-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GadGA1fOMi7Rrni1jlYB/+FCtcfTi4/CSx4t554AytcIl9wi3VremhZS+TE62SOF OJMhrUsp6zoyjZwUe79R+A== 0000914317-05-000619.txt : 20050215 0000914317-05-000619.hdr.sgml : 20050215 20050215131722 ACCESSION NUMBER: 0000914317-05-000619 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050209 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050215 DATE AS OF CHANGE: 20050215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YDI WIRELESS INC CENTRAL INDEX KEY: 0000712511 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 042751645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29053 FILM NUMBER: 05616087 BUSINESS ADDRESS: STREET 1: 20 INDUSTRIAL DRIVE EAST CITY: SOUTH DEERFIELD STATE: MA ZIP: 01373 BUSINESS PHONE: 4136658551 MAIL ADDRESS: STREET 1: 20 INDUSTRIAL DRIVE EAST STREET 2: INDUSTRIAL PARK CITY: SOUTH DEERFIELD STATE: MA ZIP: 01373 FORMER COMPANY: FORMER CONFORMED NAME: TELAXIS COMMUNICATIONS CORP DATE OF NAME CHANGE: 19991015 FORMER COMPANY: FORMER CONFORMED NAME: MILLITECH CORP DATE OF NAME CHANGE: 19990913 8-K 1 form8k-65801_ydi.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): February 9, 2005 ------------------------------ YDI WIRELESS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-29053 04-2751645 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission file number) (IRS employer incorporation) identification no.) 8000 Lee Highway, Falls Church, VA 22042 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (703) 205-0600 ---------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. ------------------------------------------- Director Compensation Policy - ---------------------------- On February 9, 2005, the Board of Directors of YDI Wireless, Inc. unanimously adopted a Policy Statement Concerning the Compensation of Directors of YDI Wireless, Inc. who are not Insiders. This policy statement sets out guidelines for compensation of YDI board members who are not employees or other insiders of YDI. Any YDI board member determined by the board to be an employee or other insider of YDI does not receive any compensation pursuant to this policy statement. The policy statement contemplates the following cash compensation: o a $17,000 annual retainer for serving on the board o an additional $9,000 annual retainer for serving as chairperson of the board o an additional $7,500 annual retainer for serving as chairperson of the audit committee of the board o an additional $4,000 annual retainer for serving as a member of the audit committee of the board o an additional $2,000 annual retainer for serving as chairperson of the compensation committee of the board o an additional $1,000 annual retainer for serving as a member of the compensation committee of the board o an additional $1,000 annual retainer for serving as chairperson of the governance and nominating committee of the board o an additional $500 annual retainer for serving as a member of the governance and nominating committee of the board No additional compensation is paid for attending board or committee meetings. Directors are also entitled to reimbursement for expenses incurred to attend board and committee meetings held in person or otherwise incurred on behalf of YDI. The policy statement contemplates the following equity compensation: o for each new director elected or appointed to the board, a non-qualified stock option to purchase 50,000 shares of YDI common stock that vests in three equal annual installments beginning on the date of grant o for each incumbent director, a fully vested, non-qualified stock option to purchase 15,000 shares of YDI common stock granted immediately following each annual meeting of stockholders, as long as the director has served at least one complete year before the date of the annual meeting and continues to serve as a director after the meeting The exercise price for all stock options granted pursuant to this policy statement is to be the fair market value of YDI's common stock on the date of grant. In addition to the compensation described above, the policy statement contemplates that board members may be periodically granted special additional consideration, in cash or non-qualified stock options, in recognition of extraordinary demands, additional committee assignments, or other circumstances deserving of special consideration. 2 The policy statement may be altered at any time by the board of directors. The policy statement does not constitute a contract, and the terms of the policy statement are not intended to create any binding obligations on YDI or enforceable rights of any director. The foregoing description of the director compensation policy statement does not purport to be complete and is qualified in its entirety by the terms and conditions of the policy statement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference. Forms of non-qualified stock option agreements to be issued to directors pursuant to YDI's 2004 Stock Plan upon first being elected or appointed to the board and to incumbent directors on an annual basis are filed as Exhibits 10.2 and 10.3 hereto, respectively, and are incorporated by reference. New Employment and Stock Option Agreement for Chief Executive Officer - --------------------------------------------------------------------- On February 9, 2005, YDI's board of directors approved a new employment agreement with Robert E. Fitzgerald, YDI's chief executive officer, and Mr. Fitzgerald and YDI have executed that agreement. This agreement replaces the employment agreement, dated March 1, 1999, between Mr. Fitzgerald and Young Design, Inc. Under the employment agreement, YDI agreed to employ Mr. Fitzgerald as its chief executive officer. Mr. Fitzgerald will report directly to the board, and the other officers and employees of YDI will report to Mr. Fitzgerald. The agreement also contemplates that Mr. Fitzgerald will continue to serve on YDI's board of directors. The employment agreement has an initial term of five years, commencing January 1, 2005, unless sooner terminated and may be renewed for additional periods if YDI gives Mr. Fitzgerald notice of its intention to renew or negotiate a new agreement at least 90 days prior to the expiration of the term. Mr. Fitzgerald's annual base salary is set at $295,000 subject to future adjustment. In addition, Mr. Fitzgerald is entitled to receive an annual performance bonus based on actual attainment of performance targets approved by the board of directors. At target performance levels, Mr. Fitzgerald shall receive a cash bonus equal to 100% of his base salary. The board decided that Mr. Fitzgerald's bonus for 2005 would be based on the following components with the following weightings: revenue (25%), operating income/loss (15%), gross margin (10%), working capital (10%), stock price (10%), net income/loss (5%), earnings per share (5%), compliance with requirements of the Sarbanes-Oxley Act of 2002 (5%), compliance with Securities and Exchange Commission filing requirements (5%), product availability (5%), and employee development (5%). Mr. Fitzgerald is also entitled to receive additional bonus awards at the discretion of the board. Mr. Fitzgerald receives five weeks of paid vacation per year. Mr. Fitzgerald receives medical, life, disability, and accidental death and dismemberment insurance and is also entitled to participate in YDI's other benefit programs for executives or other employees. If YDI issues equity rights in any of its subsidiaries or controlled entities to other employees, Mr. Fitzgerald is also entitled to receive equity rights no less than the amount granted to the largest grantee with no less favorable terms. Mr. Fitzgerald may be entitled to receive severance benefits after termination of employment depending on the circumstances under which his employment terminates. If Mr. Fitzgerald's employment is terminated by YDI for good cause (as narrowly defined in the employment agreement) or by Mr. Fitzgerald without good reason (as defined in the employment agreement), Mr. Fitzgerald will not be entitled to severance benefits. Mr. Fitzgerald will be entitled to severance benefits if his employment is terminated by YDI without good cause or by Mr. Fitzgerald for good reason. In those situations, Mr. Fitzgerald generally is entitled to severance benefits of (a) a lump-sum payment equal to twelve months of base salary, (b) a lump-sum payment equal to the greater of his annual bonus at target performance levels for the portion of the year actually worked or six months pro rata bonus at target performance levels, and (c) continuation of specified insurance benefits for a period of twelve months or receipt of a lump-sum amount in lieu thereof. However, if Mr. Fitzgerald's employment is terminated by YDI without good cause or by Mr. Fitzgerald for good reason within a six month period following or at any time within the three month period prior to a change in control of YDI, Mr. Fitzgerald is entitled to severance benefits of (a) a lump-sum payment equal to twenty-one months of base salary, (b) a lump-sum payment equal to twenty-one months of his annual bonus at target performance levels, (c) continuation of specified insurance benefits for a period of twelve months or receipt of a lump-sum amount in lieu thereof, and (d) vesting in full of his outstanding stock options and other unvested benefits. YDI's obligation to provide these severance benefits is contingent on Mr. Fitzgerald providing a release of claims to YDI. There is no requirement on the employee to mitigate these benefits by seeking other employment. 3 The employment agreement contemplates Mr. Fitzgerald being granted options to purchase 500,000 shares of YDI's common stock. Mr. Fitzgerald acknowledged that this grant was in lieu of all future annual option grants during the initial five-year term of the employment agreement. These options have been granted by YDI pursuant to a non-qualified stock option agreement, dated as of February 9, 2005, with an exercise price of $3.34 per share - the fair market value of YDI's common stock on the date of grant. Forty percent of these options vested on grant, and an additional twenty percent of these options will vest on each of the first three annual anniversaries of the date of grant. The stock option agreement provides for full vesting of any unvested options if Mr. Fitzgerald's employment is terminated by YDI without good cause or by Mr. Fitzgerald for good reason, in either case within a six month period following or at any time within the three month period prior to a change in control of YDI. In general, if Mr. Fitzgerald's employment is terminated, the options will expire 90 days after termination. However, if Mr. Fitzgerald's employment is terminated by YDI without good cause or by Mr. Fitzgerald with good reason, either in connection with a change of control of YDI or not, the options will expire one year after termination provided Mr. Fitzgerald provides a release of claims to YDI. Also, if Mr. Fitzgerald's employment is terminated due to his death or total disability, the options will expire one year after termination. However, in all events, the options expire no later than five years after the date of grant. Mr. Fitzgerald agreed not to compete with YDI and not to adversely interfere with YDI's employee, customer, supplier, and other business relationships during his employment and for one year after termination of his employment for any reason, provided that YDI is in compliance with any obligation to provide severance benefits to Mr. Fitzgerald. He agreed to disclose to YDI any business opportunity relating to YDI's current or contemplated business that he conceives or of which he becomes aware during his employment by YDI. He agreed to treat YDI's non-public information confidentially, to use it only in the course of performing his duties, and to return all of YDI's business information and other