, or which are in the process of development
in which you participated or had knowledge of, at the time of your termination
from the Company, in the United States, Canada or any European, Asian, Pacific
or other foreign country in which the Company then or thereafter transacts
business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of the Company to curtail or cancel their business or prospective business with
the Company or in any way interfere with the Company's business relationships;
or
(iii) induce, solicit, assist or facilitate the inducement or
solicitation by a third person of any employee, officer, agent or representative
of the Company, to terminate their respective relationship with the Company or
in any way interfere with the the Company's employee, officer, agent or
representative relationships.
(b) TOLLING; RELIEF OF OBLIGATIONS. In the event that you breach any
provision of paragraph (a) above, such violation (1) shall toll the running of
the twelve (12) month period set forth therein from the date of commencement of
such violation until such violation ceases, and (ii) shall relieve the Company
of any obligations to you under this Agreement.
(c) "BLUE PENCILING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in paragraph
(a) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, you and the Company agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
<PAGE> 7
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 7
NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to the
Company which are proprietary and confidential to the Company or its
subsidiaries and which are not publicly disclosed or are only disclosed with
restrictions. Without limiting the generality of the foregoing, "Confidential
Information" includes strategic plans for carrying on business, other business
plans, cost data, internal financial information, customer lists, you lists,
vendor lists, business partner or alliances lists manufacturing methods or
processes, product research or engineering data, drawings, designs, schematics,
flow charts, computer programs, program decks, routines, subroutines,
translators, compilers, operation systems, object and source codes,
specifications, inventions, calculations, discoveries and any letters, papers,
documents or instruments disclosing or reflecting any of the foregoing, and all
information revealed to, acquired or created by you during your employment by
the Company relating to any of the foregoing.
(b) You acknowledges that the discharge of your duties to the Company
necessarily involves access to Confidential Information. You acknowledge that
your unauthorized use or disclosure of Confidential Information to third parties
might cause irreparable damage to the Company and the Company's business.
Accordingly, you agree that at all times after the date hereof you will not
copy, publish, disclose, divulge to or discuss with any third party nor use for
your own benefit or that of others, without the prior express written consent of
the Company's Board, any Confidential Information, it being understood and
acknowledged by you that all Confidential Information created, compiled or
obtained by you or the Company, or furnished to you by any person while you are
associated with the Company remains the Company's exclusive property.
(c) Promptly upon termination of your employment, irrespective of the
time or manner thereof or reason therefor, you agrees to return and surrender to
the Company all Confidential Information in any manner in your control or
possession, as well as all other the Company property.
<PAGE> 8
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 8
REMEDIES INADEQUATE.
(a) You acknowledges that the services to be rendered by you to the
Company as contemplated by this Agreement are special, unique and of
extraordinary character. You expressly agree and understand that the remedy at
law for any breach by you the Non-Competition or Confidential Information
sections of this Agreement will be inadequate and that the damages flowing from
such breach are not readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of your violation of any legally enforceable
provision of those sections, the Company shall be entitled to immediate
injunctive relief, including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of those sections, you agree that you
will not raise in such proceedings any defense that there is an adequate remedy
at law, and you hereby waive any such defense. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
you of any of the provisions of those sections, or of similar provisions in
other agreements between you and the Company, which may be pursued or availed of
by the Company.
(b) You have carefully considered, and have had adequate time and
opportunity to consult with your own counsel or other advisors regarding the
nature and extent of the restrictions upon you and the rights and remedies
conferred upon the Company under this Agreement, and hereby acknowledge and
agree that such restrictions are reasonable in time, territory and scope, are
designed to eliminate competition which otherwise would be unfair to the
Company, do not stifle your inherent skill and experience, would not operate as
a bar to your sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to you.
(c) The covenants and agreements made by you in this Section 5 shall
survive full payment by the Company to you of the amounts to which you is
entitled under this Agreement.
RIGHTS.
You acknowledge and agree that any procedure, design feature,
schematic, invention, improvement, development discovery, know how, concept,
idea or the like (whether or not patentable, registrable under copyright or
trademark laws, or otherwise protectable under similar laws) that you may
conceive of, suggest, make, invent, develop or implement, during the course of
your service to the Company (whether individually or jointly with any other
person or persons), with the Company's property or relating in any way to the
business of the Company or to the general industry of which the Company is a
part, as shall all physical embodiments and manifestations thereof, and all
patent rights, copyrights, trademarks (or applications therefor) and similar
protections therein (all of the foregoing referred to as "Work Product"), shall
be the sole,
<PAGE> 9
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 9
exclusive and absolute property of the Company. All Work Product shall be deemed
to be works for hire, and to the extent that any Work Product may not constitute
a work for hire, you hereby assigns to the Company all right, title and interest
in, to and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or similar
protections as the Company may desire to obtain. You will immediately disclose
all Work Product to the Company and agree, at any time, upon the Company's
request and without additional compensation, to execute any documents and
otherwise to cooperate with the Company respecting the perfection of its right,
title and interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by the Company.
6. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. the Company will require any
"Successor" (as defined below) to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform under this Agreement if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement within one (1) business day
after any Person becomes a Successor shall constitute Good Reason for
termination by you of your employment. For purposes of this Agreement: (i)
"Successor" shall mean any Person that, through one or a series of
transaction(s), succeeds to, or has or obtains the practical ability to control
(either immediately or with the passage of time), all or substantially all of
the Company's business directly, by merger, consolidation, purchase or lease of
assets or otherwise, or indirectly, by purchase of the Company's Voting
Securities or otherwise; and (ii) the "Company" shall mean the Company as
hereinbefore defined and any Successor which executes and delivers the agreement
provided for in the first sentence of this Subparagraph (a) or which by
operation of law or otherwise becomes bound by the terms of this Agreement.
(b) This Agreement shall be binding upon you and shall inure to the
benefit of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(c) the Company expressly acknowledges and agrees that this Agreement
creates in you a contractual right to the payments and benefits provided
hereunder and expressly waives any right it may have to deny or otherwise seek
to avoid liability for any breach of its contractual obligations hereunder on
grounds of lack of consideration, accord and satisfaction or any other defense.
the Company shall pay all legal fees and related expenses you incur in
protecting, obtaining or enforcing any right or benefit provided by this
Agreement.
<PAGE> 10
Mr. Roger J. Murphy, Jr.
October 19, 1999
Page 10
(d) Prior to a Change in Control so long as the Company is is not then
in an Offer Period, this Agreement shall terminate automatically and immediately
upon (i) any termination of your employment by you or the Company for any or no
reason or (ii) you are re-assigned by the Company to a position carrying duties
and responsibilities of lesser stature than the position in which you are
serving as of the date hereof.
(e) This Agreement shall be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Delaware.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter.
Sincerely,
Aironet Wireless Communications, Inc.
By: /s/ Richard G. Holmes
Its: Sr. VP & CFO
Agreed to as of the date first above written.
/s/ Roger J. Murphy, Jr.
- --------------------------
Roger J. Murphy, Jr.
<PAGE> 1
EXHIBIT 10.1.15
[AIRONET LOGO]
October 19, 1999
Mr. Richard G. Holmes
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, Ohio 44334
Dear Mr. Holmes:
Aironet Wireless Communications, Inc. (the "Company") considers the
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its stockholders. As a publicly
held corporation, the Company recognizes the possibility that a change in its
control may arise and that the uncertainty and questions which it may raise
among management may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, in order to induce
you to remain in the employ of the Company and to secure for the Company and its
stockholders the benefits of your continued attention and dedication during the
pendency of any proposed or attempted "Change in Control" (as defined below),
including your assessment and advice to the Company's Board of Directors (the
"Board") as to whether any such proposal would be in the best interests of the
Company and its stockholders, the Compensation Committee of the Board has
determined to extend to you the severance benefits set forth in this letter
agreement (this "Agreement"), which supplements any employment agreement now
existing or hereafter entered into between you and the Company (your "Employment
Agreement", if any) and any rights or benefits to which you may be entitled
under any Plans (as defined below), in the event your employment with the
Company is terminated subsequent to a Change in Control.
1. TERMINATION FOLLOWING A CHANGE IN CONTROL.
If, during the period commencing with an offer or other proposal of a
transaction or event which is ultimately consummated and when consummated
constitutes a Change in Control (the "Offer Period") and ending twenty-four (24)
months after such Change in Control shall have occurred, your employment by the
Company shall be terminated (1) by the Company other than for "Cause" or
"Disability" or at normal retirement age or (2) by you for "Good Reason" (as
each of the foregoing capitalized terms is defined below), then you shall be
entitled, notwithstanding any contrary provisions of your Employment Agreement
or any Plan, to receive the following benefits:
(a) Salary through the date of termination at the rate in effect
immediately prior thereto, plus any benefits or awards (whether to be provided
in cash, stock or other right or property) which have been earned or become
payable, but which have not yet been paid to you, pursuant to the terms of any
compensation plan, such as a bonus, incentive, stock option, restricted stock or
Aironet Wireless Communications, Inc.
3875 Embassy Parkway, P.O. Box 5292, Akron, OH 44334-0292
(330) 664-7900 Fax (330) 664-7922
<PAGE> 2
Mr. Richard G. Holmes
October 19, 1999
Page 2
stock appreciation right plan, any benefit plan, such as a thrift, pension,
retirement, 401(k), profit-sharing, health, disability, accident or life
insurance plan, any vacation or relocation plan or policy or any other plan,
program or policy of the Company intended to benefit all, or any designated
group of, Company employees (each of the foregoing constituting a "Plan");
(b) severance payment equal to your annual cash compensation as in
effect immediately prior to the Change in Control, payable in a lump sum at the
later of (i) five (5) days after the Change in Control or (ii) five (5) days
after termination of employment, which severance pay shall be in addition to any
severance pay which may be payable to you under your Employment Agreement, if
any; and
(c) continued benefits (or if unavailable under the general terms and
provisions of the applicable Plan, their equivalent) for you and your
dependents, for a period terminating on the earliest of (a) two (2) years after
your employment termination, (b) the commencement date of equivalent benefits
from a new employer, or (c) your normal retirement date (after which the terms
of any retirement Plan shall govern), under all insured and self-insured
employee welfare benefit Plans in which you participated immediately prior to
such termination date, provided that you shall not be required to pay any amount
greater than the regular contribution made by you for such participation
immediately prior to such termination date.
During any Offer Period the Company may, in its discretion, hold your
rights hereunder in abeyance until the Change in Control actually occurs.
Except as specifically provided in Subparagraph (c) above, the amount
of any payment or benefits provided for in this Agreement shall not be reduced,
offset or subject to recovery by the Company by reason of by any compensation
earned by you as the result of your employment by another employer, by
retirement benefits, by any amount claimed to be owing by you to the Company or
otherwise.
2. "CHANGE IN CONTROL" DEFINED.
For purposes of this Agreement:
(a) A "Change in Control" is deemed to have occurred when (i) any
Person after the date of this agreement becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act")), directly or indirectly, of fifteen percent (15%) or more of
the combined voting power of the Company's Voting Securities or any Person who
on the date of this agreement is the beneficial owner of fifteen percent (15%)
or more of the combined voting power of the Company's Voting Securities becomes
the beneficial owner, directly or indirectly, of additional combined voting
power of Voting Securities in excess of that which is beneficially owned on the
date hereof, or (ii) the holders of the Company's
<PAGE> 3
Mr. Richard G. Holmes
October 19, 1999
Page 3
securities entitled to vote thereon approve, or there otherwise occurs or is
commenced, a sale, lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of the Company, or any
merger, consolidation or reorganization to which the Company is a party and as
the result of which the Company's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving entity in
the election of directors, or (iii) "Continuing Directors" (as defined below)
cease for any reason to constitute at least a majority of the Board, or (iv) any
other event occurs which is of such a nature that would be required to be
reported as a change in control in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Exchange Act, or similar successor public filing; provided, however, that
any such event shall not be deemed to be a Change in Control as to you if it
results in you, or a group of Persons which includes you, acquiring, directly or
indirectly, fifteen percent (15%) of more of the combined voting power of the
Company's Voting Securities;
(b) "Continuing Directors" means and includes the persons constituting
the Board as of the date of this Agreement as well as each person who becomes a
director of the Company subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director or of the inclusion of such
person in such proxy statement as such a nominee, in any such case without
objection by any member of such approving majority of the then Continuing
Directors to the nomination of such person or the naming of such person as a
director nominee), for so long as each such director shall remain in office;
(c) "Person" means and includes any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excludes: (i) the Company; (ii) any
employee benefit plan sponsored by the Company and (iii) any Person which after
the date of this agreement becomes the beneficial owner, directly or indirectly,
of fifteen percent (15%) or more of the combined voting power of the Company's
Voting Securities and any Person who on the date of this agreement is the
beneficial owner of fifteen percent (15%) or more of the combined voting power
of the Company's Voting Securities and which hereafter becomes the beneficial
owner of additional combined voting power in excess of the that which is
beneficially owned on the date hereof, if, but only if, such voting power is not
acquired, intentionally or unintentionally, as a prelude to or in connection
with any other type of transaction, including the acquisition of additional
voting power, that would be considered a Change of Control hereunder and the
Board deems the acquisition of such voting power alone not to constitute a
Change in Control hereunder.
<PAGE> 4
Mr. Richard G. Holmes
October 19, 1999
Page 4
(d) "Voting Securities" means the Company's Common Stock, par value
$0.01 per share, and any and all other then outstanding Company securities
ordinarily having the right to vote generally in the election of the Company's
directors.
3. GROUNDS FOR TERMINATION OF EMPLOYMENT.
(a) Termination of your employment based on "Disability" means
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless you return to the full-time
performance of your duties within thirty (30) days after the Company gives
written notice to you of its intent to terminate your employment due to such
absence, you shall have returned to the full-time performance of your duties.
(b) Termination of your employment for "Cause" means termination for
your dishonesty, conviction for any felony, grossly negligent or willful
misconduct in the work place, or material breach of your Employment Agreement,
if any, or of any material Company policy applicable to its employees generally.
(c) Any of the following shall constitute "Good Reason" for you to
terminate your employment:
(i) any change, without your prior written consent, in your status
(other than the fact that the Company may no longer be publicly traded),
positions or job responsibilities which you consider to be a reduction in, or
the assignment to you of any duties or responsibilities which you consider to be
inconsistent with, your status, positions or responsibilities as in effect
immediately prior to the Change in Control (other than as the result of your
death or the termination of your employment by the Company for Cause, Disability
or at normal retirement age or by you other than for Good Reason);
(ii) a reduction by the Company, without your prior written consent, in
your base salary, or in the level of benefits provided to you and your
dependents under any Plan, as in effect immediately prior to the Change in
Control;
(iii) the Company's requiring you, without your express written
consent, to be based anywhere other than, or to relocate from, the metropolitan
area where your office is located immediately prior to the Change in Control;
<PAGE> 5
Mr. Richard G. Holmes
October 19, 1999
Page 5
Your right to terminate your employment pursuant to this Subparagraph
(c) shall not be affected by your incapacity due to physical or mental illness.
A termination of employment by you shall be for Good Reason if one of the
occurrences specified in this Subparagraph (c) shall have occurred,
notwithstanding that you may have an offer of employment from another employer
or any other reason(s) for terminating your employment with the Company.
4. TAXES.
(a) All payments to be made to you under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.
(b) Notwithstanding anything in this Agreement to the contrary, if any
portion of any of the payments and benefits provided for in this Agreement,
together with any other payments and benefits which you have the right to
receive from the Company, its successors or any Person whose actions result in a
Change in Control, would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), the Company shall pay to you, within five (5)
days of your receipt of such payments and benefits, such additional amounts as
are necessary so that, after taking into account any tax imposed by said Section
4999 or any successor statutory provision on any such Parachute Payments and on
any payments made pursuant to this Subparagraph (b), you are in the same
after-tax position in which you would have been if said Section 4999 or any
successor statutory provision did not apply and no payments were made pursuant
to this Subparagraph (b).