property to YDI in the event of his termination. Mr. Fitzgerald also agreed to assign to YDI any inventions and intellectual property he develops during his employment except for any invention developed by him on his own time using his own facilities that do not result from his work for YDI or relate to YDI's current or contemplated business. The foregoing description of the employment agreement and stock option agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the employment agreement, a copy of which is filed as Exhibit 10.4 hereto and is incorporated by reference, and of the non-qualified stock option agreement, a copy of which is filed as Exhibit 10.5 hereto and is incorporated by reference. A form of YDI's typical incentive stock option agreement for grants to executive officers pursuant to YDI's 2004 Stock Plan is filed as Exhibit 10.6 hereto and is incorporated by reference. Item 8.01 Other Events. ----------------- On February 9, 2005, the YDI board of directors fixed May 24, 2005 as the date of the 2005 annual meeting of YDI's stockholders and fixed March 25, 2005 as the record date for that meeting. Any stockholder who wishes to submit a proposal for action to be included in YDI's proxy statement and form of proxy relating to its 2005 annual meeting of stockholders is required to submit such proposal to YDI's Secretary at 8000 Lee Highway, Falls Church, VA 22042 a reasonable time before YDI begins to print and mail its proxy materials. Any stockholder that intends to present a proposal that will not be included in YDI's proxy statement for its 2005 annual meeting must submit such proposal to YDI's Secretary at 8000 Lee Highway, Falls Church, VA 22042 not later than February 25, 2005. Proposals submitted after February 25, 2005 will be considered untimely for purposes of Rule 14a-5(e)(2) under the Securities Exchange Act of 1934, as amended, and YDI's by-laws. Item 9.01 Financial Statements and Exhibits. --------------------------------- (c) Exhibits See Exhibit Index. 4 SIGNATURE 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 hereunto duly authorized. YDI WIRELESS, INC. Dated: February 15, 2005 By: /s/ David L. Renauld -------------------- David L. Renauld Vice President EXHIBIT INDEX Number Title ------ ----- 10.1 Policy Statement Concerning the Compensation of Directors of YDI Wireless, Inc. who are not Insiders, dated February 9, 2005 10.2 Form of Non-Qualified Stock Option Agreement to be issued to Directors upon Initial Election or Appointment to Board of Directors 10.3 Form of Non-Qualified Stock Option Agreement to be issued to Incumbent Directors on an Annual Basis 10.4 Employment Agreement, dated as of February 9, 2005, between YDI Wireless, Inc. and Robert E. Fitzgerald 10.5 Non-Qualified Stock Option Agreement, dated as of February 9, 2005, between YDI Wireless, Inc. and Robert E. Fitzgerald 10.6 Form of Incentive Stock Option Agreement for Executive Officers 5 EX-10.1 2 ex10-1.txt Exhibit 10.1 POLICY STATEMENT CONCERNING THE COMPENSATION OF DIRECTORS OF YDI WIRELESS, INC. WHO ARE NOT INSIDERS As amended through: February 9, 2005 A. Definitions. 1. "Director" means any person who is a director of YDI Wireless, Inc. (the "Company"). 2. "Inside Director" means any person determined by the Board of Directors to be an employee or other insider of the Company who is also a director of the Company. 3. "Policy Statement" means this Policy Statement Concerning the Compensation of Directors of YDI Wireless, Inc. who are not Insiders, as amended through February 9, 2005 and as may be amended in the future. 4. "Reasonable and Customary Expenses" generally means those expenses consistent with the Company's Travel and Entertainment Policy and practices applied to executive management, or otherwise approved in advance, in writing, by the Compensation Committee and the Company's CEO. B. New Directors. Each person who shall become a Director of the Company on and after the date of this Policy Statement (other than an Inside Director) shall be granted a non-qualified stock option to purchase 50,000 shares of the Company's common stock at an exercise price per share equal to the fair market value of each such share on the date of grant. C. Annual Grant. On the date of the Company's annual meeting of stockholders each year beginning with the annual meeting occurring during 2005, each Director who is not an Inside Director and who shall continue to serve as a Director immediately following such annual meeting shall be granted a non-qualified stock option to purchase 15,000 shares of the Company's common stock at an exercise price per share equal to the fair market value of each such share on the date of grant; provided, however, that no Director shall receive a stock option under this Paragraph C who shall not have served as a Director for a period of at least one year as of the date of that annual meeting. D. Duration of Options. 1. If any person to whom a non-qualified stock option has been granted in accordance with this Policy Statement ceases to be a Director, (a) no further vesting of any such non-qualified stock option will occur subsequent to the date that person ceases to be Director and (b) all non-qualified stock options granted to that person will terminate no later than on the date that is ninety days after such date. 2. Notwithstanding anything in this Policy Statement to the contrary, all stock options granted in accordance with this Policy Statement shall, in all events, terminate and become null and void no later than ten (10) years after the date of grant of such option. E. Vesting. Each stock option granted in accordance with Paragraph B of this Policy Statement will vest over a three (3) year period, vesting as to one-third (1/3) of all the shares of common stock subject to such stock option on the date of grant and as to an additional one-third (1/3) of all the shares of common stock subject to such stock option on each anniversary of the granting until such stock option is vested in full. In each case, the number of shares vesting on any given date shall be rounded down to the nearest whole number, with any fractional shares vesting on the last vesting date. Each stock option granted in accordance with Paragraph C of this Policy Statement will be vested in full upon grant. F. Adjustments. If the Company's outstanding common stock is changed into or exchanged for a different number or class of shares of stock of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) the number and/or class of shares for which stock options shall be granted in the future under Paragraphs B and C above shall be proportionally adjusted, (ii) there shall be substituted for each such share of common stock then subject to stock options previously granted under this Policy Statement (and for each share reserved for issuance) the number and class of shares of common stock into which each outstanding share of common stock is so changed or exchanged, all without any change in the aggregate purchase price for the shares then subject to the previously issued stock options, and (iii) the vesting schedule set forth in Paragraph E above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. G. Option Documentation. Each stock option granted in accordance with this Policy Statement will be evidenced by written documentation in such form as the Board of Directors or Compensation Committee thereof may from time to time approve. The stock options will be granted pursuant to one of the Company's stock plans and will be subject to the terms of the stock plan under which the stock option is granted. H. Annual Retainer. For reasonable and customary levels of Board of Director activity, commencing February 9, 2005, each Director who is not an Inside Director: 1) shall be paid an annual retainer of $17,000 in quarterly installments in arrears for the period during which he or she actually served as a Director, 2) serving as Chairperson of the Board of Directors shall be paid an additional annual retainer of $9,000 in quarterly installments in arrears for the period during which he or she actually served as Chairperson of the Board of Directors, 3) serving as Chairperson of the Audit Committee of the Board of Directors shall be paid an additional annual retainer of $7,500 in quarterly installments in arrears for the period during which he or she actually served as Chairperson of the Audit Committee of the Board of Directors, 4) serving as Chairperson of the Compensation Committee of the Board of Directors shall be paid an additional annual retainer of $2,000 in quarterly installments in arrears for the period during which he or she actually served as Chairperson of the Compensation Committee of the Board of Directors, 5) serving as Chairperson of the Governance and Nominating Committee of the Board of Directors shall be paid an additional annual retainer of $1,000 in quarterly installments in arrears for the period during which he or she actually served as Chairperson of the Nominating Committee of the Board of Directors, 2 6) serving as a member of the Audit Committee of the Board of Directors shall be paid an additional annual retainer of $4,000 in quarterly installments in arrears for the period during which he or she actually served as a member of the Audit Committee of the Board of Directors, 7) serving as a member of the Compensation Committee of the Board of Directors shall be paid an additional annual retainer of $1,000 in quarterly installments in arrears for the period during which he or she actually served as a member of the Compensation Committee of the Board of Directors, and 8) serving as a member of the Governance and Nominating Committee of the Board of Directors shall be paid an additional annual retainer of $500 in quarterly installments in arrears for the period during which he or she actually served as a member of Governance and Nominating Committee of the Board of Directors. I. Compensation for Attendance at Meetings. A Director shall not be entitled to any additional payment for attending a Board of Directors or committee meeting, whether held in-person or by telephonic means. The Company will, however reimburse Directors for actual, Reasonable and Customary Expenses incurred to attend Board of Directors and committee meetings that are held in person. J. Payment of Fees and Expenses. Reasonable and Customary Expenses incurred by a Director on behalf of the Company in addition to those set forth in Paragraph I above, such as, but not limited to, phone charges, postage, meetings with customers, investors, or auditors, etc., shall be reimbursed upon presentation of documentation and receipts. Amounts owing a Director for services rendered or expenses incurred shall be promptly paid, but in no event later than fifteen (15) days after the date that such amounts are due and payable. K. Other Consideration. At the discretion of the Board of Directors, Directors who are not Inside Directors, individually or collectively, may be periodically granted special additional consideration in cash or non-qualified stock options, in recognition of extraordinary demands, additional committee assignments, or other circumstances deserving of special consideration. L. No Contractual Rights. The terms of this Policy Statement may be altered at any time by the Board of Directors. This Policy Statement does not constitute a contract, and the terms of this Policy Statement do not create any binding obligations on the Company or enforceable rights of any Director. 3 EX-10.2 3 ex10-2.txt Exhibit 10.2 NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of _____________ ___, 20__ between YDI WIRELESS, INC., a corporation organized under the laws of the State of Delaware (hereinafter called the "Corporation"), and _______________________________ (hereinafter referred to as the "Optionee"). WHEREAS, the Optionee is a director of the Corporation and the Corporation considers it desirable and in its best interests to compensate the Optionee for such services by granting Optionee an option to purchase shares of Common Stock, par value $.01 per share, of the Corporation under its 2004 Stock Plan (the "Plan"); NOW, THEREFORE, it is agreed as follows: 1. Grant of Option. The Corporation hereby grants to the Optionee as of the date of this Agreement ("Date of Grant") the right, privilege and option to purchase not more than 50,000 shares of the Common Stock of the Corporation, par value $.01 per share, as constituted on the date of this Agreement pursuant to the terms, provisions and conditions of the Plan which is incorporated herein and made a part hereof by reference as if fully set forth herein at length and subject to the terms, provisions and conditions set forth below. 2. Option Price. The option price per share of Common Stock as constituted on the date of this Agreement, as determined in accordance with the Plan, shall be $________ per share. 3. Time of Exercise; Acceleration. This option will vest as to 16,666 shares on the date of this Agreement, 16,666 shares on the first anniversary of the date hereof, and 16,668 shares on the second anniversary of the date hereof; provided, however, that upon the event of (i) the completion of a merger or consolidation of the Corporation with any other entity, (ii) the sale of substantially all of the Corporation's assets to another entity, or (iii) the sale of more than 50% of the outstanding capital stock of the Corporation to an unrelated person or group of persons acting collectively in one or a series of transactions, all of the unvested options will be immediately vested. Only vested stock options may be exercised. This option may be exercised in whole or in part as to shares which have vested for not in excess of the difference between (i) the total number of shares then vested and (ii) the total number of shares as to which the option has been previously exercised. No partial exercise of this option within any year may be for less than 100 shares (or the remaining shares purchasable under this option if less than 100 shares). 4. Method of Exercise. This option shall be exercisable from time to time as provided above by written notice in the form of Exhibit "A", signed by the person entitled to exercise the option, setting forth in terms of shares of Stock as constituted on the date of this Agreement, the number of shares as to which this option is being exercised. Such notice shall be delivered to the Corporation at its principal place of business and be accompanied by the purchase price. Alternatively, the person entitled to exercise the option may exercise the option and pay the purchase price by any other method that may be authorized by the Corporation from time to time. The Corporation shall make prompt delivery of the shares of Stock as to which the option is exercised against payment of the purchase price; provided, however, that if any law or regulation requires the Corporation to take any action with respect to the Stock before the issuance thereof, then the date of delivery of the Stock shall be extended for the period necessary to take such action. 5. Further Limitations on Exercise. A. Termination of Service. (i) If Optionee's service to the Corporation terminates other than by reason of death or Disability, (a) no further vesting of this option will occur subsequent to the date of termination, and (b) this option will terminate on the date three months after the date of termination or on the option's specified expiration date, if earlier. Nothing in this Agreement will be deemed to give the Optionee the right to continued service to the Corporation. (ii) If Optionee's service to the Corporation is terminated due to the Optionee's death or Disability, this option may be exercised, up to that portion of the option which the Optionee could have exercised on the date of death or Disability, by the Optionee, or in the case of death, the Optionee's estate, personal representative or any beneficiary who has acquired the options by will or by the laws of descent and distribution, at any time prior to the earlier of the specified expiration date of this option or one year after the Optionee's death or Disability. B. Payment. The option price shall be paid as follows: (i) by check, and/or (ii) to the extent the Stock is publicly traded, by delivery to the Corporation by the Optionee of Stock already owned by such Optionee, properly endorsed and having a fair market value equal to the purchase price (if permitted by the Corporation) and/or (iii) in any other manner permitted by the Corporation from time to time. For purposes of this Section 5(B), the market value of such stock to be delivered to the Corporation in payment of the option price shall be determined in accordance with the Plan. C. Non-Transferability. This option is not transferable by the Optionee, except by will or by laws of descent and distribution, and is exercisable during the Optionee's lifetime only by the Optionee. D. Adjustment. If a dividend is declared upon the Stock payable in Stock, then the shares of Stock then subject to this option (and the number of shares reserved for issuance) shall be increased proportionately without any change in the aggregate purchase price. If the outstanding Stock is changed into or exchanged for a different number or class of shares of stock of the Corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) there shall be substituted for each such share of Stock then subject to this option (and for each share reserved for issuance) the number and class of shares of Stock into which each outstanding share of Stock is so changed or exchanged, all without any change in the aggregate purchase price for 2 the shares then subject to this option and (ii) the vesting schedule set forth in Section 3 above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. E. Withholding Taxes. Whenever under this Agreement Stock is to be issued, the Corporation shall have the right to require the recipient to remit to the Corporation an amount sufficient to satisfy federal, state and local withholding tax requirements prior to delivery of any certificate or certificates representing the Stock. 6. Stock Ownership. An optionee shall be entitled to the privilege of stock ownership only as to such shares of Stock as are issued upon exercise of this option. 7. Requirements of Law. The granting of this option and issuance of shares of Stock upon the exercise of this option shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of such shares. 8. Expiration Date. This option and all rights granted in this Agreement shall, in all events, expire five (5) years from the Date of Grant. 9. Legend. The Optionee hereby agrees that the stock certificates delivered upon exercise of this option may bear a legend or legends in the form designated by the Corporation to ensure compliance with legal or contractual restrictions. 10. Definitions. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the same meanings as in the Plan. The term "Stock" shall mean shares of Common Stock of the Corporation as constituted on the date of this Agreement and such other stock as shall be substituted therefor or issued thereon as provided in Section 5(D) above or as shall be substituted for or issued upon or in exchange for Stock issued pursuant to the options. 11. Notices. All notices under this Agreement shall be sufficient if in writing and delivered in hand or mailed, registered or certified mail, postage prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 8000 Lee Highway, Falls Church, VA 22042, Attention: Chief Financial Officer or to the Optionee at the address set forth under the Optionee's signature below. Either party may change the address to which notices shall be delivered by like notice given at least ten (10) days before the effective date of such change of address. 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Optionee, his legal representatives, heirs, legatees and assigns. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. 3 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument all as of the date and year first above written. YDI WIRELESS, INC. By: ------------------------------------ Title: --------------------------------- OPTIONEE --------------------------------------- Name: -------------------------- -------------------------- -------------------------- 4 EXHIBIT A --------- -------------------------------- (date) YDI WIRELESS, INC. 20 Industrial Drive East South Deerfield, MA 01373 Ladies and Gentlemen: I wish to exercise my option to purchase ______ shares of common stock, par value $.01 per share (the "Securities") at a price of $______ per share pursuant to the Non-Qualified Stock Option Agreement dated as of __________ ___, 20__ (the "Agreement") under the Corporation's 2004 Stock Plan (the "Plan"). Check one of the following boxes: |_| I have enclosed a check for $_____________________ (the exercise amount). |_| I am paying the exercise price by the following means which has been approved by the company:_______________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________. I understand that the Shares will be subject to the restrictions and other terms set forth in the Plan and the Agreement and that any certificate I receive representing the Shares may contain legends reflecting these restrictions and terms. Very truly yours, - ---------------------------------- --------------------------------------- Optionee Social Security Number Optionee Signature (on line above) Optionee Name (printed):_______________ Address to which certificates are to be sent Optionee's Home Address: (complete ONLY if different than home address): - ------------------------------ ----------------------------------------------- - ------------------------------ ----------------------------------------------- - ------------------------------ ----------------------------------------------- - ------------------------------ ----------------------------------------------- 5 EX-10.3 4 ex10-3.txt Exhibit 10.3 NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of ___________ ___, 20___ between YDI WIRELESS, INC., a corporation organized under the laws of the State of Delaware (hereinafter called the "Corporation"), and _________________ (hereinafter referred to as the "Optionee"). WHEREAS, the Optionee is a director of the Corporation and the Corporation considers it desirable and in its best interests to compensate the Optionee for such services by granting Optionee an option to purchase shares of Common Stock, par value $.01 per share, of the Corporation under its 2004 Stock Plan (the "Plan"); NOW, THEREFORE, it is agreed as follows: 1. Grant of Option. The Corporation hereby grants to the Optionee as of the date of this Agreement ("Date of Grant") the right, privilege and option to purchase not more than 15,000 shares of the Common Stock of the Corporation, par value $.01 per share, as constituted on the date of this Agreement pursuant to the terms, provisions and conditions of the Plan which is incorporated herein and made a part hereof by reference as if fully set forth herein at length and subject to the terms, provisions and conditions set forth below. 2. Option Price. The option price per share of Common Stock as constituted on the date of this Agreement, as determined in accordance with the Plan, shall be $________ per share. 3. Time of Exercise; Acceleration. This option is vested in full immediately. Only vested stock options may be exercised. This option may be exercised in whole or in part as to shares which have vested for not in excess of the difference between (i) the total number of shares then vested and (ii) the total number of shares as to which the option has been previously exercised. No partial exercise of this option within any year may be for less than 100 shares (or the remaining shares purchasable under this option if less than 100 shares). 