5. RESTRICTIVE COVENANTS AND ASSIGNMENT OF RIGHTS
In consideration of the rights granted to you in this Agreement, you
agree to the following, which are in addition to any other similar agreements
made by you in favor of the Company:
COVENANT NOT TO COMPETE
- -----------------------
(a) RESTRICTED ACTIVITIES--DURATION. You agree that, in addition to
being operative while you are employed by the Company, the provisions of clauses
(i) through (iii) of this paragraph (a) shall be operative for a period of
twelve (12) months after you are no longer employed by the Company, regardless
of the time, manner or reasons for termination, or whether you leave the Company
or are terminated by the Company. During such periods, you will not, directly or
indirectly, acting alone or as a member of a partnership or as an owner,
director, officer, you, manager, representative or consultant of any corporation
or other business entity:
<PAGE> 6
Mr. Richard G. Holmes
October 19, 1999
Page 6
(i) engage in any business in competition with or adverse to the
business that is conducted by the Company, or, without limiting the generality
of the foregoing, engage in any business which manufactures, sells, distributes,
services or supports products which are of type manufactured, sold, marketed,
serviced or supported by the Company, or which are in the process of development
in which you participated or had knowledge of, at the time of your termination
from the Company, in the United States, Canada or any European, Asian, Pacific
or other foreign country in which the Company then or thereafter transacts
business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of the Company to curtail or cancel their business or prospective business with
the Company or in any way interfere with the Company's business relationships;
or
(iii) induce, solicit, assist or facilitate the inducement or
solicitation by a third person of any employee, officer, agent or representative
of the Company, to terminate their respective relationship with the Company or
in any way interfere with the the Company's employee, officer, agent or
representative relationships.
(b) TOLLING; RELIEF OF OBLIGATIONS. In the event that you breach any
provision of paragraph (a) above, such violation (1) shall toll the running of
the twelve (12) month period set forth therein from the date of commencement of
such violation until such violation ceases, and (ii) shall relieve the Company
of any obligations to you under this Agreement.
(c) "BLUE PENCILING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in paragraph
(a) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, you and the Company agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
<PAGE> 7
Mr. Richard G. Holmes
October 19, 1999
Page 7
NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
- ------------------------------------------
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to the
Company which are proprietary and confidential to the Company or its
subsidiaries and which are not publicly disclosed or are only disclosed with
restrictions. Without limiting the generality of the foregoing, "Confidential
Information" includes strategic plans for carrying on business, other business
plans, cost data, internal financial information, customer lists, you lists,
vendor lists, business partner or alliances lists manufacturing methods or
processes, product research or engineering data, drawings, designs, schematics,
flow charts, computer programs, program decks, routines, subroutines,
translators, compilers, operation systems, object and source codes,
specifications, inventions, calculations, discoveries and any letters, papers,
documents or instruments disclosing or reflecting any of the foregoing, and all
information revealed to, acquired or created by you during your employment by
the Company relating to any of the foregoing.
(b) You acknowledges that the discharge of your duties to the Company
necessarily involves access to Confidential Information. You acknowledge that
your unauthorized use or disclosure of Confidential Information to third parties
might cause irreparable damage to the Company and the Company's business.
Accordingly, you agree that at all times after the date hereof you will not
copy, publish, disclose, divulge to or discuss with any third party nor use for
your own benefit or that of others, without the prior express written consent of
the Company's Board, any Confidential Information, it being understood and
acknowledged by you that all Confidential Information created, compiled or
obtained by you or the Company, or furnished to you by any person while you are
associated with the Company remains the Company's exclusive property.
(c) Promptly upon termination of your employment, irrespective of the
time or manner thereof or reason therefor, you agrees to return and surrender to
the Company all Confidential Information in any manner in your control or
possession, as well as all other the Company property.
<PAGE> 8
Mr. Richard G. Holmes
October 19, 1999
Page 8
REMEDIES INADEQUATE.
- --------------------
(a) You acknowledges that the services to be rendered by you to the
Company as contemplated by this Agreement are special, unique and of
extraordinary character. You expressly agree and understand that the remedy at
law for any breach by you the Non-Competition or Confidential Information
sections of this Agreement will be inadequate and that the damages flowing from
such breach are not readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of your violation of any legally enforceable
provision of those sections, the Company shall be entitled to immediate
injunctive relief, including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of those sections, you agree that you
will not raise in such proceedings any defense that there is an adequate remedy
at law, and you hereby waive any such defense. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
you of any of the provisions of those sections, or of similar provisions in
other agreements between you and the Company, which may be pursued or availed of
by the Company.
(b) You have carefully considered, and have had adequate time and
opportunity to consult with your own counsel or other advisors regarding the
nature and extent of the restrictions upon you and the rights and remedies
conferred upon the Company under this Agreement, and hereby acknowledge and
agree that such restrictions are reasonable in time, territory and scope, are
designed to eliminate competition which otherwise would be unfair to the
Company, do not stifle your inherent skill and experience, would not operate as
a bar to your sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to you.
(c) The covenants and agreements made by you in this Section 5 shall
survive full payment by the Company to you of the amounts to which you is
entitled under this Agreement.
RIGHTS.
- -------
You acknowledge and agree that any procedure, design feature,
schematic, invention, improvement, development discovery, know how, concept,
idea or the like (whether or not patentable, registrable under copyright or
trademark laws, or otherwise protectable under similar laws) that you may
conceive of, suggest, make, invent, develop or implement, during the course of
your service to the Company (whether individually or jointly with any other
person or persons), with the Company's property or relating in any way to the
business of the Company or to the general industry of which the Company is a
part, as shall all physical embodiments and manifestations thereof, and all
patent rights, copyrights, trademarks (or applications therefor) and similar
protections therein (all of the foregoing referred to as "Work Product"), shall
be the sole,
<PAGE> 9
Mr. Richard G. Holmes
October 19, 1999
Page 9
exclusive and absolute property of the Company. All Work Product shall be deemed
to be works for hire, and to the extent that any Work Product may not constitute
a work for hire, you hereby assigns to the Company all right, title and interest
in, to and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or similar
protections as the Company may desire to obtain. You will immediately disclose
all Work Product to the Company and agree, at any time, upon the Company's
request and without additional compensation, to execute any documents and
otherwise to cooperate with the Company respecting the perfection of its right,
title and interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by the Company.
6. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. the Company will require any
"Successor" (as defined below) to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform under this Agreement if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement within one (1) business day
after any Person becomes a Successor shall constitute Good Reason for
termination by you of your employment. For purposes of this Agreement: (i)
"Successor" shall mean any Person that, through one or a series of
transaction(s), succeeds to, or has or obtains the practical ability to control
(either immediately or with the passage of time), all or substantially all of
the Company's business directly, by merger, consolidation, purchase or lease of
assets or otherwise, or indirectly, by purchase of the Company's Voting
Securities or otherwise; and (ii) the "Company" shall mean the Company as
hereinbefore defined and any Successor which executes and delivers the agreement
provided for in the first sentence of this Subparagraph (a) or which by
operation of law or otherwise becomes bound by the terms of this Agreement.
(b) This Agreement shall be binding upon you and shall inure to the
benefit of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(c) the Company expressly acknowledges and agrees that this Agreement
creates in you a contractual right to the payments and benefits provided
hereunder and expressly waives any right it may have to deny or otherwise seek
to avoid liability for any breach of its contractual obligations hereunder on
grounds of lack of consideration, accord and satisfaction or any other defense.
the Company shall pay all legal fees and related expenses you incur in
protecting, obtaining or enforcing any right or benefit provided by this
Agreement.
<PAGE> 10
Mr. Richard G. Holmes
October 19, 1999
Page 10
(d) Prior to a Change in Control so long as the Company is is not then
in an Offer Period, this Agreement shall terminate automatically and immediately
upon (i) any termination of your employment by you or the Company for any or no
reason or (ii) you are re-assigned by the Company to a position carrying duties
and responsibilities of lesser stature than the position in which you are
serving as of the date hereof.
(e) This Agreement shall be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Delaware.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter.
Sincerely,
Aironet Wireless Communications, Inc.
By: /s/ Roger J. Murphy, Jr.
Its: President & CEO
Agreed to as of the date first above written.
/s/ Richard G. Holmes
- ---------------------
Richard G. Holmes
<PAGE> 1
EXHIBIT 10.1.16
[AIRONET LOGO]
October 19, 1999
Mr. Ronald B. Willis
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, Ohio 44334
Dear Mr. Willis:
Aironet Wireless Communications, Inc. (the "Company") considers the
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its stockholders. As a publicly
held corporation, the Company recognizes the possibility that a change in its
control may arise and that the uncertainty and questions which it may raise
among management may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, in order to induce
you to remain in the employ of the Company and to secure for the Company and its
stockholders the benefits of your continued attention and dedication during the
pendency of any proposed or attempted "Change in Control" (as defined below),
including your assessment and advice to the Company's Board of Directors (the
"Board") as to whether any such proposal would be in the best interests of the
Company and its stockholders, the Compensation Committee of the Board has
determined to extend to you the severance benefits set forth in this letter
agreement (this "Agreement"), which supplements any employment agreement now
existing or hereafter entered into between you and the Company (your "Employment
Agreement", if any) and any rights or benefits to which you may be entitled
under any Plans (as defined below), in the event your employment with the
Company is terminated subsequent to a Change in Control.
1. TERMINATION FOLLOWING A CHANGE IN CONTROL.
If, during the period commencing with an offer or other proposal of a
transaction or event which is ultimately consummated and when consummated
constitutes a Change in Control (the "Offer Period") and ending twenty-four (24)
months after such Change in Control shall have occurred, your employment by the
Company shall be terminated (1) by the Company other than for "Cause" or
"Disability" or at normal retirement age or (2) by you for "Good Reason" (as
each of the foregoing capitalized terms is defined below), then you shall be
entitled, notwithstanding any contrary provisions of your Employment Agreement
or any Plan, to receive the following benefits:
(a) Salary through the date of termination at the rate in effect
immediately prior thereto, plus any benefits or awards (whether to be provided
in cash, stock or other right or property) which have been earned or become
payable, but which have not yet been paid to you, pursuant to the terms of any
compensation plan, such as a bonus, incentive, stock option, restricted stock or
Aironet Wireless Communications, Inc.
3875 Embassy Parkway, P.O. Box 5292, Akron, OH 44334-0292
(330) 664-7900 Fax (330) 664-7922
<PAGE> 2
Mr. Ronald B. Willis
October 19, 1999
Page 2
stock appreciation right plan, any benefit plan, such as a thrift, pension,
retirement, 401(k), profit-sharing, health, disability, accident or life
insurance plan, any vacation or relocation plan or policy or any other plan,
program or policy of the Company intended to benefit all, or any designated
group of, Company employees (each of the foregoing constituting a "Plan");
(b) severance payment equal to your annual cash compensation as in
effect immediately prior to the Change in Control, payable in a lump sum at the
later of (i) five (5) days after the Change in Control or (ii) five (5) days
after termination of employment, which severance pay shall be in addition to any
severance pay which may be payable to you under your Employment Agreement, if
any; and
(c) continued benefits (or if unavailable under the general terms and
provisions of the applicable Plan, their equivalent) for you and your
dependents, for a period terminating on the earliest of (a) two (2) years after
your employment termination, (b) the commencement date of equivalent benefits
from a new employer, or (c) your normal retirement date (after which the terms
of any retirement Plan shall govern), under all insured and self-insured
employee welfare benefit Plans in which you participated immediately prior to
such termination date, provided that you shall not be required to pay any amount
greater than the regular contribution made by you for such participation
immediately prior to such termination date.
During any Offer Period the Company may, in its discretion, hold your
rights hereunder in abeyance until the Change in Control actually occurs.
Except as specifically provided in Subparagraph (c) above, the amount
of any payment or benefits provided for in this Agreement shall not be reduced,
offset or subject to recovery by the Company by reason of by any compensation
earned by you as the result of your employment by another employer, by
retirement benefits, by any amount claimed to be owing by you to the Company or
otherwise.
2. "CHANGE IN CONTROL" DEFINED.
For purposes of this Agreement:
(a) A "Change in Control" is deemed to have occurred when (i) any
Person after the date of this agreement becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act")), directly or indirectly, of fifteen percent (15%) or more of
the combined voting power of the Company's Voting Securities or any Person who
on the date of this agreement is the beneficial owner of fifteen percent (15%)
or more of the combined voting power of the Company's Voting Securities becomes
the beneficial owner, directly or indirectly, of additional combined voting
power of Voting Securities in excess of that which is beneficially owned on the
date hereof, or (ii) the holders of the Company's
<PAGE> 3
Mr. Ronald B. Willis
October 19, 1999
Page 3
securities entitled to vote thereon approve, or there otherwise occurs or is
commenced, a sale, lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of the Company, or any
merger, consolidation or reorganization to which the Company is a party and as
the result of which the Company's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving entity in
the election of directors, or (iii) "Continuing Directors" (as defined below)
cease for any reason to constitute at least a majority of the Board, or (iv) any
other event occurs which is of such a nature that would be required to be
reported as a change in control in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Exchange Act, or similar successor public filing; provided, however, that
any such event shall not be deemed to be a Change in Control as to you if it
results in you, or a group of Persons which includes you, acquiring, directly or
indirectly, fifteen percent (15%) of more of the combined voting power of the
Company's Voting Securities;
(b) "Continuing Directors" means and includes the persons constituting
the Board as of the date of this Agreement as well as each person who becomes a
director of the Company subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director or of the inclusion of such
person in such proxy statement as such a nominee, in any such case without
objection by any member of such approving majority of the then Continuing
Directors to the nomination of such person or the naming of such person as a
director nominee), for so long as each such director shall remain in office;
(c) "Person" means and includes any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excludes: (i) the Company; (ii) any
employee benefit plan sponsored by the Company and (iii) any Person which after
the date of this agreement becomes the beneficial owner, directly or indirectly,
of fifteen percent (15%) or more of the combined voting power of the Company's
Voting Securities and any Person who on the date of this agreement is the
beneficial owner of fifteen percent (15%) or more of the combined voting power
of the Company's Voting Securities and which hereafter becomes the beneficial
owner of additional combined voting power in excess of the that which is
beneficially owned on the date hereof, if, but only if, such voting power is not
acquired, intentionally or unintentionally, as a prelude to or in connection
with any other type of transaction, including the acquisition of additional
voting power, that would be considered a Change of Control hereunder and the
Board deems the acquisition of such voting power alone not to constitute a
Change in Control hereunder.
<PAGE> 4
Mr. Ronald B. Willis
October 19, 1999
Page 4
(d) "Voting Securities" means the Company's Common Stock, par value
$0.01 per share, and any and all other then outstanding Company securities
ordinarily having the right to vote generally in the election of the Company's
directors.
3. GROUNDS FOR TERMINATION OF EMPLOYMENT.
(a) Termination of your employment based on "Disability" means
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless you return to the full-time
performance of your duties within thirty (30) days after the Company gives
written notice to you of its intent to terminate your employment due to such
absence, you shall have returned to the full-time performance of your duties.
(b) Termination of your employment for "Cause" means termination for
your dishonesty, conviction for any felony, grossly negligent or willful
misconduct in the work place, or material breach of your Employment Agreement,
if any, or of any material Company policy applicable to its employees generally.
(c) Any of the following shall constitute "Good Reason" for you to
terminate your employment:
(i) any change, without your prior written consent, in your status
(other than the fact that the Company may no longer be publicly traded),
positions or job responsibilities which you consider to be a reduction in, or
the assignment to you of any duties or responsibilities which you consider to be
inconsistent with, your status, positions or responsibilities as in effect
immediately prior to the Change in Control (other than as the result of your
death or the termination of your employment by the Company for Cause, Disability
or at normal retirement age or by you other than for Good Reason);
(ii) a reduction by the Company, without your prior written consent, in
your base salary, or in the level of benefits provided to you and your
dependents under any Plan, as in effect immediately prior to the Change in
Control;
(iii) the Company's requiring you, without your express written
consent, to be based anywhere other than, or to relocate from, the metropolitan
area where your office is located immediately prior to the Change in Control;
<PAGE> 5
Mr. Ronald B. Willis
October 19, 1999
Page 5
Your right to terminate your employment pursuant to this Subparagraph
(c) shall not be affected by your incapacity due to physical or mental illness.