4. Method of Exercise. This option shall be exercisable from time to time as provided above by written notice in the form of Exhibit "A", signed by the person entitled to exercise the option, setting forth in terms of shares of Stock as constituted on the date of this Agreement, the number of shares as to which this option is being exercised. Such notice shall be delivered to the Corporation at its principal place of business and be accompanied by the purchase price. Alternatively, the person entitled to exercise the option may exercise the option and pay the purchase price by any other method that may be authorized by the Corporation from time to time. The Corporation shall make prompt delivery of the shares of Stock as to which the option is exercised against payment of the purchase price; provided, however, that if any law or regulation requires the Corporation to take any action with respect to the Stock before the issuance thereof, then the date of delivery of the Stock shall be extended for the period necessary to take such action. 5. Further Limitations on Exercise. A. Termination of Service. (i) If Optionee's service to the Corporation terminates other than by reason of death or Disability, (a) no further vesting of this option will occur subsequent to the date of termination, and (b) this option will terminate on the date three months after the date of termination or on the option's specified expiration date, if earlier. Nothing in this Agreement will be deemed to give the Optionee the right to continued service to the Corporation. (ii) If Optionee's service to the Corporation is terminated due to the Optionee's death or Disability, this option may be exercised, up to that portion of the option which the Optionee could have exercised on the date of death or Disability, by the Optionee, or in the case of death, the Optionee's estate, personal representative or any beneficiary who has acquired the options by will or by the laws of descent and distribution, at any time prior to the earlier of the specified expiration date of this option or one year after the Optionee's death or Disability. B. Payment. The option price shall be paid as follows: (i) by check, and/or (ii) to the extent the Stock is publicly traded, by delivery to the Corporation by the Optionee of Stock already owned by such Optionee, properly endorsed and having a fair market value equal to the purchase price (if permitted by the Corporation) and/or (iii) in any other manner permitted by the Corporation from time to time. For purposes of this Section 5(B), the market value of such stock to be delivered to the Corporation in payment of the option price shall be determined in accordance with the Plan. C. Non-Transferability. This option is not transferable by the Optionee, except by will or by laws of descent and distribution, and is exercisable during the Optionee's lifetime only by the Optionee. D. Adjustment. If a dividend is declared upon the Stock payable in Stock, then the shares of Stock then subject to this option (and the number of shares reserved for issuance) shall be increased proportionately without any change in the aggregate purchase price. If the outstanding Stock is changed into or exchanged for a different number or class of shares of stock of the Corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) there shall be substituted for each such share of Stock then subject to this option (and for each share reserved for issuance) the number and class of shares of Stock into which each outstanding share of Stock is so changed or exchanged, all without any change in the aggregate purchase price for the shares then subject to this option and (ii) the vesting schedule set forth in Section 3 above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. E. Withholding Taxes. Whenever under this Agreement Stock is to be issued, the Corporation shall have the right to require the recipient to remit to the Corporation an 2 amount sufficient to satisfy federal, state and local withholding tax requirements prior to delivery of any certificate or certificates representing the Stock. 6. Stock Ownership. An optionee shall be entitled to the privilege of stock ownership only as to such shares of Stock as are issued upon exercise of this option. 7. Requirements of Law. The granting of this option and issuance of shares of Stock upon the exercise of this option shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of such shares. 8. Expiration Date. This option and all rights granted in this Agreement shall, in all events, expire five (5) years from the Date of Grant. 9. Legend. The Optionee hereby agrees that the stock certificates delivered upon exercise of this option may bear a legend or legends in the form designated by the Corporation to ensure compliance with legal or contractual restrictions. 10. Definitions. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the same meanings as in the Plan. The term "Stock" shall mean shares of Common Stock of the Corporation as constituted on the date of this Agreement and such other stock as shall be substituted therefor or issued thereon as provided in Section 5(D) above or as shall be substituted for or issued upon or in exchange for Stock issued pursuant to the options. 11. Notices. All notices under this Agreement shall be sufficient if in writing and delivered in hand or mailed, registered or certified mail, postage prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 8000 Lee Highway, Falls Church, VA 22042, Attention: Chief Financial Officer or to the Optionee at the address set forth under the Optionee's signature below. Either party may change the address to which notices shall be delivered by like notice given at least ten (10) days before the effective date of such change of address. 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Optionee, his legal representatives, heirs, legatees and assigns. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. 3 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument all as of the date and year first above written. YDI WIRELESS, INC. By: --------------------------------- Title: ------------------------------ OPTIONEE ------------------------------------ Name: -------------------------- -------------------------- -------------------------- 4 EXHIBIT A --------- -------------------------------- (date) YDI WIRELESS, INC. 20 Industrial Drive East South Deerfield, MA 01373 Ladies and Gentlemen: I wish to exercise my option to purchase ______ shares of common stock, par value $.01 per share (the "Securities") at a price of $______ per share pursuant to the Non-Qualified Stock Option Agreement dated as of ______________ ___, 20__ (the "Agreement") under the Corporation's 2004 Stock Plan (the "Plan"). Check one of the following boxes: |_| I have enclosed a check for $_____________________ (the exercise amount). |_| I am paying the exercise price by the following means which has been approved by the company:_______________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________. I understand that the Shares will be subject to the restrictions and other terms set forth in the Plan and the Agreement and that any certificate I receive representing the Shares may contain legends reflecting these restrictions and terms. Very truly yours, - --------------------------------- ---------------------------------------- Optionee Social Security Number Optionee Signature (on line above) Optionee Name (printed):________________ Address to which certificates are to be sent Optionee's Home Address: (complete ONLY if different than home address): - ---------------------------- ----------------------------------------------- - ---------------------------- ----------------------------------------------- - ---------------------------- ----------------------------------------------- - ---------------------------- ----------------------------------------------- 5 EX-10.4 5 ex10-4.txt Exhibit 10.4 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT ("Agreement") by and between YDI Wireless, Inc., a Delaware corporation (the "Company"), and Robert E. Fitzgerald (the "Executive"), is dated and entered into as of February 9, 2005 (the "Signing Date") but is effective (except as otherwise specifically noted) as of the Effective Date defined below in Section 4 hereof. RECITALS WHEREAS: The Company is duly incorporated and organized under the laws of the State Delaware and is authorized to engage in any lawful business; WHEREAS: The Company desires to continue the Executive's employment and to have him render full-time services for it and to prevent the services of Executive from being used by its competitors; and WHEREAS: The Executive is willing to continue rendering his full-time services for the Company in accordance with and subject to the terms and conditions of this Agreement, ACCORDINGLY, the parties hereby agree as follows: AGREEMENT 1. Position. The Company will continue to employ Executive and Executive will continue to accept employment by the Company as Chief Executive Officer of the Company under the terms of this Agreement. Executive shall continue to be a member of the Board of Directors of the Company (the "Board"). 2. Devotion of Time and Energies. Executive will devote substantially all of his business time and attention to the performance of services to the Company under this Agreement; provided, however, that Executive may, (a) upon receipt of prior permission from the Board, which will not be unreasonably withheld (or unreasonably revoked once it is initially given), devote reasonable periods of time to serving on boards as a director of other corporations or to miscellaneous management and technical advisory services for other non-competitive companies, (b) engage in charitable or community service activities, and, (c) manage his own personal affairs and investments, in each case as long as none of the foregoing additional activities materially interferes with Executive's duties under this Agreement. The Company acknowledges that it has previously given Executive permission to continue certain of his business relationships. 3. Duties and Authority. As Chief Executive Officer, Executive shall have responsibility for overall management and administration of the Company including, without limitation, financial performance, strategic direction, promotional and technical services, and such other tasks in connection with the affairs and overall operation of the Company as are customary for a chief executive officer of a public company in the wireless communications and equipment business. Subject to the provisions of this Section 3, Executive agrees to act in accordance with the Company's business plan, as it may be amended from time to time by the Board. Executive shall -1- report solely and directly to the Board. All other employees of the Company or any of its' controlled subsidiaries shall report solely and directly to Executive or his designee(s). 4. Effective Date and Term. This Agreement shall be effective as of January 1, 2005 (the "Effective Date"). As of the Effective Date, this Agreement replaces and supersedes, in its entirety, the Employment Agreement dated March 1, 1999, between Executive and Young Design, Inc., which Employment Agreement shall be of no further force or effect. The term of Executive's employment pursuant to this Agreement will begin on the Effective Date and will continue for a period of five (5) years after that date (the "Term"), unless otherwise sooner terminated. Thereafter this Agreement may be renewed for additional periods, provided that the Company gives the Executive at least ninety (90) days notice prior to the expiration of the Term, of its intent to renew this Agreement or negotiate a new agreement. 5. Salary and Other Compensation. 5.1. Base Salary. For services rendered by Executive under this Agreement, Executive will be paid an annual salary equal to two hundred and ninety five thousand dollars ($295,000), starting from the Signing Date of this Agreement (the "Initial Base Salary"), and payable in accordance with the Company's normal payroll practices. Such Initial Base Salary will be reviewed at least once during each full performance period or annually, which ever is greater, and will be subject to increase, but not decrease, in accordance with such review, except in the event that all of the Company's officers and senior managers receive a similar and proportionate reduction in salary. The Initial Base Salary, as may be modified from time to time during the Term of this Agreement, is hereinafter referred to as the "Base Salary." 5.2. Annual Bonus. Executive will be granted cash bonus payouts each year based on the percentages of actual attainment of performance targets approved by the Board of Directors prior to the commencement of each year. At target performance levels, the Executive shall be granted a cash bonus equal to 100% of his actual Base Salary during the previous year. Executive may be awarded all, some, more than, or none of this potential cash bonus based on the Board's assessment of the Executive's actual performance as measured against the previously approved performance targets, and relative weighting of the performance targets. Performance targets for each year shall establish the minimal level of bonus to be paid to Executive based on the performance level achieved. The Board may determine to provide the Executive with additional annual bonuses based on other considerations but has no obligation to do so. Any annual bonus shall be paid within 70 days after the end of the year. 5.3. Stock Option Bonus: (a) On the Signing Date of this Agreement, the Executive shall be granted options to purchase five hundred thousand (500,000) shares of the Company's common stock. All options shall be Non-Qualified Stock Options with an exercise price equal to the closing stock price on the date of the grant. (b) The actual grant and the specific terms of the grant will be set forth in a specific stock option agreement, which terms at a minimum, shall establish the vesting schedule for these options to be: forty percent (40%) at time of grant, and an additional twenty percent (20%) on each of the next three (3) annual anniversaries of the Effective Date. (c) Executive acknowledges that this grant will be in lieu of all future annual option grants of shares of the Company to the Executive during the initial term of this Agreement. -2- 5.4. Spot Awards. Executive has the opportunity to receive certain bonus payments at any time during the Term of the Agreement, in addition to those set forth hereinabove at the sole discretion of the Board, in the event that agreed upon milestones are significantly exceeded as a result of the execution of one or more material and strategic initiatives that clearly result in a significant increase in shareholder value, and further that such strategic initiatives are directly attributable to the Executive's leadership and personal efforts. For example, but not limited to certain: acquisitions, mergers, business combinations, joint ventures, etc. 5.5. Other Compensation. (a) Subject to the provisions of Subsection 5.3(c) above, Executive shall be entitled to participate on the same basis as other executives of the Company in any incentive or supplemental compensation plan maintained or made available by the Company for any of its senior executives. (b) Not withstanding the provisions of Subsection 5.3(c) above, when events or transactions result in the formation of subsidiaries or the acquisition of controlled entities, whereby shares or options to buy shares of such subsidiary or controlled entity are granted to employees of the Company or its subsidiary or controlled entity, the Executive shall be granted no less than an equal amount of shares or options in any subsidiary or controlled entity of the Company, as may be granted to the largest grantee of such subsidiary or controlled entity, with no less favorable terms. (c) In addition, Executive may receive further compensation from the Company in such form and to such extent as the Board and/or its compensation committee may in its discretion determine from time to time. 5.6. Expenses. Executive shall be entitled to reimbursement of all reasonable travel, entertainment, and other out-of-pocket business expenses incurred by Executive in the course of his duties and in accordance with any policies adopted from time to time by the Board, upon submission of reasonable documentation therefore. 5.7. Benefits. During the Term of the Agreement, but subject Subsection 5.3(c) above, Executive shall be entitled to participate in, and receive the benefits of any and all of the Company's benefit plans such as but not limited to: life and disability insurance, pension or other retirement benefit plan, the 401(k) plan, profit sharing, stock option, employee stock ownership, or other plans, benefits and privileges given to employees and executives of the Company, to the extent commensurate with his then duties and responsibilities. Further, the Company shall directly pay the full premium cost for the following benefits, or make payment to the Executive of the economic equivalent of the premium cost for the following benefits in the event that any one or more of the following benefit plan(s) are not continued by the Company, or the Executive's continued participation in such benefit plan(s) is not possible: (a) to the extent not otherwise covered under another plan, insurance premiums for Executive and his eligible dependents under the Company's existing or equivalent medical insurance plan; and (b) life insurance providing a death benefit of at least two times (2X) the Executive's Base Salary; (c) disability benefits, in accordance with the Company's then standard disability insurance coverage; (d) accidental death and dismemberment insurance providing a benefit of up to two times the Executive's then current Base Salary; and -3- (e) five (5) weeks paid vacation each year, subject to the terms of the Company's existing vacation policy. 6 Termination. Employment of Executive pursuant to this Agreement may be terminated as follows, but in any case the provisions of noncompetition, nondisclosure and assignment of Intellectual Property set forth in Sections 9, 10 and 11 of this Agreement will survive the termination of Executive's employment: 6.1. By Company. The Company may terminate the employment of Executive, with or without Good Cause at any time during the term of employment upon giving Notice of Termination. 6.2. By Executive. Executive may terminate his employment with or without Good Reason at any time during the term of employment upon giving Notice of Termination. 6.3. Automatic Termination. Executive's employment will terminate upon his death or Total Disability. The term "Total Disability" as used in this Agreement will mean an inability to perform the duties set forth for Executive under this Agreement because of illness or physical or mental disability (as determined by a medical doctor chosen by the Company and reasonably satisfactory to Executive) for a period of one-hundred twenty (120) consecutive calendar days, unless Executive is granted a leave of absence by the Company's Board of Directors. Termination under this Agreement will be deemed to be effective immediately upon Executive's death or upon Executive's Total Disability. 6.4. Notice. The term "Notice of Termination" as used in this Agreement will mean at least thirty (30) days' written notice of termination of Executive's employment, during which period Executive's employment and performance of services will continue; provided, however, that the Company may, at its own election but without reducing Executive's compensation during such period, excuse Executive from any or all of his duties during such period. The effective date of the termination of Executive's employment hereunder will be the date on which such 30-day notice period expires. 7 Termination Payments. If Executive's employment hereunder terminates, all compensation and benefits set forth in this Agreement will terminate except as specifically provided in this Section 7 (the "Termination Payments"). 7.1. Termination due to Death or Total Disability. If Executive's employment is terminated due to his death or Total Disability, Executive (or his estate) shall be entitled to: (a) any unpaid salary and other benefits which have accrued for services already performed as of the date the termination of Executive's employment becomes effective and, in the event of Total Disability, benefits in accordance with the Company's disability plan; (b) pro-rata annual bonus for the year of termination based on the target bonus (based on number of days employed divided by 365); (c) in the case of Total Disability, the continuation of the benefits described in Subsections 5.7(a), (b), (c), and (d) above for a period of twelve (12) months, or a lump sum payment to Executive of the economic equivalent to the extent plans do not permit his continued participation, provided that such benefits shall cease to the extent Executive becomes covered -4- under the plans of a new employer (in which case, Executive shall return to the Company a pro rata portion of any lump sum payment made by the Company in lieu of continuing the benefits). 7.2 Termination by Company without Good Cause. If the Company terminates Executive's employment without Good Cause prior to the end of the Term of this Agreement, Executive will be entitled to receive: (a) any unpaid Base Salary and other benefits which have accrued for services already performed as of the effective date of Executive's termination; (b) the greater of a pro-rata annual target bonus for that portion of the year of termination actually worked prior to termination or an amount equal to six (6) months pro-rata performance at target levels, which ever is greater, payable in a lump sum within five (5) business days of termination: (c) twelve (12) months of salary at the then current Base Salary rate, payable in a lump sum within five (5) business days of termination: (d) all amounts, entitlements or benefits in which Executive is already vested including, without limitation, all options, which shall remain exercisable for twelve months (12) from the date of termination. (e) the continuation of the benefits described in Subsections 5.7(a), (b), (c), and (d) above for a period of twelve (12) months, or a lump sum payment to Executive of the economic equivalent to the extent plans do not permit his continued participation, provided that such benefit shall cease to the extent Executive becomes covered under similar plans of a new employer (in which case, Executive shall return to the Company a pro rata portion of any lump sum payment made by the Company in lieu of continuing the benefits). 7.3 Good Cause. For purposes of this Agreement, "Good Cause" shall mean and be limited to the following: willful fraudulent conduct intended to enrich the Executive at the expense of the Company, embezzlement or willful misappropriation for his own benefit of any proprietary information of the Company, the indictment or conviction in any jurisdiction for any crime which constitutes a felony, or which constitutes a misdemeanor that involves fraud or moral turpitude, or the Executive's failure to cooperate with the lawful investigations of regulatory or governmental agencies. Additionally, the Executive's material and persistent breach of the provisions of this Agreement and gross misconduct in, or neglect of, the performance of his duties and responsibilities hereunder, which causes material economic harm to the Company, or the Executive's chronic, repeated willful failure to carry out the reasonable, lawful, specific written directions of the Board, which directions are consistent with the provisions of this Agreement, shall be considered Good Cause for termination, unless the Executive believed and can demonstrate, that in good faith such action or non action was in, or not opposed to, the best interests of the Company. 