A termination of employment by you shall be for Good Reason if one of the
occurrences specified in this Subparagraph (c) shall have occurred,
notwithstanding that you may have an offer of employment from another employer
or any other reason(s) for terminating your employment with the Company.
4. TAXES.
(a) All payments to be made to you under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.
(b) Notwithstanding anything in this Agreement to the contrary, if any
portion of any of the payments and benefits provided for in this Agreement,
together with any other payments and benefits which you have the right to
receive from the Company, its successors or any Person whose actions result in a
Change in Control, would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), the Company shall pay to you, within five (5)
days of your receipt of such payments and benefits, such additional amounts as
are necessary so that, after taking into account any tax imposed by said Section
4999 or any successor statutory provision on any such Parachute Payments and on
any payments made pursuant to this Subparagraph (b), you are in the same
after-tax position in which you would have been if said Section 4999 or any
successor statutory provision did not apply and no payments were made pursuant
to this Subparagraph (b).
5. RESTRICTIVE COVENANTS AND ASSIGNMENT OF RIGHTS
In consideration of the rights granted to you in this Agreement, you
agree to the following, which are in addition to any other similar agreements
made by you in favor of the Company:
COVENANT NOT TO COMPETE
- -----------------------
(a) RESTRICTED ACTIVITIES--DURATION. You agree that, in addition to
being operative while you are employed by the Company, the provisions of clauses
(i) through (iii) of this paragraph (a) shall be operative for a period of
twelve (12) months after you are no longer employed by the Company, regardless
of the time, manner or reasons for termination, or whether you leave the Company
or are terminated by the Company. During such periods, you will not, directly or
indirectly, acting alone or as a member of a partnership or as an owner,
director, officer, you, manager, representative or consultant of any corporation
or other business entity:
<PAGE> 6
Mr. Ronald B. Willis
October 19, 1999
Page 6
(i) engage in any business in competition with or adverse to the
business that is conducted by the Company, or, without limiting the generality
of the foregoing, engage in any business which manufactures, sells, distributes,
services or supports products which are of type manufactured, sold, marketed,
serviced or supported by the Company, or which are in the process of development
in which you participated or had knowledge of, at the time of your termination
from the Company, in the United States, Canada or any European, Asian, Pacific
or other foreign country in which the Company then or thereafter transacts
business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of the Company to curtail or cancel their business or prospective business with
the Company or in any way interfere with the Company's business relationships;
or
(iii) induce, solicit, assist or facilitate the inducement or
solicitation by a third person of any employee, officer, agent or representative
of the Company, to terminate their respective relationship with the Company or
in any way interfere with the the Company's employee, officer, agent or
representative relationships.
(b) TOLLING; RELIEF OF OBLIGATIONS. In the event that you breach any
provision of paragraph (a) above, such violation (1) shall toll the running of
the twelve (12) month period set forth therein from the date of commencement of
such violation until such violation ceases, and (ii) shall relieve the Company
of any obligations to you under this Agreement.
(c) "BLUE PENCILING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in paragraph
(a) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, you and the Company agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
<PAGE> 7
Mr. Ronald B. Willis
October 19, 1999
Page 7
NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
- -----------------------------------------
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to the
Company which are proprietary and confidential to the Company or its
subsidiaries and which are not publicly disclosed or are only disclosed with
restrictions. Without limiting the generality of the foregoing, "Confidential
Information" includes strategic plans for carrying on business, other business
plans, cost data, internal financial information, customer lists, you lists,
vendor lists, business partner or alliances lists manufacturing methods or
processes, product research or engineering data, drawings, designs, schematics,
flow charts, computer programs, program decks, routines, subroutines,
translators, compilers, operation systems, object and source codes,
specifications, inventions, calculations, discoveries and any letters, papers,
documents or instruments disclosing or reflecting any of the foregoing, and all
information revealed to, acquired or created by you during your employment by
the Company relating to any of the foregoing.
(b) You acknowledges that the discharge of your duties to the Company
necessarily involves access to Confidential Information. You acknowledge that
your unauthorized use or disclosure of Confidential Information to third parties
might cause irreparable damage to the Company and the Company's business.
Accordingly, you agree that at all times after the date hereof you will not
copy, publish, disclose, divulge to or discuss with any third party nor use for
your own benefit or that of others, without the prior express written consent of
the Company's Board, any Confidential Information, it being understood and
acknowledged by you that all Confidential Information created, compiled or
obtained by you or the Company, or furnished to you by any person while you are
associated with the Company remains the Company's exclusive property.
(c) Promptly upon termination of your employment, irrespective of the
time or manner thereof or reason therefor, you agrees to return and surrender to
the Company all Confidential Information in any manner in your control or
possession, as well as all other the Company property.
<PAGE> 8
Mr. Ronald B. Willis
October 19, 1999
Page 8
REMEDIES INADEQUATE.
- --------------------
(a) You acknowledges that the services to be rendered by you to the
Company as contemplated by this Agreement are special, unique and of
extraordinary character. You expressly agree and understand that the remedy at
law for any breach by you the Non-Competition or Confidential Information
sections of this Agreement will be inadequate and that the damages flowing from
such breach are not readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of your violation of any legally enforceable
provision of those sections, the Company shall be entitled to immediate
injunctive relief, including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of those sections, you agree that you
will not raise in such proceedings any defense that there is an adequate remedy
at law, and you hereby waive any such defense. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
you of any of the provisions of those sections, or of similar provisions in
other agreements between you and the Company, which may be pursued or availed of
by the Company.
(b) You have carefully considered, and have had adequate time and
opportunity to consult with your own counsel or other advisors regarding the
nature and extent of the restrictions upon you and the rights and remedies
conferred upon the Company under this Agreement, and hereby acknowledge and
agree that such restrictions are reasonable in time, territory and scope, are
designed to eliminate competition which otherwise would be unfair to the
Company, do not stifle your inherent skill and experience, would not operate as
a bar to your sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to you.
(c) The covenants and agreements made by you in this Section 5 shall
survive full payment by the Company to you of the amounts to which you is
entitled under this Agreement.
RIGHTS.
- -------
You acknowledge and agree that any procedure, design feature,
schematic, invention, improvement, development discovery, know how, concept,
idea or the like (whether or not patentable, registrable under copyright or
trademark laws, or otherwise protectable under similar laws) that you may
conceive of, suggest, make, invent, develop or implement, during the course of
your service to the Company (whether individually or jointly with any other
person or persons), with the Company's property or relating in any way to the
business of the Company or to the general industry of which the Company is a
part, as shall all physical embodiments and manifestations thereof, and all
patent rights, copyrights, trademarks (or applications therefor) and similar
protections therein (all of the foregoing referred to as "Work Product"), shall
be the sole,
<PAGE> 9
Mr. Ronald B. Willis
October 19, 1999
Page 9
exclusive and absolute property of the Company. All Work Product shall be deemed
to be works for hire, and to the extent that any Work Product may not constitute
a work for hire, you hereby assigns to the Company all right, title and interest
in, to and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or similar
protections as the Company may desire to obtain. You will immediately disclose
all Work Product to the Company and agree, at any time, upon the Company's
request and without additional compensation, to execute any documents and
otherwise to cooperate with the Company respecting the perfection of its right,
title and interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by the Company.
6. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. the Company will require any
"Successor" (as defined below) to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform under this Agreement if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement within one (1) business day
after any Person becomes a Successor shall constitute Good Reason for
termination by you of your employment. For purposes of this Agreement: (i)
"Successor" shall mean any Person that, through one or a series of
transaction(s), succeeds to, or has or obtains the practical ability to control
(either immediately or with the passage of time), all or substantially all of
the Company's business directly, by merger, consolidation, purchase or lease of
assets or otherwise, or indirectly, by purchase of the Company's Voting
Securities or otherwise; and (ii) the "Company" shall mean the Company as
hereinbefore defined and any Successor which executes and delivers the agreement
provided for in the first sentence of this Subparagraph (a) or which by
operation of law or otherwise becomes bound by the terms of this Agreement.
(b) This Agreement shall be binding upon you and shall inure to the
benefit of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(c) the Company expressly acknowledges and agrees that this Agreement
creates in you a contractual right to the payments and benefits provided
hereunder and expressly waives any right it may have to deny or otherwise seek
to avoid liability for any breach of its contractual obligations hereunder on
grounds of lack of consideration, accord and satisfaction or any other defense.
the Company shall pay all legal fees and related expenses you incur in
protecting, obtaining or enforcing any right or benefit provided by this
Agreement.
<PAGE> 10
Mr. Ronald B. Willis
October 19, 1999
Page 10
(d) Prior to a Change in Control so long as the Company is is not then
in an Offer Period, this Agreement shall terminate automatically and immediately
upon (i) any termination of your employment by you or the Company for any or no
reason or (ii) you are re-assigned by the Company to a position carrying duties
and responsibilities of lesser stature than the position in which you are
serving as of the date hereof.
(e) This Agreement shall be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Delaware.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter.
Sincerely,
Aironet Wireless Communications, Inc.
By: /s/ Roger J. Murphy, Jr.
Its: President & CEO
Agreed to as of the date first above written.
/s/ Ronald B. Willis
- ---------------------
Ronald B. Willis
<PAGE> 1
Exhibit 10.1.17
[AIRONET LOGO]
October 19, 1999
Mr. Harvey A. Ikeman
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, Ohio 44334
Dear Mr. Ikeman:
Aironet Wireless Communications, Inc. (the "Company") considers the
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its stockholders. As a publicly
held corporation, the Company recognizes the possibility that a change in its
control may arise and that the uncertainty and questions which it may raise
among management may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, in order to induce
you to remain in the employ of the Company and to secure for the Company and its
stockholders the benefits of your continued attention and dedication during the
pendency of any proposed or attempted "Change in Control" (as defined below),
including your assessment and advice to the Company's Board of Directors (the
"Board") as to whether any such proposal would be in the best interests of the
Company and its stockholders, the Compensation Committee of the Board has
determined to extend to you the severance benefits set forth in this letter
agreement (this "Agreement"), which supplements any employment agreement now
existing or hereafter entered into between you and the Company (your "Employment
Agreement", if any) and any rights or benefits to which you may be entitled
under any Plans (as defined below), in the event your employment with the
Company is terminated subsequent to a Change in Control.
1. TERMINATION FOLLOWING A CHANGE IN CONTROL.
If, during the period commencing with an offer or other proposal of a
transaction or event which is ultimately consummated and when consummated
constitutes a Change in Control (the "Offer Period") and ending twenty-four (24)
months after such Change in Control shall have occurred, your employment by the
Company shall be terminated (1) by the Company other than for "Cause" or
"Disability" or at normal retirement age or (2) by you for "Good Reason" (as
each of the foregoing capitalized terms is defined below), then you shall be
entitled, notwithstanding any contrary provisions of your Employment Agreement
or any Plan, to receive the following benefits:
(a) Salary through the date of termination at the rate in effect
immediately prior thereto, plus any benefits or awards (whether to be provided
in cash, stock or other right or property) which have been earned or become
payable, but which have not yet been paid to you, pursuant to the terms of any
compensation plan, such as a bonus, incentive, stock option, restricted stock or
Aironet Wireless Communications, Inc.
3875 Embassy Parkway, P.O. Box 5292, Akron, OH 44334-0292
(330) 664-7900 Fax (330) 664-7922
<PAGE> 2
Mr. Harvey A. Ikeman
October 19, 1999
Page 2
stock appreciation right plan, any benefit plan, such as a thrift, pension,
retirement, 401(k), profit-sharing, health, disability, accident or life
insurance plan, any vacation or relocation plan or policy or any other plan,
program or policy of the Company intended to benefit all, or any designated
group of, Company employees (each of the foregoing constituting a "Plan");
(b) severance payment equal to your annual cash compensation as in
effect immediately prior to the Change in Control, payable in a lump sum at the
later of (i) five (5) days after the Change in Control or (ii) five (5) days
after termination of employment, which severance pay shall be in addition to any
severance pay which may be payable to you under your Employment Agreement, if
any; and
(c) continued benefits (or if unavailable under the general terms and
provisions of the applicable Plan, their equivalent) for you and your
dependents, for a period terminating on the earliest of (a) two (2) years after
your employment termination, (b) the commencement date of equivalent benefits
from a new employer, or (c) your normal retirement date (after which the terms
of any retirement Plan shall govern), under all insured and self-insured
employee welfare benefit Plans in which you participated immediately prior to
such termination date, provided that you shall not be required to pay any amount
greater than the regular contribution made by you for such participation
immediately prior to such termination date.
During any Offer Period the Company may, in its discretion, hold your
rights hereunder in abeyance until the Change in Control actually occurs.
Except as specifically provided in Subparagraph (c) above, the amount
of any payment or benefits provided for in this Agreement shall not be reduced,
offset or subject to recovery by the Company by reason of by any compensation
earned by you as the result of your employment by another employer, by
retirement benefits, by any amount claimed to be owing by you to the Company or
otherwise.
2. "CHANGE IN CONTROL" DEFINED.
For purposes of this Agreement:
(a) A "Change in Control" is deemed to have occurred when (i) any
Person after the date of this agreement becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act")), directly or indirectly, of fifteen percent (15%) or more of
the combined voting power of the Company's Voting Securities or any Person who
on the date of this agreement is the beneficial owner of fifteen percent (15%)
or more of the combined voting power of the Company's Voting Securities becomes
the beneficial owner, directly or indirectly, of additional combined voting
power of Voting Securities in excess of that which is beneficially owned on the
date hereof, or (ii) the holders of the Company's
<PAGE> 3
Mr. Harvey A. Ikeman
October 19, 1999
Page 3
securities entitled to vote thereon approve, or there otherwise occurs or is
commenced, a sale, lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of the Company, or any
merger, consolidation or reorganization to which the Company is a party and as
the result of which the Company's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving entity in
the election of directors, or (iii) "Continuing Directors" (as defined below)
cease for any reason to constitute at least a majority of the Board, or (iv) any
other event occurs which is of such a nature that would be required to be
reported as a change in control in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Exchange Act, or similar successor public filing; provided, however, that
any such event shall not be deemed to be a Change in Control as to you if it
results in you, or a group of Persons which includes you, acquiring, directly or
indirectly, fifteen percent (15%) of more of the combined voting power of the
Company's Voting Securities;
(b) "Continuing Directors" means and includes the persons constituting
the Board as of the date of this Agreement as well as each person who becomes a
director of the Company subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director or of the inclusion of such
person in such proxy statement as such a nominee, in any such case without
objection by any member of such approving majority of the then Continuing
Directors to the nomination of such person or the naming of such person as a
director nominee), for so long as each such director shall remain in office;
(c) "Person" means and includes any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excludes: (i) the Company; (ii) any
employee benefit plan sponsored by the Company and (iii) any Person which after
the date of this agreement becomes the beneficial owner, directly or indirectly,
of fifteen percent (15%) or more of the combined voting power of the Company's
Voting Securities and any Person who on the date of this agreement is the
beneficial owner of fifteen percent (15%) or more of the combined voting power
of the Company's Voting Securities and which hereafter becomes the beneficial
owner of additional combined voting power in excess of the that which is
beneficially owned on the date hereof, if, but only if, such voting power is not
acquired, intentionally or unintentionally, as a prelude to or in connection
with any other type of transaction, including the acquisition of additional
voting power, that would be considered a Change of Control hereunder and the
Board deems the acquisition of such voting power alone not to constitute a
Change in Control hereunder.
<PAGE> 4
Mr. Harvey A. Ikeman
October 19, 1999
Page 4
(d) "Voting Securities" means the Company's Common Stock, par value
$0.01 per share, and any and all other then outstanding Company securities
ordinarily having the right to vote generally in the election of the Company's
directors.
3. GROUNDS FOR TERMINATION OF EMPLOYMENT.
(a) Termination of your employment based on "Disability" means
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless you return to the full-time
performance of your duties within thirty (30) days after the Company gives
written notice to you of its intent to terminate your employment due to such
absence, you shall have returned to the full-time performance of your duties.