7.4 Termination by the Company for Good Cause. If Executive is terminated by the Company for Good Cause, Executive will only be entitled to any unpaid Base Salary and other benefits that have accrued for services already performed as of the date the termination of Executive's employment becomes effective. -5- A termination for Good Cause shall not take effect unless the provisions of this paragraph are complied with. The Executive shall be given written notice by the Board of the intention to terminate him for Good Cause, stating the grounds on which the proposed termination for Good Cause is based. The Executive shall be given an opportunity to cure such conduct within a thirty (30) calendar day period (to the extent such cure is possible). If he fails to cure such conduct, the Executive shall then be entitled to a hearing before the Board, and, thereafter, upon a determination by affirmative vote of a majority of the members of Board (excluding Executive) that Good Cause exists, he shall be terminated. 7.5 Good Reason. For purposes of this Agreement, "Good Reason" shall mean and be limited to any material reduction or adverse change in Executive's position, which shall mean and refer to: (a) any reduction or downgrade, in Executive's title, duties, responsibilities or authority as provided in Sections 1 and 3, or the assignment to the Executive of duties, responsibilities or authority inconsistent therewith, provided that hiring a President(s), COO(s) and/or any other senior executive officer(s) of the Company shall not constitute "Good Reason" for purposes of this provision, so long as the duties, responsibilities and authority of the President(s), COO(s) and/or other senior executive officer(s) are approved by the Executive and such position, or positions, answer to Executive; (b) a failure to nominate Executive to the Board as part of the Board's slate of nominees; (c) any proposed reduction in Base Salary (except to the extent permitted by Section 5.1); (d) any change in or failure to continue any stock compensation plan or other employee benefit plan, including, but not limited to, pension, life insurance, medical, health, accident or disability plans, which would directly or indirectly materially reduce any such benefits to Executive (except to the extent permitted by Section 5.1); (e) relocation of Executive's own office location, as assigned to him by the Company, other than a relocation at Executive's initiative, to a new location more than fifty (50) miles from the Executive's current place of residence; (f) a material breach by the Company of the provisions of this Agreement; (g) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 30 calendar days after a merger, consolidation, sale or similar transaction; (h) the failure of the Company to offer the Executive the position of Chief Executive Officer of the surviving entity or, the failure to nominate the Executive to the Board of the surviving entity, in the event of a Change of Control. Following written notice from Executive of any of the events described above, the Company shall have thirty (30) calendar days in which to cure. If the Company fails to cure, Executive's termination shall become effective on the 31st calendar day following the written notice. -6- 7.6 Termination by Executive with Good Reason. If Executive terminates his employment hereunder with Good Reason prior to the end of the Term of this Agreement, Executive will be entitled to receive the same payments, benefits and rights as described under Subsection 7.2 above. 7.7 Termination by Executive without Good Reason. If Executive terminates his employment without Good Reason, Executive will be entitled to the same payments, benefits and rights as described under Subsection 7.4 above. 7.8 Change in Control. "Change in Control" shall mean the occurrence of any one of the following events: (a) any "person," as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," but excluding a person who owns more than 10% of the outstanding shares of the Company as of the date of this Agreement, as such term is used in Rule 13D-3 promulgated under that act, of 50% or more of the Voting Stock of the Company; (b) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets; (c) all or substantially all of the assets or business of the Company is disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned of the Voting Stock of the Company, all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company); or (d) the Company combines with another Company and is the surviving corporation but, immediately after the combination, the shareholders of the Company immediately prior to the combination hold, directly or indirectly, 50% or less of the Voting Stock of the combined company It is clearly understood, however, that no Change in Control will be considered to have occurred solely as a result of a subsequent public offering of Company shares without satisfaction of at least one of the criteria set forth in Subsections (a) through (d) above. For purposes of the Change in Control definition, "the Company" shall include any entity that succeeds to all or substantially all of the business of the Company, "Affiliate" of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified and "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 7.9 Consequences of a Change in Control. Upon Executive's termination of employment pursuant to Section 7.2 or 7.6 within a six (6) month period following or at any time within the three (3) month period prior to a Change in Control, Executive shall be entitled to the benefits provided in Section 7.2 above, except that (a) the amount payable pursuant to Section 7.2(c) shall be twenty one (21) months of the Executive's Base Salary and (b) the amount payable pursuant to -7- section 7.2(b) shall be pro rata annual target bonus for a twenty one (21) month period at target performance levels. Additionally, all amounts, entitlements or benefits in which Executive is not yet vested shall become fully vested including, without limitation, all outstanding options, which shall remain exercisable for one year from the date of termination. 7.10 No Mitigation: No Offset. In the event of any termination of employment under this Section 7.10, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any claims asserted by the Company or any remuneration attributable to any subsequent employment that he may obtain. 7.11 Other Severance Provisions. Notwithstanding any other provision of this Agreement: (a) All payments made to Executive shall be subject to and reduced by all required tax withholdings. (b) As a condition precedent to the Company's obligations to make any payments or provide any benefits pursuant to Sections 7.2, 7.6 or 7.9 above, the Executive must execute and deliver to the Company a release (in a form and substance acceptable to the Company) as to any and all claims Executive may have against the Company (which release, however, need not release any claims relating to indemnification, contribution, or insurance coverage). 8 Insurance. The Company agrees to continue and maintain a directors' and officers' liability insurance policy covering Executive in an aggregate amount of no less than $5,000,000. 9. Restrictive Covenants. 9.1 During Emp1oyment. During the term of this Agreement, Executive agrees that he will not directly or indirectly render any services of a commercial or professional nature to any person or organization other than the Company (except as is necessary or appropriate in carrying out his duties hereunder) whether for compensation or otherwise and except as otherwise provided in Section 2 of this Agreement. 9.2 Noncompetition. Executive agrees that he will not, other than in the course of performing his duties hereunder, and provided that the Company is in material compliance with all applicable terms of Sections 7.1, 7.2, 7.4, 7.6, or 7.9 above as the case may be, at any time during the Restricted Period set forth in Subsection 9.6 below and in the "Territory," either directly or indirectly, by or for himself or for any other person, partnership, corporation, trust, or company, "Participate" (as defined below) in any business or enterprise involved in a product, process or service similar to those developed, produced or provided by the Company (or any Affiliate as defined in section 7.8 above) or otherwise competitive with the Company's Business (as defined below); provided, however, that this restriction shall not apply if Executive has disclosed to the Company in writing all known facts relating to such work or activity and has received prior written consent of the Board of the Company to engage in such work or activity. The term "Territory" shall mean the world. For purposes of this Agreement, the term "Participate" includes, without limitation, any direct or indirect participation or interest in any business, whether as an officer, director, employee, partner, sole proprietor, stockholder, owner, advisor, consultant, or otherwise, other than by ownership of less than three percent (3%) of the stock of a publicly held corporation whose stock is traded on a national securities exchange or in the over the-counter market. If Executive believes the -8- Company is not in compliance with its obligations under Section 7.1, 7.2, 7.4, 7.6, 7.7 or 7.9 above, as the case may be, Executive shall deliver written notice to the Company describing the noncompliance. The Company shall have ten (10) business days after receipt of such notice in which to cure. If the Company fails to cure, Executive shall be released from the obligations under this Section 9.2 effective on the 11th business day following delivery of the written notice. 9.3 Noninterference. Provided that that Company is in material compliance with all applicable terms of Sections 7.1, 7.2, 7.4, 7.6, or 7.9 above as the case may be, during any portion of the Restricted Period, other than in the course of performing his duties hereunder, Executive will not (a) induce or attempt to induce any other employee of the Company to leave the employ of the Company or in any way interfere with the relationship between the Company and any other employee of the Company, nor will he assist others in doing so or (b) induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company to cease doing business with the Company, nor will he assist others in doing so. If Executive believes the Company is not in compliance with its obligations under Section 7.1, 7.2, 7.4, 7.6, 7.7 or 7.9 above, as the case may be, Executive shall deliver written notice to the Company describing the noncompliance. The Company shall have ten (10) business days after receipt of such notice in which to cure. If the Company fails to cure, Executive shall be released from the obligations under this Section 9.3 effective on the 11th business day following delivery of the written notice. 9.4 Business Opportunity. Executive shall, during the term of his employment with the Company, promptly and fully disclose to the Company any business opportunity coming to Executive's attention, or conceived or developed in whole or in part by Executive, which to the best of Executive's knowledge (a) relates to the then current Company Business (as set forth in Section 10.3, below) or (b) is related to the Company's demonstrably anticipated business. Executive shall not at any time exploit such business opportunities for his own gain or that of any person or entity other than the Company or an affiliate or subsidiary of the Company. 