(b) Termination of your employment for "Cause" means termination for
your dishonesty, conviction for any felony, grossly negligent or willful
misconduct in the work place, or material breach of your Employment Agreement,
if any, or of any material Company policy applicable to its employees generally.
(c) Any of the following shall constitute "Good Reason" for you to
terminate your employment:
(i) any change, without your prior written consent, in your status
(other than the fact that the Company may no longer be publicly traded),
positions or job responsibilities which you consider to be a reduction in, or
the assignment to you of any duties or responsibilities which you consider to be
inconsistent with, your status, positions or responsibilities as in effect
immediately prior to the Change in Control (other than as the result of your
death or the termination of your employment by the Company for Cause, Disability
or at normal retirement age or by you other than for Good Reason);
(ii) a reduction by the Company, without your prior written consent, in
your base salary, or in the level of benefits provided to you and your
dependents under any Plan, as in effect immediately prior to the Change in
Control;
(iii) the Company's requiring you, without your express written
consent, to be based anywhere other than, or to relocate from, the metropolitan
area where your office is located immediately prior to the Change in Control;
<PAGE> 5
Mr. Harvey A. Ikeman
October 19, 1999
Page 5
Your right to terminate your employment pursuant to this Subparagraph
(c) shall not be affected by your incapacity due to physical or mental illness.
A termination of employment by you shall be for Good Reason if one of the
occurrences specified in this Subparagraph (c) shall have occurred,
notwithstanding that you may have an offer of employment from another employer
or any other reason(s) for terminating your employment with the Company.
4. TAXES.
(a) All payments to be made to you under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.
(b) Notwithstanding anything in this Agreement to the contrary, if any
portion of any of the payments and benefits provided for in this Agreement,
together with any other payments and benefits which you have the right to
receive from the Company, its successors or any Person whose actions result in a
Change in Control, would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), the Company shall pay to you, within five (5)
days of your receipt of such payments and benefits, such additional amounts as
are necessary so that, after taking into account any tax imposed by said Section
4999 or any successor statutory provision on any such Parachute Payments and on
any payments made pursuant to this Subparagraph (b), you are in the same
after-tax position in which you would have been if said Section 4999 or any
successor statutory provision did not apply and no payments were made pursuant
to this Subparagraph (b).
5. RESTRICTIVE COVENANTS AND ASSIGNMENT OF RIGHTS
In consideration of the rights granted to you in this Agreement, you
agree to the following, which are in addition to any other similar agreements
made by you in favor of the Company:
Covenant Not To Compete
(a) Restricted Activities--Duration. You agree that, in addition to
being operative while you are employed by the Company, the provisions of clauses
(i) through (iii) of this paragraph (a) shall be operative for a period of
twelve (12) months after you are no longer employed by the Company, regardless
of the time, manner or reasons for termination, or whether you leave the Company
or are terminated by the Company. During such periods, you will not, directly or
indirectly, acting alone or as a member of a partnership or as an owner,
director, officer, you, manager, representative or consultant of any corporation
or other business entity:
<PAGE> 6
Mr. Harvey A. Ikeman
October 19, 1999
Page 6
(i) engage in any business in competition with or adverse to the
business that is conducted by the Company, or, without limiting the generality
of the foregoing, engage in any business which manufactures, sells, distributes,
services or supports products which are of type manufactured, sold, marketed,
serviced or supported by the Company, or which are in the process of development
in which you participated or had knowledge of, at the time of your termination
from the Company, in the United States, Canada or any European, Asian, Pacific
or other foreign country in which the Company then or thereafter transacts
business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of the Company to curtail or cancel their business or prospective business with
the Company or in any way interfere with the Company's business relationships;
or
(iii) induce, solicit, assist or facilitate the inducement or
solicitation by a third person of any employee, officer, agent or representative
of the Company, to terminate their respective relationship with the Company or
in any way interfere with the the Company's employee, officer, agent or
representative relationships.
(b) TOLLING; RELIEF OF OBLIGATIONS. In the event that you breach any
provision of paragraph (a) above, such violation (1) shall toll the running of
the twelve (12) month period set forth therein from the date of commencement of
such violation until such violation ceases, and (ii) shall relieve the Company
of any obligations to you under this Agreement.
(c) "BLUE PENCILING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in paragraph
(a) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, you and the Company agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
<PAGE> 7
Mr. Harvey A. Ikeman
October 19, 1999
Page 7
NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
- ------------------------------------------
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to the
Company which are proprietary and confidential to the Company or its
subsidiaries and which are not publicly disclosed or are only disclosed with
restrictions. Without limiting the generality of the foregoing, "Confidential
Information" includes strategic plans for carrying on business, other business
plans, cost data, internal financial information, customer lists, you lists,
vendor lists, business partner or alliances lists manufacturing methods or
processes, product research or engineering data, drawings, designs, schematics,
flow charts, computer programs, program decks, routines, subroutines,
translators, compilers, operation systems, object and source codes,
specifications, inventions, calculations, discoveries and any letters, papers,
documents or instruments disclosing or reflecting any of the foregoing, and all
information revealed to, acquired or created by you during your employment by
the Company relating to any of the foregoing.
(b) You acknowledges that the discharge of your duties to the Company
necessarily involves access to Confidential Information. You acknowledge that
your unauthorized use or disclosure of Confidential Information to third parties
might cause irreparable damage to the Company and the Company's business.
Accordingly, you agree that at all times after the date hereof you will not
copy, publish, disclose, divulge to or discuss with any third party nor use for
your own benefit or that of others, without the prior express written consent of
the Company's Board, any Confidential Information, it being understood and
acknowledged by you that all Confidential Information created, compiled or
obtained by you or the Company, or furnished to you by any person while you are
associated with the Company remains the Company's exclusive property.
(c) Promptly upon termination of your employment, irrespective of the
time or manner thereof or reason therefor, you agrees to return and surrender to
the Company all Confidential Information in any manner in your control or
possession, as well as all other the Company property.
<PAGE> 8
Mr. Harvey A. Ikeman
October 19, 1999
Page 8
REMEDIES INADEQUATE.
- --------------------
(a) You acknowledges that the services to be rendered by you to the
Company as contemplated by this Agreement are special, unique and of
extraordinary character. You expressly agree and understand that the remedy at
law for any breach by you the Non-Competition or Confidential Information
sections of this Agreement will be inadequate and that the damages flowing from
such breach are not readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of your violation of any legally enforceable
provision of those sections, the Company shall be entitled to immediate
injunctive relief, including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of those sections, you agree that you
will not raise in such proceedings any defense that there is an adequate remedy
at law, and you hereby waive any such defense. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
you of any of the provisions of those sections, or of similar provisions in
other agreements between you and the Company, which may be pursued or availed of
by the Company.
(b) You have carefully considered, and have had adequate time and
opportunity to consult with your own counsel or other advisors regarding the
nature and extent of the restrictions upon you and the rights and remedies
conferred upon the Company under this Agreement, and hereby acknowledge and
agree that such restrictions are reasonable in time, territory and scope, are
designed to eliminate competition which otherwise would be unfair to the
Company, do not stifle your inherent skill and experience, would not operate as
a bar to your sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to you.
(c) The covenants and agreements made by you in this Section 5 shall
survive full payment by the Company to you of the amounts to which you is
entitled under this Agreement.
RIGHTS.
- -------
You acknowledge and agree that any procedure, design feature,
schematic, invention, improvement, development discovery, know how, concept,
idea or the like (whether or not patentable, registrable under copyright or
trademark laws, or otherwise protectable under similar laws) that you may
conceive of, suggest, make, invent, develop or implement, during the course of
your service to the Company (whether individually or jointly with any other
person or persons), with the Company's property or relating in any way to the
business of the Company or to the general industry of which the Company is a
part, as shall all physical embodiments and manifestations thereof, and all
patent rights, copyrights, trademarks (or applications therefor) and similar
protections therein (all of the foregoing referred to as "Work Product"), shall
be the sole,
<PAGE> 9
Mr. Harvey A. Ikeman
October 19, 1999
Page 9
exclusive and absolute property of the Company. All Work Product shall be deemed
to be works for hire, and to the extent that any Work Product may not constitute
a work for hire, you hereby assigns to the Company all right, title and interest
in, to and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or similar
protections as the Company may desire to obtain. You will immediately disclose
all Work Product to the Company and agree, at any time, upon the Company's
request and without additional compensation, to execute any documents and
otherwise to cooperate with the Company respecting the perfection of its right,
title and interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by the Company.
6. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. the Company will require any
"Successor" (as defined below) to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform under this Agreement if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement within one (1) business day
after any Person becomes a Successor shall constitute Good Reason for
termination by you of your employment. For purposes of this Agreement: (i)
"Successor" shall mean any Person that, through one or a series of
transaction(s), succeeds to, or has or obtains the practical ability to control
(either immediately or with the passage of time), all or substantially all of
the Company's business directly, by merger, consolidation, purchase or lease of
assets or otherwise, or indirectly, by purchase of the Company's Voting
Securities or otherwise; and (ii) the "Company" shall mean the Company as
hereinbefore defined and any Successor which executes and delivers the agreement
provided for in the first sentence of this Subparagraph (a) or which by
operation of law or otherwise becomes bound by the terms of this Agreement.
(b) This Agreement shall be binding upon you and shall inure to the
benefit of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(c) the Company expressly acknowledges and agrees that this Agreement
creates in you a contractual right to the payments and benefits provided
hereunder and expressly waives any right it may have to deny or otherwise seek
to avoid liability for any breach of its contractual obligations hereunder on
grounds of lack of consideration, accord and satisfaction or any other defense.
the Company shall pay all legal fees and related expenses you incur in
protecting, obtaining or enforcing any right or benefit provided by this
Agreement.
<PAGE> 10
Mr. Harvey A. Ikeman
October 19, 1999
Page 10
(d) Prior to a Change in Control so long as the Company is is not then
in an Offer Period, this Agreement shall terminate automatically and immediately
upon (i) any termination of your employment by you or the Company for any or no
reason or (ii) you are re-assigned by the Company to a position carrying duties
and responsibilities of lesser stature than the position in which you are
serving as of the date hereof.
(e) This Agreement shall be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Delaware.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter.
Sincerely,
Aironet Wireless Communications, Inc.
By: /s/ Roger J. Murphy, Jr.
Its: President & CEO
Agreed to as of the date first above written.
/s/ Harvey A. Ikeman
- -----------------------
Harvey A. Ikeman
<PAGE> 1
Exhibit 10.1.18
[AIRONET LOGO]
October 19, 1999
Mr. Donald I. Sloan
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, Ohio 44334
Dear Mr. Sloan:
Aironet Wireless Communications, Inc. (the "Company") considers the
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its stockholders. As a publicly
held corporation, the Company recognizes the possibility that a change in its
control may arise and that the uncertainty and questions which it may raise
among management may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, in order to induce
you to remain in the employ of the Company and to secure for the Company and its
stockholders the benefits of your continued attention and dedication during the
pendency of any proposed or attempted "Change in Control" (as defined below),
including your assessment and advice to the Company's Board of Directors (the
"Board") as to whether any such proposal would be in the best interests of the
Company and its stockholders, the Compensation Committee of the Board has
determined to extend to you the severance benefits set forth in this letter
agreement (this "Agreement"), which supplements any employment agreement now
existing or hereafter entered into between you and the Company (your "Employment
Agreement", if any) and any rights or benefits to which you may be entitled
under any Plans (as defined below), in the event your employment with the
Company is terminated subsequent to a Change in Control.
1. TERMINATION FOLLOWING A CHANGE IN CONTROL.
If, during the period commencing with an offer or other proposal of a
transaction or event which is ultimately consummated and when consummated
constitutes a Change in Control (the "Offer Period") and ending twenty-four (24)
months after such Change in Control shall have occurred, your employment by the
Company shall be terminated (1) by the Company other than for "Cause" or
"Disability" or at normal retirement age or (2) by you for "Good Reason" (as
each of the foregoing capitalized terms is defined below), then you shall be
entitled, notwithstanding any contrary provisions of your Employment Agreement
or any Plan, to receive the following benefits:
(a) Salary through the date of termination at the rate in effect
immediately prior thereto, plus any benefits or awards (whether to be provided
in cash, stock or other right or property) which have been earned or become
payable, but which have not yet been paid to you, pursuant to the terms of any
compensation plan, such as a bonus, incentive, stock option, restricted stock or
Aironet Wireless Communications, Inc.
3875 Embassy Parkway, P.O. Box 5292, Akron, OH 44334-0292
(330) 664-7900 Fax (330) 664-7922
<PAGE> 2
Mr. Donald I. Sloan
October 19, 1999
Page 2
stock appreciation right plan, any benefit plan, such as a thrift, pension,
retirement, 401(k), profit-sharing, health, disability, accident or life
insurance plan, any vacation or relocation plan or policy or any other plan,
program or policy of the Company intended to benefit all, or any designated
group of, Company employees (each of the foregoing constituting a "Plan");
(b) severance payment equal to your annual cash compensation as in
effect immediately prior to the Change in Control, payable in a lump sum at the
later of (i) five (5) days after the Change in Control or (ii) five (5) days
after termination of employment, which severance pay shall be in addition to any
severance pay which may be payable to you under your Employment Agreement, if
any; and
(c) continued benefits (or if unavailable under the general terms and
provisions of the applicable Plan, their equivalent) for you and your
dependents, for a period terminating on the earliest of (a) two (2) years after
your employment termination, (b) the commencement date of equivalent benefits
from a new employer, or (c) your normal retirement date (after which the terms
of any retirement Plan shall govern), under all insured and self-insured
employee welfare benefit Plans in which you participated immediately prior to
such termination date, provided that you shall not be required to pay any amount
greater than the regular contribution made by you for such participation
immediately prior to such termination date.
During any Offer Period the Company may, in its discretion, hold your
rights hereunder in abeyance until the Change in Control actually occurs.
Except as specifically provided in Subparagraph (c) above, the amount
of any payment or benefits provided for in this Agreement shall not be reduced,
offset or subject to recovery by the Company by reason of by any compensation
earned by you as the result of your employment by another employer, by
retirement benefits, by any amount claimed to be owing by you to the Company or
otherwise.
2. "CHANGE IN CONTROL" DEFINED.
For purposes of this Agreement:
(a) A "Change in Control" is deemed to have occurred when (i) any
Person after the date of this agreement becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act")), directly or indirectly, of fifteen percent (15%) or more of
the combined voting power of the Company's Voting Securities or any Person who
on the date of this agreement is the beneficial owner of fifteen percent (15%)
or more of the combined voting power of the Company's Voting Securities becomes
the beneficial owner, directly or indirectly, of additional combined voting
power of Voting Securities in excess of that which is beneficially owned on the
date hereof, or (ii) the holders of the Company's
<PAGE> 3
Mr. Donald I. Sloan
October 19, 1999
Page 3
securities entitled to vote thereon approve, or there otherwise occurs or is
commenced, a sale, lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of the Company, or any
merger, consolidation or reorganization to which the Company is a party and as
the result of which the Company's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving entity in
the election of directors, or (iii) "Continuing Directors" (as defined below)
cease for any reason to constitute at least a majority of the Board, or (iv) any
other event occurs which is of such a nature that would be required to be
reported as a change in control in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Exchange Act, or similar successor public filing; provided, however, that
any such event shall not be deemed to be a Change in Control as to you if it
results in you, or a group of Persons which includes you, acquiring, directly or
indirectly, fifteen percent (15%) of more of the combined voting power of the
Company's Voting Securities;
(b) "Continuing Directors" means and includes the persons constituting
the Board as of the date of this Agreement as well as each person who becomes a
director of the Company subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director or of the inclusion of such
person in such proxy statement as such a nominee, in any such case without
objection by any member of such approving majority of the then Continuing
Directors to the nomination of such person or the naming of such person as a
director nominee), for so long as each such director shall remain in office;
(c) "Person" means and includes any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excludes: (i) the Company; (ii) any
employee benefit plan sponsored by the Company and (iii) any Person which after
the date of this agreement becomes the beneficial owner, directly or indirectly,
of fifteen percent (15%) or more of the combined voting power of the Company's
Voting Securities and any Person who on the date of this agreement is the
beneficial owner of fifteen percent (15%) or more of the combined voting power
of the Company's Voting Securities and which hereafter becomes the beneficial
owner of additional combined voting power in excess of the that which is
beneficially owned on the date hereof, if, but only if, such voting power is not
acquired, intentionally or unintentionally, as a prelude to or in connection
with any other type of transaction, including the acquisition of additional
voting power, that would be considered a Change of Control hereunder and the
Board deems the acquisition of such voting power alone not to constitute a
Change in Control hereunder.
<PAGE> 4
Mr. Donald I. Sloan
October 19, 1999
Page 4
(d) "Voting Securities" means the Company's Common Stock, par value
$0.01 per share, and any and all other then outstanding Company securities
ordinarily having the right to vote generally in the election of the Company's
directors.
3. GROUNDS FOR TERMINATION OF EMPLOYMENT.
(a) Termination of your employment based on "Disability" means
termination because of your absence from your duties with the Company on a full
time basis for one hundred eighty (180) consecutive days as a result of your
incapacity due to physical or mental illness, unless you return to the full-time
performance of your duties within thirty (30) days after the Company gives
written notice to you of its intent to terminate your employment due to such
absence, you shall have returned to the full-time performance of your duties.
(b) Termination of your employment for "Cause" means termination for
your dishonesty, conviction for any felony, grossly negligent or willful
misconduct in the work place, or material breach of your Employment Agreement,
if any, or of any material Company policy applicable to its employees generally.
(c) Any of the following shall constitute "Good Reason" for you to
terminate your employment:
(i) any change, without your prior written consent, in your status
(other than the fact that the Company may no longer be publicly traded),
positions or job responsibilities which you consider to be a reduction in, or
the assignment to you of any duties or responsibilities which you consider to be
inconsistent with, your status, positions or responsibilities as in effect
immediately prior to the Change in Control (other than as the result of your
death or the termination of your employment by the Company for Cause, Disability
or at normal retirement age or by you other than for Good Reason);
(ii) a reduction by the Company, without your prior written consent, in
your base salary, or in the level of benefits provided to you and your
dependents under any Plan, as in effect immediately prior to the Change in
Control;
(iii) the Company's requiring you, without your express written
consent, to be based anywhere other than, or to relocate from, the metropolitan
area where your office is located immediately prior to the Change in Control;
<PAGE> 5
Mr. Donald I. Sloan
October 19, 1999
Page 5
Your right to terminate your employment pursuant to this Subparagraph
(c) shall not be affected by your incapacity due to physical or mental illness.
A termination of employment by you shall be for Good Reason if one of the
occurrences specified in this Subparagraph (c) shall have occurred,
notwithstanding that you may have an offer of employment from another employer
or any other reason(s) for terminating your employment with the Company.
4. TAXES.
(a) All payments to be made to you under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.
(b) Notwithstanding anything in this Agreement to the contrary, if any
portion of any of the payments and benefits provided for in this Agreement,
together with any other payments and benefits which you have the right to
receive from the Company, its successors or any Person whose actions result in a
Change in Control, would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any successor statutory
provision ("Parachute Payments"), the Company shall pay to you, within five (5)
days of your receipt of such payments and benefits, such additional amounts as
are necessary so that, after taking into account any tax imposed by said Section
4999 or any successor statutory provision on any such Parachute Payments and on
any payments made pursuant to this Subparagraph (b), you are in the same
after-tax position in which you would have been if said Section 4999 or any
successor statutory provision did not apply and no payments were made pursuant
to this Subparagraph (b).
5. RESTRICTIVE COVENANTS AND ASSIGNMENT OF RIGHTS
In consideration of the rights granted to you in this Agreement, you
agree to the following, which are in addition to any other similar agreements
made by you in favor of the Company:
COVENANT NOT TO COMPETE
(a) Restricted Activities--Duration. You agree that, in addition to
being operative while you are employed by the Company, the provisions of clauses
(i) through (iii) of this paragraph (a) shall be operative for a period of
twelve (12) months after you are no longer employed by the Company, regardless
of the time, manner or reasons for termination, or whether you leave the Company
or are terminated by the Company. During such periods, you will not, directly or
indirectly, acting alone or as a member of a partnership or as an owner,
director, officer, you, manager, representative or consultant of any corporation
or other business entity:
<PAGE> 6
Mr. Donald I. Sloan
October 19, 1999
Page 6
(i) engage in any business in competition with or adverse to the
business that is conducted by the Company, or, without limiting the generality
of the foregoing, engage in any business which manufactures, sells, distributes,
services or supports products which are of type manufactured, sold, marketed,
serviced or supported by the Company, or which are in the process of development
in which you participated or had knowledge of, at the time of your termination
from the Company, in the United States, Canada or any European, Asian, Pacific
or other foreign country in which the Company then or thereafter transacts
business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of the Company to curtail or cancel their business or prospective business with
the Company or in any way interfere with the Company's business relationships;
or
(iii) induce, solicit, assist or facilitate the inducement or
solicitation by a third person of any employee, officer, agent or representative
of the Company, to terminate their respective relationship with the Company or
in any way interfere with the the Company's employee, officer, agent or
representative relationships.
(b) TOLLING; RELIEF OF OBLIGATIONS. In the event that you breach any
provision of paragraph (a) above, such violation (1) shall toll the running of
the twelve (12) month period set forth therein from the date of commencement of
such violation until such violation ceases, and (ii) shall relieve the Company
of any obligations to you under this Agreement.
(c) "BLUE PENCILING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in paragraph
(a) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, you and the Company agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
<PAGE> 7
Mr. Donald I. Sloan
October 19, 1999
Page 7
NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
- ------------------------------------------
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to the
Company which are proprietary and confidential to the Company or its
subsidiaries and which are not publicly disclosed or are only disclosed with
restrictions. Without limiting the generality of the foregoing, "Confidential
Information" includes strategic plans for carrying on business, other business
plans, cost data, internal financial information, customer lists, you lists,
vendor lists, business partner or alliances lists manufacturing methods or
processes, product research or engineering data, drawings, designs, schematics,
flow charts, computer programs, program decks, routines, subroutines,
translators, compilers, operation systems, object and source codes,
specifications, inventions, calculations, discoveries and any letters, papers,
documents or instruments disclosing or reflecting any of the foregoing, and all
information revealed to, acquired or created by you during your employment by
the Company relating to any of the foregoing.
(b) You acknowledges that the discharge of your duties to the Company
necessarily involves access to Confidential Information. You acknowledge that
your unauthorized use or disclosure of Confidential Information to third parties
might cause irreparable damage to the Company and the Company's business.
Accordingly, you agree that at all times after the date hereof you will not
copy, publish, disclose, divulge to or discuss with any third party nor use for
your own benefit or that of others, without the prior express written consent of
the Company's Board, any Confidential Information, it being understood and
acknowledged by you that all Confidential Information created, compiled or
obtained by you or the Company, or furnished to you by any person while you are
associated with the Company remains the Company's exclusive property.
(c) Promptly upon termination of your employment, irrespective of the
time or manner thereof or reason therefor, you agrees to return and surrender to
the Company all Confidential Information in any manner in your control or
possession, as well as all other the Company property.
<PAGE> 8
Mr. Donald I. Sloan
October 19, 1999
Page 8
REMEDIES INADEQUATE.
- --------------------
(a) You acknowledges that the services to be rendered by you to the
Company as contemplated by this Agreement are special, unique and of
extraordinary character. You expressly agree and understand that the remedy at
law for any breach by you the Non-Competition or Confidential Information
sections of this Agreement will be inadequate and that the damages flowing from
such breach are not readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of your violation of any legally enforceable
provision of those sections, the Company shall be entitled to immediate
injunctive relief, including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of those sections, you agree that you
will not raise in such proceedings any defense that there is an adequate remedy
at law, and you hereby waive any such defense. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
you of any of the provisions of those sections, or of similar provisions in
other agreements between you and the Company, which may be pursued or availed of
by the Company.
(b) You have carefully considered, and have had adequate time and
opportunity to consult with your own counsel or other advisors regarding the
nature and extent of the restrictions upon you and the rights and remedies
conferred upon the Company under this Agreement, and hereby acknowledge and
agree that such restrictions are reasonable in time, territory and scope, are
designed to eliminate competition which otherwise would be unfair to the
Company, do not stifle your inherent skill and experience, would not operate as
a bar to your sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to you.
(c) The covenants and agreements made by you in this Section 5 shall
survive full payment by the Company to you of the amounts to which you is
entitled under this Agreement.
RIGHTS.
- -------
You acknowledge and agree that any procedure, design feature,
schematic, invention, improvement, development discovery, know how, concept,
idea or the like (whether or not patentable, registrable under copyright or
trademark laws, or otherwise protectable under similar laws) that you may
conceive of, suggest, make, invent, develop or implement, during the course of
your service to the Company (whether individually or jointly with any other
person or persons), with the Company's property or relating in any way to the
business of the Company or to the general industry of which the Company is a
part, as shall all physical embodiments and manifestations thereof, and all
patent rights, copyrights, trademarks (or applications therefor) and similar
protections therein (all of the foregoing referred to as "Work Product"), shall
be the sole,
<PAGE> 9
Mr. Donald I. Sloan
October 19, 1999
Page 9
exclusive and absolute property of the Company. All Work Product shall be deemed
to be works for hire, and to the extent that any Work Product may not constitute
a work for hire, you hereby assigns to the Company all right, title and interest
in, to and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or similar
protections as the Company may desire to obtain. You will immediately disclose
all Work Product to the Company and agree, at any time, upon the Company's
request and without additional compensation, to execute any documents and
otherwise to cooperate with the Company respecting the perfection of its right,
title and interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by the Company.
6. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. the Company will require any
"Successor" (as defined below) to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform under this Agreement if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement within one (1) business day
after any Person becomes a Successor shall constitute Good Reason for
termination by you of your employment. For purposes of this Agreement: (i)
"Successor" shall mean any Person that, through one or a series of
transaction(s), succeeds to, or has or obtains the practical ability to control
(either immediately or with the passage of time), all or substantially all of
the Company's business directly, by merger, consolidation, purchase or lease of
assets or otherwise, or indirectly, by purchase of the Company's Voting
Securities or otherwise; and (ii) the "Company" shall mean the Company as
hereinbefore defined and any Successor which executes and delivers the agreement
provided for in the first sentence of this Subparagraph (a) or which by
operation of law or otherwise becomes bound by the terms of this Agreement.
(b) This Agreement shall be binding upon you and shall inure to the
benefit of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(c) the Company expressly acknowledges and agrees that this Agreement
creates in you a contractual right to the payments and benefits provided
hereunder and expressly waives any right it may have to deny or otherwise seek
to avoid liability for any breach of its contractual obligations hereunder on
grounds of lack of consideration, accord and satisfaction or any other defense.
the Company shall pay all legal fees and related expenses you incur in
protecting, obtaining or enforcing any right or benefit provided by this
Agreement.
<PAGE> 10
Mr. Donald I. Sloan
October 19, 1999
Page 10
(d) Prior to a Change in Control so long as the Company is is not then
in an Offer Period, this Agreement shall terminate automatically and immediately
upon (i) any termination of your employment by you or the Company for any or no
reason or (ii) you are re-assigned by the Company to a position carrying duties
and responsibilities of lesser stature than the position in which you are
serving as of the date hereof.
(e) This Agreement shall be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Delaware.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter.
Sincerely,
Aironet Wireless Communications, Inc.
By: /s/ Roger J. Murphy, Jr.
Its: President & CEO
Agreed to as of the date first above written.
/s/ Donald I. Sloan
- --------------------
Donald I. Sloan
<PAGE> 1
Exhibit 10.16
ASSIGNMENT OF PATENT APPLICATION
WHEREAS, TELXON CORPORATION, a Delaware corporation ("Assignor"),
having a principal place of business of 3330 West Market Street, Akron, Ohio
44333, is the owner of the entire right, title and interest in and to Patent
Application 08/810,328; and
WHEREAS, AIRONET WIRELESS COMMUNICATIONS, INC., a Delaware corporation
("Assignee"), having a principal place of business at 3875 Embassy Parkway,
Akron, Ohio 44333, is desirous of acquiring the entire right, title and interest
in and to said patent application;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, said Assignor does hereby sell,
assign, transfer, grant and set over to said Assignee, its entire right, title
and interest in and to said patent application and all Letters Patent to be
obtained therefor on said patent application or any continuation, division,
renewal, substitute, reissue thereof or patent term extension therefor, for the
full term or terms for which the same may be granted or extended, and all
Letters Patent and applications therefor throughout the world, including all
rights accruing by virtue of the International Convention for the Protection of
Industrial Property, the same to be held and enjoyed by said Assignee for its
own use and enjoyment and for the use and enjoyment of its successors and
assigns or other legal representatives, to the end of the term or terms for
which said Letters Patent are granted or may be reissued or extended as fully
and entirely as the same would have been held and enjoyed by said Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringement of said Letters Patents, with the right to sue
for, and collect the same for its own use, and for the use of its successors,
assigns or other legal representatives.
<PAGE> 2
Assignor hereby warrants that no assignment, sale, agreement or
encumbrance has been made or entered into, or license granted, which conflicts
with this Assignment and sale and covenants that no assignment, sale, agreement
or encumbrance will be made or entered into which would conflict with this
Agreement and sale.
Assignor further covenants that Assignee, upon its request, will be
provided promptly with all pertinent facts and documents relating to said patent
application as may be known and accessible to Assignor and will testify as to
the same in any interference or litigation related thereto.
Assignor further convenants that Assignor will promptly execute and
deliver to Assignee or its legal representative confirmatory assignments
relating to said patent application prepared by Assignee for recording by
Assignee in the United States Patent and Trademark Office and will promptly
execute and deliver to the Assignee or its legal representative any and all
other papers, instruments or affidavits and take all other actions required to
apply for, obtain, maintain and enforce said patent application which may be
necessary or desirable to carry out the purposes hereof.
IN WITNESS WHEREOF, this Assignment has been duly executed as of August
4th, 1999.
TELXON CORPORATION
By: /s/ Glenn S. Hansen
-------------------------------------
Its: Vice President, Legal Administration
-------------------------------------
<PAGE> 3
STATE OF OHIO )
) ss
COUNTY OF SUMMIT )
On the 4th day of August, 1999, before me personally appeared Glenn S.
Hansen, personally known to me or proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to this instrument, and
acknowledged to me that he/she executed it.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year of this certificate first written above.
/s/Suzanne M. Testerman
------------------------------------
Notary Public
Suzanne M. Testerman
Notary Public
State of Ohio
My Commission Expires 08-19-2002
<PAGE> 1
Exhibit 10.17
PATENT LICENSE AGREEMENT
This Patent License Agreement (this "Agreement") is made as of August
4th, 1999, by and between Aironet Wireless Communications, Inc., a Delaware
corporation ("Aironet"), and Telxon Corporation, a Delaware corporation
("Telxon").
BACKGROUND
WHEREAS, Telxon is the majority stockholder of Aironet;
WHEREAS, Aironet is the owner of patent application 08/810,328
(Cellular Communication System with Dedicated Repeater Channels) (together with
all patents issued thereon, and all continuations, continuations in part,
divisions, reissues, additions, or extensions thereof, the "Patent"), pursuant
to a Assignment of Patent entered into between Telxon and Aironet as of an even
date herewith and attached hereto as EXHIBIT A; and
WHEREAS, Telxon desires to receive from Aironet a non-exclusive license
to utilize the Patent.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements made herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1 LICENSE. Aironet hereby grants a perpetual, royalty free,
worldwide, non-exclusive license to Telxon to practice the methods of the claims
made in the Patent and to make, support, service, maintain, repair, reconstruct,
reconfigure and upgrade, integrate, install, use, have used, market, sell, offer
for sale, lease and transfer any product which but for this license would
infringe the Patent. Telxon may not license, sublicense or otherwise relicense
any of these rights, provided that Telxon's immediate and subsequent transferees
of products shall have an implied license to utilize such products in the form
originally transferred by Telxon.
2 CONTRACTORS. Telxon may exercise the rights granted to it in
Section 1 either through its employees or through its contractors.