9.5 Covenants Reasonable. The Executive acknowledges and agrees that the covenants in this Section 9 are reasonable in relation to the position Executive has been afforded with the Company and are a material inducement for the Company to enter into the Agreement. However, should any court find that any provision of such covenants is unreasonable, whether in period of time, geographical area, scope of activity, or otherwise, then in that event the parties agree that such covenants shall be interpreted and enforced to the maximum extent which the court deems reasonable. 9.6 Term of Noncompetition. The term of the covenants set forth in Subsections 9.2 and 9.3 (the "'Restricted Period") shall begin upon the execution of this Agreement by the Executive and continue for a period of one (1) year from the date on which Executive's employment is terminated with the Company for any reason. 10. Nondisclosure. 10.1 Executive acknowledges that the Company's business and future success depends on the preservation of the trade secrets and other confidential information of the Company and its suppliers and customers (the "Secrets"). The Secrets may include, without limitation, existing and to-be-developed or acquired source codes, flow charts, product designs, new product plans or ideas, technologies, market surveys, the identities of past, present, or potential customers, -9- vendors or investors, business and financial information, pricing methods or data, contract information, marketing plans, personnel information, procedural and technical manuals and practices, servicing routines, and parts and supplier lists proprietary to the Company or its customers or suppliers, and any other sorts of items or information of the Company or its customers or suppliers which are not generally known to the public at large. Executive agrees to protect and to preserve as confidential during and after the term of his employment all of the Secrets at any time known to Executive or in his possession or control (whether wholly or partially developed by Executive or provided to Executive, and whether embodied in a tangible medium or merely remembered). 10.2 Executive shall not knowingly use or allow any other person to use any of the Secrets in any way except (a) in the course of performing his duties hereunder, (b) to the extent Secrets become known in the industry or by the public (other than through a breach of the Agreement by Executive) or (c) to the extent required by a statute, by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information. All material containing or disclosing any portion of the Secrets shall be, and remain the property of, the Company and shall be returned to the Company upon the termination of Executive's employment or the earlier request of another officer of the Company or Chairman of the Board. At such time, Executive shall also assemble all tangible items of work in progress, notes, plans, and other materials related in any way to the Company's Business except personal diaries, rolodexes or similar records of a personal nature, and will promptly deliver such items to the Company. 10.3 Executive's covenants in this Section shall supplement, and shall not supplant, any other rights or remedies the Company may have under applicable law for the protection of its properties and trade secrets. For purposes of this Agreement, the "Company Business" shall mean any of the following activities undertaken to support wireless transmission or reception techniques, products and services such as, but not limited to the development of related technologies or techniques, manufacturing, servicing, operation of wireless equipment and/or systems, including free space optical technology or techniques, marketing and selling voice and/or data and/or video transmission and/or wireless networking equipment or services, whether bi-directional and/or broadcast, and other related wireless transmission/reception techniques and/or media. Further, in the event that the Company should expand the scope of the Company Business during the Term of this Agreement, either by acquisition or organic growth, any such new business activities or technologies shall also be added to the term "Company Business." 11. Intellectual Properties. 11.1 All ownership, copyright, patent, trade secrecy, and other rights in all works, programs, fixes, routines, inventions, ideas, designs, manuals, improvements, discoveries, processes, or other properties (the "Intellectual Properties") made or conceived by Executive and relating to the Company's Business during the term of his employment by the Company shall be the rights and property solely of the Company, whether developed independently by Executive or jointly with others, and whether or not developed or conceived during regular working hours or at the Company's facilities, and whether or not the Company uses, registers, or markets the same. To the extent any such works may be considered "works made for hire" under the Copyright Act, they are hereby agreed to be works made for hire; otherwise, Executive hereby irrevocably -10- assigns and conveys all such rights, title, and interests to the Company, subject to no liens, claims, or reserved rights. 11.2 Executive will assist the Company as requested during and after the term of his employment to further evidence and perfect, and to enforce, the Company's rights in and ownership of the Intellectual Properties covered hereby, including without limitation, the execution of additional instruments of conveyance and assisting the Company with applications for patents or copyright or other registrations provided that Executive shall be reimbursed any expenses he incurs in meeting the obligations pursuant to this Section 11.2. 11.3 Notwithstanding the foregoing, the provisions of this Section 11 shall not apply to or assign to the Company any of Executive's rights in any invention for which no equipment, supplies, facilities, or trade secret information of the Company was used, and which was developed entirely on Executive's own time, unless the invention: (a) relates, at the time of conception or reduction to practice of the invention, directly to the Company's Business or to the Company's actual or demonstrably anticipated research or development; or (b) results from any work performed by Executive for the Company. 12. Assignment. This Agreement will be binding on and inure to the benefit of the parties and each of their respective affiliates, legal representatives, successors, and assigns. The Company may not assign or transfer its rights under this Agreement except in the case of a transfer or sale of all or substantially all of the assets of the Company or its merger or consolidation into another company. In no event will Executive's obligations to perform future services for the Company or its affiliates be delegable or transferable. 13. Remedies. 13.1 Equitable Relief. Executive acknowledges that any violation by him of Sections 9, 10 or 11 of this Agreement may cause the Company injury. The Company (acting through its Board) acknowledges that any violation by the Company of this Agreement may cause Executive injury. Therefore, each party separately agrees that the injured party will be entitled, in addition to any remedies it may have under this Agreement or at law, to injunctive and other equitable relief to prevent or curtail any breach of this Agreement by the other party. 13.2 Severability. The provisions of this Agreement will be deemed to be severable. The invalidating of any one provision by a court of competent jurisdiction will not invalidate any other provision. If a court of competent jurisdiction determines that any of the restrictions contained in this Agreement is unreasonable, such court is free to impose and is authorized to enforce any lesser restriction or restrictions determined by it to be reasonable. Inclusion in the Agreement of this Subsection 13.2 will not in any way be deemed to be a waiver, renunciation, or denial by either party of Executive's agreement contained in Subsection 13.4 below. 13.3 Survival of Remedies. Executive agrees that his covenants and agreements made in and the requirements imposed on him by Sections 9, 10 and 11 and this Section 13 will be construed as an agreement independent of any of the provisions of this Agreement as set forth in the respective provisions. The existence of any claim or cause of action of Executive against the Company or any of its Affiliates, irrespective of whether predicated on the terms of this Agreement, will not constitute a defense to the enforcement of the covenants and agreements -11- of Executive contained in Sections 9, 10 and 11 or the requirements imposed on him by this Section 13. 13.4 Fairness. Executive acknowledges that he has carefully read and reviewed the provisions of this Agreement, including the provisions contained in Sections 9, 10 and 11 and this Section 13, has been granted the opportunity to discuss the meaning and effect of these provisions with counsel, and agrees that they are fair and reasonable. 13.5 Arbitration. Any controversy or claim arising out of or relating to this Agreement shall be settled exclusively by final and binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (" AAA ") then in effect, conducted by a panel of three (3) arbitrators, either mutually agreed upon by the parties or selected in accordance with the AAA Rules, and judgment on any award rendered by the arbitrator(s) may be entered in any court having proper jurisdiction. This Subsection 13.5 does not limit a party's right to seek preliminary injunctive or other equitable relief as provided in Subsection 13.1 from a court or an arbitrator pending arbitral determination of controversies or claims under this Subsection 13.5. Each party to the dispute shall be responsible for its own cost of the arbitration, including attorney fees pertaining to the dispute. Further, the Company will continue to provide the Executive with benefit coverage during the arbitration proceedings to the extent otherwise required by this Agreement. 14. General Provisions. 14.1 Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia without regard to its principles of conflicts of laws. 14.2 Modifications. No amendment, modification, or waiver of this Agreement will be binding or effective for any purpose unless it is made in a writing signed by the party against which or whom enforcement of such amendment, modification, or waiver is sought. Any amendment, modification, or waiver by the Company must be approved by a majority of the Board (excluding Executive) to be valid. The course of dealing between the parties will not be deemed to affect, modify, amend, or discharge any provision or term of this Agreement. A delay on the part of either party in the exercise of its or his rights or remedies will not operate as a waiver of such rights or remedies, and a single or partial exercise by a party of any such right or remedy will not preclude other or further exercises of that right or remedy. A waiver of right or remedy on anyone occasion will not be construed as a bar to or waiver of any such right or remedy on any other occasion. 14.3 Construction. This Agreement contains the entire agreement between the parties with respect to its subject matter. Its language is and will be deemed to be the language chosen by the parties jointly to express their mutual intent. No rule of construction based on which party drafted the Agreement or certain of its provisions will be applied against either party. 14.4 Headings. All titles and headings used in this Agreement are solely for convenience and shall not in any way affect the interpretation of this Agreement. 14.5 Nonwaiver. Failure of either party to insist upon or to enforce strict performance of any provision of this Agreement or to exercise any right, remedy or provision of this Agreement -12- will not be construed as a waiver to any extent of such party's rights under this Agreement, and such provision shall remain in full force and effect. 