3 DISCLAIMER OF WARRANTY AND LIABILITY. AIRONET MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE PATENT, WHETHER
EXPRESS OR IMPLIED OR ARISING UNDER ANY STATUTE OR FROM ANY COURSE OF DEALING,
USAGE OF TRADE OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT. IN NO EVENT SHALL AIRONET BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOST DATA OR OTHERWISE, WHETHER
OR NOT AIRONET IS MADE AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
<PAGE> 2
4 GOVERNING LAW; JURISDICTION. This Agreement shall be construed
under and governed by the laws of the State of Ohio, without regard to conflict
or choice of laws statutes, regulations, rules or principles. Any action
relating to the execution or performance of this Agreement shall be brought in
the courts, state or federal, sitting in Summit County, Ohio, and each party
hereto consents to the jurisdiction and venue of such courts, and agrees not to
contest venue on the grounds of forum non conveniens or otherwise.
5 PRIOR AGREEMENTS SUPERSEDED. Except for the Assignment of Patent
Application attached hereto as EXHIBIT A, this Agreement supersedes all prior
and contemporaneous understandings and agreements, written or oral, between the
parties relating to the subject matter hereof.
6 NUMBER AND GENDER. The use in this Agreement of singular, plural,
masculine, feminine and neuter nouns and pronouns, shall include the others as
the context may require.
7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same document. An executed
faxed counterpart of this Agreement shall be binding on the parties and for
evidentiary purposes, shall be deemed to be an original.
8 AMENDMENTS; WAIVERS. Amendments to and waivers of any term of this
Agreement must be in writing and executed by both parties hereto.
9 ASSIGNABILITY. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated by Telxon to a direct competitor of
Aironet (a "Competitor"), and any such assignment or delegation shall be void
and of no effect. The merger, consolidation, asset sale, change of control, or
any other reorganization of Telxon with or into a Competitor, or of a Competitor
with or into Telxon, shall be deemed an assignment under this Section 9. Subject
to the foregoing, this Agreement shall be binding upon and enforceable by, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns. Nothing in this Agreement is intended to give any person
not named herein the benefit of any legal or equitable right, remedy or claim
under this Agreement, except as expressly provided herein.
2
<PAGE> 3
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized representative as of the date first set forth at the
beginning hereof.
AIRONET WIRELESS COMMUNICATIONS, INC.
By: /s/Roger J. Murphy
---------------------------------------
Roger J. Murphy
President and Chief Executive Officer
TELXON CORPORATION
By: /s/Glenn S. Hansen
---------------------------------------
Its: Vice President, Legal Administration
---------------------------------------
3
<PAGE> 4
EXHIBIT A
PATENT LICENSE AGREEMENT
AIRONET WIRELESS COMMUNICATIONS, INC./TELXON CORPORATION
Attached
<PAGE> 1
Exhibit 10.18
ASSIGNMENT
----------
WHEREAS, TELXON CORPORATION. whose full post office address is 3330
West Market Street, P.O. Box 5582, Akron, Ohio 44334-0582, U.S.A., is the owner
of the entire right, title and interest in and to the invention described and
claimed in Canadian patent application Serial No. 2,259,153, filed June 19,
1997, relating to;
CELLULAR SYSTEM HAND-OFF PROTOCOL
AND WHEREAS, AIRONET WIRELESS COMMUNICATIONS, INC., whose full post
office address is 3875 Embassy Parkway, Akron, Ohio, 44334-0292, U.S.A., is
desirous of acquiring all right, title and interest in Canada in and to the
aforesaid invention;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the aforesaid does hereby sell and assign to the
aforesaid all its right, title and interest in and to the above-mentioned
Canadian patent application, and all its corresponding right, title and interest
in and to any patent which may issue therefor.
DATED at Akron, Ohio, U.S.A., this 4th day of August, 1999.
TELXON CORPORATION
[c.s.]
/s/Glenn S. Hansen
-----------------------------------
Name: Glenn S. Hansen
Position: Vice President, Legal Administration
WITNESS:
/s/Suzanne M. Testerman
-----------------------------------
SUZANNE M. TESTERMAN
Notary Public
State of Ohio
My Commission Expires 08-19-2001
<PAGE> 1
Exhibit 10.19
ASSIGNMENT
THIS ASSIGNMENT is made the 4th day of August 1999, between Telxon
Corporation of 3330 West Market Street, P.O. Box 5582, Akron, Ohio
44334-0582, U.S.A., a Corporation of the State of Delaware
(hereinafter called "the Assignor") of the one part, and
Aironet WirelessCommunications, Inc. of 3875 Embassy Parkway,
Akron, Ohio 44334-0292, U.S.A., a Corporation of the State of Ohio
(hereinafter called "the Assignee") of the other part.
WHEREAS the Assignor is the registered Applicant of European Patent
Application No. 97931146.1 (hereinafter called "the Application")
NOW THIS ASSIGNMENT WITNESSES and it is hereby agreed between the
parties hereto as follows:
In consideration of the sum of $10.00 now paid by the Assignee to
the Assignor (the receipt of which sum the Assignor hereby
acknowledges) the Assignor hereby assigns absolutely to the Assignee
the Application, the right, title and interest therein in all
Contracting States of the European Patent Convention, including all
rights which may arise under s30(7) of the U.K. Patents Act 1977,
the right to apply for, prosecute and obtain patent or similar
protection throughout the world in respect of the invention claimed
in the Application; and the right to claim priority therefrom to the
intent that the grant of any patents or similar protection shall be
in the name of and vest in the Assignee.
<PAGE> 2
IN WITNESS WHEREOF the Assignor and the Assignee have executed this
Assignment the day and year first above mentioned.
Signed on behalf of the ASSIGNOR
Telxon Corporation
/s/Glenn S. Hansen
----------------------------
Signature
Glenn S. Hansen Vice President, Legal Administration
---------------------------- ------------------------------------
Name Capacity
Signed on behalf of the ASSIGNEE
Aironet Wireless Communications, Inc.
/s/Roger J. Murphy
----------------------------
Signature
Roger J. Murphy President & C.E.O.
---------------------------- ------------------------------------
Name Capacity
<PAGE> 1
Exhibit 10.20
DEED OF ASSIGNMENT
THIS DEED made this 4th day of August, 1999
BETWEEN TELXON CORPORATION a Corporation of the State of Ohio of 3330 West
Market Street, Akron, Ohio 44334-0582, United States of America (the
Assignor)
AND AIRONET WIRELESS COMMUNICATIONS, INC. a Corporation of the State of
Ohio, of 3875 Embassy Parkway, Akron, Ohio 44334-0292, United States of
America (the Assignee)
RECITALS:
A. The Assignor is the applicant for Australian Letters Patent under
patent application No. 34854-97 (the application) in respect of an
invention entitled CELLULAR SYSTEM HAND-OFF PROTOCOL (the Invention).
B. The Assignor has agreed to assign to the Assignee and the Assignee
desires to take assignment of all rights, title and interest of the
Assignor in and to the Invention, the application and any patent
granted pursuant thereto.
PURSUANT TO THE FOREGOING and in consideration of the sum of ten dollars
($10.00) and for other valuable consideration paid to the Assignor by or on
behalf of the Assignee the receipt and sufficiency of which are hereby
acknowledged, the Assignor assigns to the Assignee the whole right, title and
interest in and to the Invention, the application and any patent granted
pursuant thereto.
<PAGE> 2
EXECUTED as a Deed.
Signed on behalf of
TELXON CORPORATION
By: /s/ Glenn S. Hansen /s/ Suzanne M. Testerman
------------------------------- ---------------------------------
Witness
Name: Glenn S. Hansen
Title: Vice President, Legal Administration
Signed on behalf of
AIRONET WIRELESS COMMUNICATIONS, INC.
By: /s/ Roger J. Murphy /s/ Candy L. Mackey
------------------------------- ----------------------------------
Witness:
Name: Roger J. Murphy
Title: President and CEO
<PAGE> 1
Exhibit 10.21
DEED OF ASSIGNMENT
------------------
BETWEEN:
Telxon Corporation of 3330 West Market Street, P.O. Box 5582, Akron, OH
44334-0582, U.S.A. (the "Assignor")
and
Aironet Wireless Communications, Inc. of 3875 Embassy Parkway, OH 44334-0292,
U.S.A. (the "Assignee")
In consideration of the sum of NIS 10.00 (Ten New Israel Shekels) paid to us,
the Assignor, we hereby assign, transfer and set over to the Assignee, all of
our right, title and interest in and to Israel Patent Application No. 127628
for "Cellular System Hand-Off Protocol"
And we, the said Assignee, hereby accept the said assignment.
IN WITNESS WHEREOF WE HAVE SET OUR HAND
THIS 4th DAY OF AUGUST, 1999
- -------------------------------------------------------
Assignor Telxon Corporation
- -------------------------------------------------------
signature /s/Glenn S. Hansen
- -------------------------------------------------------
name of person signing Glenn S. Hansen
- -------------------------------------------------------
Vice President,
position of person signing Legal Administration
- -------------------------------------------------------
- -------------------------------------------------------
Assignee Aironet Wireless Communications, Inc.
- -------------------------------------------------------
signature /s/Roger J. Murphy
- -------------------------------------------------------
name of person signing Roger J. Murphy
- -------------------------------------------------------
position of person signing President and CEO
- -------------------------------------------------------
<PAGE> 1
Exhibit 10.22
AGREEMENT
---------
THIS AGREEMENT (this "Agreement") is entered into as of November
8, 1999 by and among Telxon Corporation, a Delaware corporation ("Telxon"),
Cisco Systems, Inc., a California corporation ("Cisco"), and Aironet Wireless
Communications, Inc., a Delaware corporation ("Aironet"). Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Merger Agreement (as defined below).
RECITALS:
WHEREAS, Cisco and Aironet have entered into that certain
Agreement and Plan of Merger and Reorganization dated of even date herewith
(the "Merger Agreement"), pursuant to which, among other things, Cisco would
acquire Aironet pursuant to a merger of a subsidiary of Cisco with and into
Aironet (the "Merger") and Aironet stockholders would receive shares of Cisco
Common Stock;
WHEREAS, Telxon beneficially owns approximately 35% of Aironet's
outstanding stock and as a result stands to benefit substantially from the
Merger;
WHEREAS, Telxon and Aironet are parties to a number of agreements
and have certain relationships which Cisco desires to terminate or clarify in
connection with entering into the Merger Agreement; and
WHEREAS, in order to induce Cisco to enter into the Merger
Agreement, Telxon and Aironet have agreed to enter into this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises, the
covenants and representations set forth herein, and certain other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
SECTION 1. TERMINATION OF TELXON/AIRONET AGREEMENTS; EXECUTION OF
PURCHASE AND LICENSE AGREEMENTS.
1.1 Effective as of, and conditioned upon the occurrence of, the
Effective Time, Telxon, Aironet and Cisco agree that with no further action on
the part of any party hereto or thereto, that certain License, Rights and
Supply Agreement and that certain Services Agreement, each dated March 31,
1998, by and between Telxon and Aironet (the "Terminated Agreements"), and all
licenses granted thereunder, shall terminate effective as of the Effective
Time, and that none of Telxon, Cisco or the Surviving Corporation shall have
any further liability or obligations with respect thereto.
1.2 Unless specifically contemplated by the Merger Agreement or
with the express prior written consent of Cisco, from the date hereof until the
earlier of the Effective Time or the date
<PAGE> 2
on which the Merger Agreement is terminated Aironet and Telxon will not amend,
modify or otherwise alter, or otherwise cause or permit to be amended, modified
or otherwise altered, the Terminated Agreements.
1.3 Effective as of, and conditioned upon the occurrence of, the
Effective Time, Cisco and Telxon will enter into a Purchase Agreement in
substantially the form attached as EXHIBIT A hereto and a License Agreement in
substantially the form attached as EXHIBIT B hereto (together, the "New
Agreements"). The New Agreements shall become effective as of, and are
expressly conditioned upon, the occurrence of the Effective Time with no
further action on the part of Cisco or Telxon; provided that in the event that
the Merger Agreement is terminated or the Merger is not consummated, the New
Agreements shall terminate and be deemed void ab initio.
SECTION 2. CONSENTS TO ASSIGNMENT. Effective as of the Effective Time,
Telxon hereby consents to the assignment to Cisco and the Surviving
Corporation, and any other direct or indirect Cisco subsidiary of each of the
agreements set forth on SCHEDULE 1 hereto. Such consent shall be effective at
the Effective Time whether or not the corporate existence of Aironet ceases,
including, but not limited to, as a result of the merger of Aironet with and
into Cisco (or any subsidiary of Cisco) following the Merger. Without limiting
the generality of the foregoing, Telxon hereby expressly acknowledges that
Cisco is not a "direct competitor" of Telxon for purposes of each of the LM3000
Software Agreement and the Patent License Agreement, each dated March 30, 1998
by and between Telxon and Aironet and the Tax Benefit and Indemnification
Agreement dated March 31, 1998 by and between Telxon and Aironet, and any other
agreement for which such acknowledgement would be appropriate.
SECTION 3. NON-COMPETITION AGREEMENT.
3.1 As an additional material inducement for Cisco to enter into
the Merger Agreement and consummate the Merger, from and after the date hereof
and prior to the consummation of the Merger for so long as the Merger Agreement
shall remain in effect, and upon the consummation of the Merger for a period of
two (2) years after the Effective Time, Telxon will not, other than through its
ownership of Aironet stock between the date hereof and the Effective Time, as
an employer, employee, agent, consultant, advisor, independent contractor,
partner, officer, director, stockholder, investor, member, lender or guarantor
of any business corporation, partnership or other entity, or in any other
capacity, directly or indirectly, on a worldwide basis:
(i) design or develop any PHY and/or MAC level
networking devices, or acquire (by means of merger, stock
purchase, asset purchase or otherwise) any business that
designs or develops such devices, which comply with the IEEE
802.11 standard (including each of the various specifications
thereunder), and any drafts, proposals, extensions and
modifications to the IEEE 802.11 standard and the
specifications thereunder (collectively, the "Business"); or
(ii) permit Telxon's name to be used in connection
with the Business.
2
<PAGE> 3
3.2 Notwithstanding the foregoing, Telxon may beneficially own,
directly or indirectly, solely for investment purposes, up to two percent (2%)
of any class of "publicly traded securities" of any person or entity which owns
or operates a business that is competitive or substantially similar to the
Business. The term "publicly traded securities" shall mean securities that are
traded on a national securities exchange or quoted on the National Association
of Securities Dealers Automated Quotation System.
3.3 If any restriction set forth in this Section 3 is found by a
court to be unreasonable and therefore unenforceable, or for any other reason
to be unenforceable, then Telxon agrees, and hereby submits, to the reduction
and limitation of such prohibition to such area or period as shall be deemed
enforceable.
SECTION 4. STOCKHOLDER LAWSUIT INDEMNIFICATION.
(a) INDEMNIFICATION. Telxon shall indemnify and hold
harmless Cisco and the Surviving Corporation and their respective directors,
officers, representatives, agents and affiliates (within the meaning of the
Securities Act of 1933, as amended) (collectively, the "Indemnified Parties")
from and against any cost, damage, disbursement, expense, liability, judgment,
loss, deficiency, obligation, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including, but not limited to, interest
or other carrying costs, penalties, legal, accounting and other professional,
expert witness and consultant fees and expenses incurred in investigation,
response to collection, prosecution and defense of claims and amounts paid to
settlement (collectively, "Losses") that may be imposed on, incurred or
suffered by any Indemnified Party as a result of or in connection with the two
class action lawsuits filed by Telxon's stockholders in the court of Chancery
of the State of Delaware on May 8, 1998 or the 27 class action lawsuits filed
by Telxon's stockholders in the U.S. District Court, Northern District of Ohio
from December 1998 through March 1999, including any successor or consolidated
actions or any future lawsuits or actions arising out of or with respect to the
facts alleged in such pending actions (each, an "Action").
4.1 PROCEDURES. If any Action indemnifiable under this Section 4
shall be brought, asserted or threatened against any person indemnified under
this Section 4, the Indemnified Party shall promptly notify the indemnifying
person ("Indemnitor"); PROVIDED that any failure to notify Indemnitor timely or
at all shall reduce the liabilities and obligations of Indemnitor under this
Section 4 only to the extent Indemnitor actually shall be prejudiced by the
failure. Indemnitor shall assume the payment of all related fees and expenses
to the Action, and Indemnitor may, at its option, assume the defense of, or
respond to, the Action. If Indemnitor has assumed the defense of (or responded
to) the Action, then the Indemnified Party shall not have the right to assume
the defense of (or respond to) the Action and, subject to the provisions of
this Section 4, Indemnitor shall have the right to control the defense,
compromise or settlement of any such Action. If Indemnitor, within 30 days
after notice of any such Action, or such shorter period as is reasonably
required, fails to assume the defense of such Action, the Indemnified Party
will have the right to undertake the defense, compromise or settlement of such
Action on behalf of, and for the account and risk, and at the expense of,
Indemnitor, subject to the right of Indemnitor to assume the defense of such
Action at any time prior to settlement, compromise or final determination
thereof. The Indemnified Party
3
<PAGE> 4
shall be bound by the result of the defense of any Action, whether the defense
shall have been assumed by Indemnitor or by the Indemnified Party; PROVIDED,
HOWEVER, that Indemnitor shall not enter into any settlement or compromise of
any Action or consent to the entry of any judgment (i) which does not include
as an unconditional term thereof the delivery to the Indemnified Party, of a
written release from all liability in respect of such Action or (ii) for other
than monetary damages to be borne by Indemnitor, without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld. The Indemnified Party shall cooperate fully in all aspects of any
investigation, defense, pre-trial activities, trial, compromise, settlement or
discharge of any Action in respect of which indemnity is sought pursuant to
this Section 4; PROVIDED that in any event the costs associated therewith shall
also be deemed Losses hereunder.
4.2 APPEAL. Notwithstanding anything in this Section 4 to the
contrary, if, in connection with an Action indemnifiable under this Section 4,
a court, governmental body or other authority of competent jurisdiction or
other person having authority or jurisdiction over a matter or matters related
to the Action shall have rendered, entered or granted a binding judgment,
decision, ruling, order or award with respect to the matter or matters
providing for the payment of money damages or the claimant and Indemnitor shall
have agreed to settle the Action for an amount of money damages without
reservation of any rights or defenses against the Indemnified Party, and if the
Indemnified Party elects to appeal the judgment, decision, ruling, order or
award or declines to agree to the proposed settlement, as the case may be, then
the Indemnified Party may continue to defend the Action, free of any
participation by Indemnitor, but the amount of any ultimate liability under
this Section 4 with respect to Losses related to or allegedly arising in
connection with the matter or matters that shall have been comprehended by the
judgment, decision, ruling, order or award or by the proposed settlement, as
the case may be, shall then be limited to the amount of the judgment, decision,
ruling, order or award or the amount of the proposed settlement, as the case
may be.
4.3 LIMITATION ON OTHER RIGHTS OF RECOVERY. The rights of the
Indemnified Party to indemnification as provided for in this Section 4 shall
constitute the Indemnified Party's sole remedy against Indemnitor for
indemnification with respect to an Action and Indemnitor shall have no other
liability or damages to the Indemnified Party resulting from any Action. The
provisions of this Section 4 shall not eliminate or otherwise limit the right
of any Indemnified Party hereunder or any other person to seek to recover
contribution, damages or otherwise enforce its rights against any person other
than Indemnitor without regard to the provisions of this Section 4.
SECTION 5. MISCELLANEOUS.
5.1 FURTHER ASSURANCES. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary
or desirable for effecting completely the consummation of this Agreement.
5.2 GOVERNING LAW AND VENUE. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Delaware,
without regard to conflict or choice of laws, statutes, regulations, rules or
principles. ANY ACTION RELATING TO THE
4
<PAGE> 5
EXECUTION OR PERFORMANCE OF THIS AGREEMENT SHALL BE BROUGHT IN THE COURTS,
STATE OR FEDERAL SITTING IN DELAWARE, AND EACH PARTY HERETO CONSENTS TO THE
JURISDICTION AND VENUE OF SUCH COURTS, AND AGREES NOT TO CONSENT VENUE ON THE
GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
5.3 SEVERABILITY. In addition to the reformation provision of
Section 3, if any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
then the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
5.4 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by
either of the parties without the prior written consent of the other.
5.5 AMENDMENT AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except by the execution and delivery
of a written agreement executed by the parties hereto.
5.6 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Cisco will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Telxon set forth herein. Therefore, it is agreed that, in addition to any other
remedies that may be available to Cisco upon any such violation, Cisco shall
have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Cisco at law
or in equity and each of Aironet and Telxon hereby waives any requirement for
the security or posting of any bond in connection with such enforcement.
5.7 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with confirmation of receipt) to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
(a) If to Telxon to:
Telxon Corporation
3330 West Market Street
Akron Ohio, 44333
Attention: President
Facsimile No.: (330) 664-2220
5
<PAGE> 6
(b) If to Aironet to:
Aironet Wireless Communications, Inc.
3875 Embassy Parkway
Akron, OH 44333
Attention: Roger J. Murphy
Facsimile No.: (330) 664-7922
(c) If to Cisco to:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Attention: Senior Vice President, Legal
and Government Affairs
Facsimile No.: (408) 526-5925
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Therese A. Mrozek, Esq.
Facsimile No.: (650) 496-2885
; or to such other address as any party hereto may designate for itself by
notice given as herein provided.
5.8 EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of
this Agreement.
5.9 ENTIRE AGREEMENT. This Agreement represents and contains the
entire agreement and understanding among the parties hereto with respect to the
subject matter of this Agreement, and supersedes any and all prior oral and
written agreements and understandings.
[Signature page follows.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first above written.
CISCO SYSTEMS, INC.
By: /s/ Larry Carter
Name: Larry Carter
Title: Sr. Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
TELXON CORPORATION
By: /s/ John W. Paxton, Sr.
Name: John W. Paxton, Sr.
Title: Chairman and CEO
AIRONET WIRELESS COMMUNICATIONS, INC.
By: /s/ Roger J. Murphy
Name: Roger J. Murphy
Title: President and CEO
[SIGNATURE PAGE TO AGREEMENT]
<PAGE> 8
SCHEDULE 1
1. Nondisclosure Agreement, dated March 31, 1998, by and between Telxon
and Aironet.
2. LM3000 Software Agreement, dated March 30, 1998, by and between Telxon
and Aironet.
3. Patent License Agreement, dated March 30, 1998, by and between Telxon
and Aironet.
4. Tax Benefit and Indemnification Agreement, dated March 31, 1998, by
and between Telxon and Aironet.
5. Patent License Agreement, dated August 4, 1999, by and between Telxon
and Aironet.
6. Lease for 91 Springside Drive, dated April 1, 1998, by and between
Telxon and Aironet.
7. Sublease for 3875 Embassy Parkway, dated August 1, 1998, by and
between Telxon and Aironet.
8. Cross Covenant Not to Sue, dated March 31, 1998, by and between Telxon
and Aironet.
<PAGE> 9
EXHIBIT A
PURCHASE AGREEMENT
<PAGE> 10
PURCHASE AGREEMENT
Between: and:
Aironet Wireless Communications, Inc. Telxon Corporation
3875 Embassy Parkway 3330 West Market Street
Akron, Ohio 44333 Akron, Ohio
(330) 664-7900
(330) 664-7922 (Fax)
("Aironet") ("Buyer")
1. PRODUCTS, PRICES, TAXES AND TERM. Aironet agrees to sell its products
("Products") to Buyer in available quantities for use by Buyer or sale by
Buyer to its customers as part of ,or for use with, Buyer's finished
products. Buyer shall place its orders for Products in writing specifying
the Products ordered, quantity and desired shipping date. Prices for the
Products shall be the same price Aironet charges its other customers for
same Products in like quantities and similar terms and conditions. Prices
are F.O.B. point of shipment, exclusive of shipping charges, federal,
state and/or local excise, sales, use property, occupation or similar
taxes. This agreement supersedes any terms or conditions contained in
printed forms submitted by either party in connection with this purchase,
such as purchase orders, sales acknowledgments or invoices, which shall be
void and of no effect. The term of this agreement is the one year period
commencing on the date of the last signature below, provided that the term
may be extended by mutual written agreement of the parties. Aironet may
terminate this agreement prior to the expiration of the term upon Telxon's
material breach, provided that Telxon shall have five days from written
notice of breach to cure and avoid termination.
2. CREDIT APPROVAL AND PAYMENT TERMS. Buyer shall pay for its orders net 30
days from the date of invoice. Aironet's invoicing and shipment of orders
is subject to Aironet's approval of Buyer's credit. Buyer will provide
Aironet with such financial information as Aironet reasonably requests to
establish credit approval. Aironet may assess late charges of up to one
and one-half percent (1 1/2%) per month or a higher rate as may be allowed
by law. Aironet may also collect from Buyer all costs, including
reasonable legal fees, which Aironet may incur to collect any delinquent
amount.
3. DELIVERY. Aironet will use reasonable efforts to meet the delivery dates
specified in Buyer's orders; however, Aironet will not be liable for
delays in delivery for any reason. Aironet will select the carrier, who
will deliver the Products to Buyer at the location(s) shown in Buyer's
orders, or as otherwise agreed in writing by the parties. Title and risk
of loss or damage will pass to Buyer at Aironet's place of shipment upon
delivery to the first carrier. Buyer may not cancel this agreement for any
reason. Buyer may modify or cancel its orders without charge if done at
least sixty days prior to the scheduled shipping date. Orders may not be
modified or canceled sixty or fewer days prior to the scheduled shipping
date.
4. WARRANTY. Aironet warrants the Aironet manufactured products purchased
pursuant to this agreement against defects in material and
1
<PAGE> 11
workmanship under normal use and service for one year from the date of
shipment to Buyer. Aironet, at its option, will at no charge either
repair, replace, or refund the purchase price of the Product during the
warranty period provided it is returned in accordance with the terms of
this warranty to the location specified by Aironet from time to time.
Repair, at Aironet's option, may include the replacement of parts or
boards with functionally equivalent reconditioned or new parts or boards.
Replaced parts or boards are warranted for the balance of the original
applicable warranty period. All replaced parts, boards, or Product shall
become the property of Aironet. This warranty is extended by Aironet to
Buyer only and is not assignable or transferable to any other party.
Aironet is not responsible under this warranty for ancillary equipment,
whether or not manufactured by Aironet, which is attached to or used in
connection with the Product, nor for operation of the Product with any
such ancillary equipment. Because each Product system is unique, Aironet
disclaims liability for range, coverage, or operation of the system as a
whole under this warranty. This warranty does not cover: defects or damage
resulting from use of the Products in other than its normal and customary
manner; defects or damage from misuse, accident or neglect; defects or
damage from improper testing, operation, maintenance, installation,
alteration, modification or adjustment; breakage or damage to antennas
unless caused directly by defects in material or workmanship; product
disassembled or repaired in such a manner as to adversely affect
performance or prevent adequate inspection and testing to verify any
warranty claim; or Product which has had the serial number removed or made
illegible.
5. PATENT AND COPYRIGHT INDEMNIFICATION. Aironet agrees to defend, at its
expense, any suits against Buyer based upon a claim that the Products
purchased hereunder infringe a now existing U.S. patent or copyright and
to pay costs and damages finally awarded in any such suit, provided that
Aironet is notified promptly in writing of the suit and Aironet is given
sole control of said suit and is provided by Buyer with all requested
assistance for defense of same. If the use or sale of any Products
furnished is enjoined as a result of such suit, Aironet at its option and
at no expense to Buyer will either (i) obtain for Buyer the right to use
or sell the Products, (ii) substitute a substantially equivalent product
or (iii) require the return of the Products and reimburse Buyer the
purchase price, less a charge for reasonable wear and tear and
depreciation. This indemnity does not extend to any suit based upon any
infringement or alleged infringement of any patent or copyright by
Products which have been altered by any person or entity other than
Aironet or by the combination of any Products with other items other than
when the Products are used for their intended purpose. This states the
entire liability of Aironet for intellectual property infringement.
6. FIRMWARE, MASK WORKS, SOFTWARE AND LICENSE DISCLAIMER. The Products may be
accompanied by software, and one or more components of the Products may
contain firmware or mask works programs built into their circuitry.
Buyer's purchase of the Products includes a non-exclusive, royalty-free,
non-transferable license to use such software, firmware and mask works
with or as part of the Products, but only under the conditions prescribed
by this Section 6. Any firmware, mask works or software which Aironet
furnishes with the Product is subject to the following minimum conditions,
in addition to those which may be imposed by law or other license terms
included with the Products: (i) Aironet (or its supplier) retains all
title and ownership to such firmware, mask works or software, and Aironet
reserves all rights in patents, copyrights, trade secrets and other
2
<PAGE> 12
intellectual property in it; (ii) Buyer may not copy, disassemble,
decompile or reverse engineer the firmware, mask works or software under
any circumstances, nor will Buyer assist or cooperate with third parties
attempting any of the foregoing; and (iii) Buyer will exercise the same
care to prevent any unauthorized copying or dissemination by Buyer's
customers and others who are to use the Products as Buyer would take to
protect Buyer's own proprietary information, but in no event less than
reasonable care. If Buyer ever transfers the Products to any other party,
Buyer shall bind its transferee to the terms of this Section 6. Except for
the right to use the software, firmware or maskworks as provided in this
Section 6, nothing contained in this agreement shall be deemed to grant to
Buyer or any other person or entity, either directly or by implication,
estoppel, or otherwise any license or right under any patents, copyrights,
trademarks or trade secrets of Aironet or any third party.
7. WARRANTY DISCLAIMERS. THE WARRANTY GIVEN IN SECTION 4 IS LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT, WHICH ARE SPECIFICALLY EXCLUDED. SECTION 4 SETS FORTH
THE FULL EXTENT OF AIRONET'S RESPONSIBILITIES AND LIABILITY REGARDING THE
PRODUCTS, AND REPAIR, REPLACEMENT, OR REFUND OF THE PURCHASE PRICE, AT
AIRONET'S OPTION, IS BUYER'S EXCLUSIVE REMEDY. SECTION 5 SETS FORTH THE
FULL EXTENT OF AIRONET'S RESPONSIBILITY AND LIABILITY REGARDING
INTELLECTUAL PROPERTY INFRINGEMENT.
8. CONSEQUENTIAL DAMAGES WAIVER. IN NO EVENT SHALL AIRONET BE LIABLE FOR ANY
LOSS OF USE, LOSS OF TIME, LOST DATA, INCONVENIENCE, COMMERCIAL LOSS, LOST
PROFITS OR SAVINGS OR OTHER INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
REGARDLESS OF HOW ARISING OR WHETHER AIRONET HAS BEEN NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
9. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING ELSE HEREIN, ALL
LIABILITY OF AIRONET AND ITS SUPPLIERS UNDER THIS AGREEMENT OR OTHERWISE
SHALL BE LIMITED TO THE PURCHASE PRICE PAID TO AIRONET FOR THE AFFECTED
PRODUCTS DURING THE SIX (6) MONTH PERIOD PRECEDING THE EVENT OR
CIRCUMSTANCES GIVING RISE TO SUCH LIABILITY. THIS LIMITATION OF LIABILITY
IS CUMULATIVE AND NOT PER INCIDENT.
10. GOVERNMENT SALES. Any software or firmware which is part of or accompanies
the Products constitutes commercial computer software programs developed
at private expense, and to the extent that the Products or any
accompanying software is provided to or on behalf of the United States of
America, its agencies and/or instrumentalities (collectively, the
"Government"), Buyer must provide such Products (A) with "restricted
rights" within the meaning of, and use, duplication and disclosure thereof
by the Government is subject to the restriction set forth in, the Rights
in Technical Data and Computer Licensed Program clause at 48 C.F.R.
252.227-7013 and (B) Buyer shall provide that the software and firmware
constitute "restricted computer
3
<PAGE> 13
software" within the meaning of the Commercial Computer Licensed Program -
Restricted Rights clause at 48 C.F.R. 52.227-19, as applicable, or as set
forth in the particular department or agency regulations or rules which
provide protection equivalent to or greater than the above cited clauses
or any successor provisions to any of the foregoing. The
Manufacturer/Contractor is Aironet Wireless Communications, Inc., 3875
Embassy Parkway, Akron, Ohio 44334.
11. COMPLIANCE WITH LAW. Buyer shall not use or transfer the Products except
in accordance with all applicable federal, state, and local laws and
regulations. In the event that Buyer uses or sells the Products outside of
the United States, Buyer shall comply with all the United States export
control laws and similar laws of the foreign county involved. The Products
have been configured to operate in the United States unless otherwise
agreed by Aironet as to any specific order.
12. YEAR 2000. In reference to requests regarding "Year 2000" compliance,
please be advised that for all Aironet products, there is no reliance upon
any function that keeps time or calendar information. Therefore, Aironet
products do not require any "Year 2000" specific modifications or updates
to operate correctly before, during or after the year 2000, provided that
all other products (for example, hardware, software and firmware) used
with the Aironet products, properly exchange accurate data with it.
13. GENERAL. Buyer may not assign this agreement or Buyer's rights or
obligations hereunder without the express written consent of Aironet.
Notices under this agreement must be sent by telegram, telex, telecopy, or
registered or certified mail to the appropriate party at its address
stated on the first page of this agreement (or to a new address if the
other has been properly notified of the change). If Aironet, the notice
must be addressed to the President of Aironet. A notice will not be
effective until the addressee actually receives it. All terms and pricing
of this agreement are confidential and Buyer will not disclose same
without Aironet's prior written consent. This agreement constitutes the
entire and final expression of agreement between the parties pertaining to
the subject matter of the agreement and supersedes all other
communications between the parties, including all previous oral or written
communications. If any provision is held invalid all other provisions
shall remain valid, unless such invalidity would frustrate the purpose of
this agreement. No waiver of any term, or alteration or modification of
the agreement will be binding upon either Buyer or Aironet unless made in
writing and signed by an authorized representative of each. No failure or
delay to act on any rights under this agreement shall be construed as a
waiver of these or any other rights of the parties. Any term which by its
nature survives the expiration or termination of this agreement shall so
survive. This agreement shall be governed in accordance with the law of
the state of Ohio without regard to conflict-of-laws principles.
4
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly-authorized representatives as of the dates set forth
below.
AIRONET WIRELESS COMMUNICATIONS, INC. TELXON CORPORATION
------------------
By: By:
______________________
(Authorized Signature) (Authorized Signature)
(Print Name) (Print Name)
Title: Title:
Date: Date:
5
<PAGE> 15
EXHIBIT B
LICENSE AGREEMENT
<PAGE> 16
LICENSE AGREEMENT
This License Agreement (this "Agreement") is made as of November 8,
1999, by between Aironet Wireless Communications, Inc. ("Aironet") and Telxon
Corporation. This Agreement shall become operative only upon closing
("Closing") under the Agreement and Plan of Merger and Reorganization dated as
of the date hereof by and among Cisco Systems, Inc., Aironet, and Osprey
Acquisition Corporation.
BACKGROUND
WHEREAS, Aironet and Telxon are parties to a License, Rights, and
Supply Agreement dated as of March 31, 1998 (together with all exhibits and
schedules thereto and as amended, the "Prior Agreement"), pursuant to which
Aironet has granted to Telxon certain rights and licenses, and has agreed to
supply Telxon with certain products; and
WHEREAS, to accommodate changes in the respective business plans of
the parties, effective as of the Closing, the Prior Agreement is hereby
terminated and this Agreement shall be entered into in its place.
AGREEMENT
NOW, THEREFORE, based on the mutual rights, obligations,
representations, and warranties set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. LICENSE. Subject to the other provisions of this Agreement, Aironet
hereby grants a perpetual (subject to Section 14), worldwide, non-exclusive
fully paid license to Telxon to make, support, service, maintain, repair,
integrate, install, combine, use, market, sell, lease, and transfer the
hardware products identified in SCHEDULE 1 and to copy the software and
firmware used therein and to load or integrate the software and firmware into
such hardware and to transfer such copies, in object code form only, with its
associated hardware and to support, service and maintain the software and
firmware (such hardware, software and firmware being collectively referred to
as "Legacy Products") to its customers. Telxon shall, and shall require its
distributors, OEMs, VARs and other resellers to, include an end user software
license with each copy of the software distributed with Legacy Products in an
end user in form reasonably acceptable to Aironet.
2. TERMINATION OF PRIOR AGREEMENT. The Prior Agreement and all
licenses and rights thereunder are terminated effective as of the Closing;
provided, however, that the following sections of the Prior Agreement and only
those sections shall survive termination: Sec. 18.3 (Confidentiality), 18.5
(Limitation of Liability).
1
<PAGE> 17
3. NO ROYALTIES. No royalties or fees are due in payment of the rights
and licenses granted to Telxon in this Agreement which are fully paid.
4. CONTRACTORS. Telxon may have the licensed activities performed for
it by third parties that are not direct competitors of Aironet, but Telxon has
no right to sublicense or re-license its rights hereunder.
5. RESTRICTIONS. Telxon shall not:
5.1 prepare improvements, refinements, enhancements,
modifications, adaptations, revisions, or derivatives of the Legacy
Products, except for minor changes to permit the Legacy Products to be
compatible or interface with Telxon's finished products,
5.2 sell any subassemblies or radios for Legacy Products
unless they are integrated into such products or are sold as repair or
replacement parts for such products, either by Telxon directly to an
end user or indirectly through a Telxon reseller, distributor, OEM, or
other channel partner or service or repair vendor;
5.3 sell Legacy Products through its alternate distribution
channels except to those partners which are certified to sell complete
Telxon integrated PTCs and pen-based products; or
5.4 otherwise engage in any activities prohibited under
Section 2.7 of the Prior Agreement.
6. DOCUMENTS. Telxon is in possession of documentation, procedures,
engineering drawings, manufacturing specifications, know how, schematics,
diagnostic programs, test procedures, code , specifications, vendor and parts
lists, technical bulletins, and the like necessary for Telxon to exercise its
rights under the license ("Documentation"). Telxon may copy and use the
Documentation in connection with the exercise of the license.
6.1 COPYRIGHT NOTICES. Telxon shall ensure that all copies of
the Documentation in Telxon's possession or control incorporate
copyright and other proprietary notices in the same manner that
Aironet incorporates such notices in the Documentation or in any
manner reasonably requested by Aironet. Telxon shall promptly notify
Aironet in writing upon its discovery of any unauthorized use of the
Documentation or infringement of the Documentation or Aironet's
proprietary rights in the Documentation.
6.2 PROTECTION OF DOCUMENTATION. Documentation is the
confidential and proprietary property of Aironet. Telxon receives no
rights to and, other than copies of Documentation customarily provided
to customers or members of its distribution channels and maintenance
providers, will not sell, assign, lease, rent, market, transfer,
encumber or suffer to exist any lien or security interest (other than
those of Aironet and
2
<PAGE> 18
Telxon's commercial lenders) nor allow any person, firm, or
corporation to copy, reproduce or disclose, in whole or in part in any
manner, the Documentation. Telxon shall take all reasonable steps,
both during and after the term of this Agreement, to ensure that no
unauthorized person shall have access to Documentation and that no
unauthorized copy, in whole or in part, in any form shall be made.
7. LICENSING TO U.S. GOVERNMENT. Telxon shall identify or mark any
copies of the Software and Documentation provided pursuant to any agreement
with the United States Government or any contractor therefor, as follows: (i)
For acquisition by or on behalf of civilian agencies, as necessary to obtain
protection substantially equivalent to that afforded to restricted computer
software and related documentation developed at private expenses and which is
existing computer no part of which was developed with government funds and
provided with Restricted Rights in accordance with subparagraphs (a) through
(d) of the "Commercial Computer Software Restricted Rights" clause at 48 C.F.R.
52.227-19 of the Federal Acquisition Regulations and its successors; or (ii)
For acquisition by or on behalf of units of the Department of Defense ("DOD")
as necessary to obtain protection substantially equivalent to that afforded to
commercial computer software and related documentation developed at private
expenses and provided with Restricted Rights as defined in DOD FAR Supplement
48 C.F.R. 52.227-7013(c)(1)(ii) and its successors.
8. OWNERSHIP. Neither Telxon nor Aironet shall acquire any ownership
interest in the other's intellectual property rights as a result of this
Agreement. Telxon acknowledges that the intellectual property underlying the
Legacy Products and Documentation is Aironet's sole property, and that Telxon
has no right, title, or interest in or thereto except for the license granted
in this Agreement. Aironet's and Telxon's intellectual property rights shall
remain separate property and shall not be, or be deemed to be, a joint work,
compilation, or any other type of work of multiple authorship by reason of this
Agreement.
9. NO IMPLIED RIGHTS. Except for the specific and unequivocal rights
and licenses conferred herein, nothing contained in this Agreement shall be
deemed to grant to Telxon or any other person or entity, either directly or by
implication, estoppel, or otherwise any license or right under any patents,
copyrights, trademarks, trade secrets, or other intellectual or industrial
property rights of Aironet or any third party.
10. TRADEMARKS; PROPRIETARY LEGENDS. Telxon's products, including the
Legacy Products, shall not carry any of Aironet's trademarks. Aironet may
reasonably require Telxon to mark the Legacy Products with proprietary rights
notices required either (a) by or in accordance with law or (b) to prevent
prejudice to Aironet's intellectual property rights.
11. DISCLAIMER. AIRONET MAKES NO WARRANTY OF ANY KIND WITH RESPECT TO
ANY LEGACY PRODUCT, WHETHER EXPRESS OR IMPLIED OR ARISING UNDER ANY STATUTE OR
FROM ANY COURSE OF DEALING, USAGE OF TRADE OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE,
3
<PAGE> 19
SATISFACTORY QUALITY OR PERFORMANCE, OR NON-INFRINGEMENT.
12 Telxon shall prepare and maintain on a current basis complete and
accurate books and records, in accordance with generally accepted accounting
principles, sufficient to document compliance with this Agreement. All such
books and records shall be retained for at least three (3) years from the date
they are created. At the request of Aironet and during the normal business
hours of Telxon, no more than once in any fiscal quarter, Telxon shall permit
an Aironet's representative, to have access to such books, records and
inventories as may be necessary to determine Telxon's compliance with this
Agreement.
13. COVENANTS. Telxon agrees that it shall at all times: (i) act to
protect the Documentation with the same level of diligence and care that it
takes to protect its own trade secrets, but in no case less than a reasonable
degree of care; (ii) maintain high standards of quality in Legacy Products; and
(iii) comply in all material respects with all applicable laws, rules, and
regulations in its performance hereunder.
14. TERMINATION. Aironet may terminate this Agreement upon a material
breach by Telxon, provided that Telxon may avoid termination by curing the
breach within seven (7) days following receipt of written notice of breach from
Aironet. Upon termination or expiration Telxon shall return or destroy the
Documentation at Aironet's direction. The provisions of Section 6.2 shall
survive termination of this Agreement.
15. ASSIGNMENT. Telxon may not assign this Agreement or its rights or
obligations hereunder without the express written consent of Aironet.
16. INDEMNIFICATION. Telxon shall indemnify, defend, and hold harmless
Aironet, and its affiliates, officers, directors, employees, and agents from
and against any and all losses, liabilities, claims, and expenses (including,
without limitation, reasonable attorneys' fees) which result from or arise in
connection with Telxon's exercise of its rights hereunder.
17. LIMITATION OF LIABILITY. EXCEPT FOR BREACH OF THE OBLIGATION TO
KEEP THE DOCUMENTATION CONFIDENTIAL AND BREACH OF THE SCOPE OF THE LICENSE,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL,
SPECIAL, OR PUNITIVE DAMAGES OR LOST PROFITS ARISING OUT OF THIS AGREEMENT OR
ANY TERMINATION OF THIS AGREEMENT WHETHER LIABILITY IS ASSERTED IN CONTRACT OR
TORT, AND IRRESPECTIVE OF WHETHER IT HAS ADVISED OR HAS BEEN ADVISED OF THE
POSSIBILITY OF ANY SUCH DAMAGES.
4
<PAGE> 20
18. MISCELLANEOUS. This Agreement shall not be construed to create a
partnership, joint venture, agency relationship, or any similar arrangement
between the parties for any purpose whatsoever. This Agreement is severable.
Any determination by a court of competent jurisdiction that a provision of this
Agreement is not enforceable shall not prevent enforcement of the remaining
provisions. This Agreement may be executed in two or more counterparts, each of
which shall be deemed and enforceable as an original, and all of which together
shall constitute one and the same instrument. This Agreement shall be governed
by and construed under the laws of the State of Ohio, without regard to the
conflict of laws principles thereof. Any notices required or permitted to be
given pursuant to this Agreement shall be given in writing and delivered by
confirmed fax receipt, confirmed courier delivery, or confirmed postal delivery
and shall be deemed made upon confirmation of receipt. Such notices shall be
made to the parties at their principal offices to the attention of their
presidents. This Agreement, together with any schedules attached hereto,
constitutes the entire agreement and understanding of the parties with respect
to the subject matter hereof, and supersedes all prior and contemporaneous
agreements, both oral and written. This Agreement may not be amended except
pursuant to a written instrument executed by both parties hereto, nor may any
provision hereof be waived except pursuant to a written instrument executed by
the party granting such waiver.
IN WITNESS WHEREOF, the authorized representatives of the parties hereby
execute this Agreement as of the date set forth in the first paragraph hereof.
AIRONET WIRELESS TELXON CORPORATION
COMMUNICATIONS, INC.
By:_______________________________ By:__________________________________
Roger J. Murphy, President John W. Paxton, Chairman
and Chief Executive Officer and Chief Executive Officer
5
<PAGE> 21
<TABLE>
<CAPTION>
SCHEDULE 1.1
LEGACY PRODUCTS
- --------------------------- ----------------------------- -------------------------------
1000 SERIES 2000 SERIES
- --------------------------- ----------------------------- -------------------------------
900 MHz 2.4 GHz
DSSS DSSS
Proprietary Proprietary
- --------------------------- ----------------------------- -------------------------------
<S> <C> <C> <C> <C>
RADIOS: R100 (095) R200 (025)
093
091
- --------------------------- ----------------------------- -------------------------------
PC CARDS: PC1000 (690-900) PC2000 (690-2400)
- --------------------------- ----------------------------- -------------------------------
ACCESS POINTS: AP1000E (630-900) AP2000E (630-2400)
AP1000T (631-900) AP2000T (631-2400)
AP1000L (632-900) AP2000L (632-2400)
- --------------------------- ----------------------------- -------------------------------
UNIVERSAL CLIENTS: UC1000E UC2000E
UC1000S UC2000S
- --------------------------- ----------------------------- -------------------------------
OTHERS: IC1000 (655-900) IC2000 (655-2400)
MC1000 (670-900) MC2000 (670-2400)
671-900 671-2400
672-900 672-2400
POSLAN 210-900 DS2415-2400
DS2410-900
DS2445
- --------------------------- ----------------------------- -------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 48,008
<SECURITIES> 0
<RECEIVABLES> 6,790
<ALLOWANCES> (1,415)
<INVENTORY> 5,039
<CURRENT-ASSETS> 64,915
<PP&E> 7,290
<DEPRECIATION> (4,573)
<TOTAL-ASSETS> 71,294
<CURRENT-LIABILITIES> 10,691
<BONDS> 0
0
0
<COMMON> 63,780
<OTHER-SE> (3,177)
<TOTAL-LIABILITY-AND-EQUITY> 71,294
<SALES> 13,529
<TOTAL-REVENUES> 14,974
<CGS> 8,220
<TOTAL-COSTS> 8,220
<OTHER-EXPENSES> 5,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19)
<INCOME-PRETAX> 1,653
<INCOME-TAX> 675
<INCOME-CONTINUING> 978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 978
<EPS-BASIC> 0.08
<EPS-DILUTED> 0.07
</TABLE>