14.6 Notice. All notice required by the terms of this Agreement will be given in writing and delivered personally by registered or certified mail or by overnight courier service (charges prepaid), addressed as follows: If to the Company, to the then-current address of its general corporate offices, to the attention of the Corporate Secretary; and if to Executive, to his residence address as last reflected on the records of the Company. 14.7 Company Representation. The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement, that the performance of its obligations pursuant to this Agreement will not violate any agreement between it and any other firm or organization or the Certificate of Incorporation or the Bylaws of the Company and that this Agreement has been duly authorized and approved by the Board. IN WITNESS WHEREOF, the parties have executed and entered into this Agreement on the date set forth above. "COMPANY" "EXECUTIVE" By: /s/ David L. Renauld By: /s/ Robert E. Fitzgerald -------------------- ------------------------ David L. Renauld - V.P, Legal Robert E. Fitzgerald Date: February 10, 2005 Date: February 9, 2005 -13- EX-10.5 6 ex10-5.txt Exhibit 10.5 NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of February 9, 2005 between YDI WIRELESS, INC., a corporation organized under the laws of the State of Delaware (hereinafter called the "Corporation"), and Robert E. Fitzgerald (hereinafter referred to as the "Employee"). WHEREAS, the Employee is in the employ of the Corporation or one of its affiliates and the Corporation considers it desirable and in its best interests to encourage the Employee as an eligible employee under its 2004 Stock Plan (the "Plan") to remain in such employ and to motivate the Employee to exert the Employee's best efforts on behalf of the Corporation and its affiliates; NOW, THEREFORE, it is agreed as follows: 1. Grant of Option. The Corporation hereby grants to the Employee as of the date of this Agreement ("Date of Grant") the right, privilege and option to purchase not more than Five Hundred Thousand (500,000) shares (the "Grant Number") of the Common Stock of the Corporation, par value $.01 per share, as constituted on the date of this Agreement pursuant to the terms, provisions and conditions of the Plan which is incorporated herein and made a part hereof by reference as if fully set forth herein at length and subject to the terms, provisions and conditions set forth below. 2. Option Price. The option price per share of Common Stock as constituted on the date of this Agreement, as determined in accordance with the Plan, shall be $3.34 per share. 3. Time of Exercise; Acceleration. This option will vest as to forty percent (40%) of the Grant Number on the Date of Grant and as to an additional twenty percent (20%) of the Grant Number on each of the first three annual anniversaries of the Date of Grant (the day on which any options are scheduled to vest under this Agreement is referred to in this Agreement as a "Vesting Date"); provided, however, that upon the termination of the Employee's employment pursuant to Section 7.2 or 7.6 of the Employment Agreement, dated as of February 9, 2005 (the "Employment Agreement"), between the Corporation and the Employee within a six (6) month period following or at any time within the three (3) month period prior to a Change in Control (as that term is defined in the Employment Agreement), all unvested options will be immediately vested (subject to the Employee performing his obligations under Section 7.11(b) of the Employment Agreement). Notwithstanding the foregoing sentence, (a) the number of options that will vest on each Vesting Date, if other than a whole number, will be rounded down to the nearest whole number and (b) any fractional options resulting from the preceding clause will vest on the ninth Vesting Date. Only vested stock options may be exercised. This option may be exercised in whole or in part as to shares which have vested for not in excess of the difference between (i) the total number of shares then vested and (ii) the total number of shares as to which the option has been previously exercised. No partial exercise of this option within any year may be for less than 100 shares (or the remaining shares purchasable under this option if less than 100 shares). 4. Method of Exercise. This option shall be exercisable from time to time as provided above by written notice in the form of Exhibit "A", signed by the person entitled to exercise the option, setting forth in terms of shares of Stock as constituted on the date of this Agreement, the number of shares as to which this option is being exercised. Such notice shall be delivered to the Corporation at its principal place of business and be accompanied by the purchase price. Alternatively, the person entitled to exercise the option may exercise the option and pay the purchase price by any other method that may be authorized by the Corporation from time to time. The Corporation shall make prompt delivery of the shares of Stock as to which the option is exercised against payment of the purchase price; provided, however, that if any law or regulation requires the Corporation to take any action with respect to the Stock before the issuance thereof, then the date of delivery of the Stock shall be extended for the period necessary to take such action. 5. Further Limitations on Exercise. A. Termination of Employment. (i) If Employee's employment with or service to the Corporation terminates pursuant to Section 7.2 or 7.6 of the Employment Agreement, (a) no further vesting of this option will occur subsequent to the date of termination (except to the extent provided in Section 3 above), and (b) this option will terminate on the date twelve months after the date of termination or on the option's specified expiration date, if earlier (provided that the Employee has performed his obligations under Section 7.11(b) of the Employment Agreement). Nothing in this Agreement will be deemed to give the Employee the right to continued employment with the Corporation. (ii) If Employee's employment or other service to the Corporation is terminated due to the Employee's death or Total Disability (as that term is defined in the Employment Agreement), this option may be exercised, up to that portion of the option which the Employee could have exercised on the date of death or Total Disability, by the Employee, or in the case of death, the Employee's estate, personal representative or any beneficiary who has acquired the option by will or by the laws of descent and distribution, at any time prior to the earlier of the specified expiration date of this option or one year after the Employee's death or Total Disability. (iii) If Employee's employment with or service to the Corporation terminates or is terminated in any manner or for any reason such that the provisions of neither Section 5(A)(i) nor Section 5(A)(ii) apply, (a) no further vesting of this option will occur subsequent to the date of termination, and (b) this option will terminate on the date three months after the date of termination or on the option's specified expiration date, if earlier. Nothing in this Agreement will be deemed to give the Employee the right to continued employment with the Corporation. 2 B. Condition to Exercise. As a condition of the Corporation's obligation to issue Stock upon exercise of this option, the Employee or other person entitled to exercise this option, if requested by the Corporation, shall concurrently with the exercise of this option execute an Agreement Not to Compete with the Corporation (in such form as adopted by the Corporation from time to time), which obligates the Employee to refrain from certain activities (if the person exercising the option has not already executed such an agreement). C. Payment. The option price shall be paid as follows: (i) by check, and/or (ii) to the extent the Stock is publicly traded, by delivery to the Corporation by the Employee of Stock already owned by such Employee, properly endorsed and having a fair market value equal to the purchase price (if permitted by the Corporation) and/or (iii) in any other manner permitted by the Corporation from time to time. For purposes of this Section 5(C), the market value of such stock to be delivered to the Corporation in payment of the option price shall be determined in accordance with the Plan. D. Non-Transferability. This option is not transferable by the Employee, except by will or by laws of descent and distribution, and is exercisable during the Employee's lifetime only by the Employee. E. Adjustment. If a dividend is declared upon the Stock payable in Stock, then the shares of Stock then subject to this option (and the number of shares reserved for issuance) shall be increased proportionately without any change in the aggregate purchase price. If the outstanding Stock is changed into or exchanged for a different number or class of shares of stock of the Corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) there shall be substituted for each such share of Stock then subject to this option (and for each share reserved for issuance) the number and class of shares of Stock into which each outstanding share of Stock is so changed or exchanged, all without any change in the aggregate purchase price for the shares then subject to this option and (ii) the vesting schedule set forth in Section 3 above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. F. Withholding Taxes. Whenever under this Agreement Stock is to be issued, the Corporation shall have the right to require the recipient to remit to the Corporation an amount sufficient to satisfy federal, state and local withholding tax requirements prior to delivery of any certificate or certificates representing the Stock. 6. Stock Ownership. An optionee shall be entitled to the privilege of stock ownership only as to such shares of Stock as are issued upon exercise of this option. 7. Requirements of Law. The granting of this option and issuance of shares of Stock upon the exercise of this option shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of such shares. 8. Expiration Date. This option and all rights granted in this Agreement shall, in all events, expire five (5) years from the Date of Grant. 3 9. Legend. The Employee hereby agrees that the stock certificates delivered upon exercise of this option may bear a legend or legends in the form designated by the Corporation to ensure compliance with legal or contractual restrictions. 10. Definitions. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the same meanings as in the Plan. The term "Stock" shall mean shares of Common Stock of the Corporation as constituted on the date of this Agreement and such other stock as shall be substituted therefor or issued thereon as provided in Section 5(E) above or as shall be substituted for or issued upon or in exchange for Stock issued pursuant to the options. 11. Notices. All notices under this Agreement shall be sufficient if in writing and delivered in hand or mailed, registered or certified mail, postage prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 8000 Lee Highway, Falls Church, VA 22042, Attn: Chief Financial Officer or to the Employee at the address set forth under the Employee's signature below. Either party may change the address to which notices shall be delivered by like notice given at least ten (10) days before the effective date of such change of address. 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Employee, his legal representatives, heirs, legatees and assigns. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument all as of the date and year first above written. YDI WIRELESS, INC. By: /s/ David L. Renauld ---------------------------------- Title: Vice President ------------------------------- EMPLOYEE /s/ Robert E. Fitzgerald ------------------------------------- Name: Robert E. Fitzgerald 3011 Cedarwood Lane Falls Church, VA 22042 4 EXHIBIT A --------- --------------------------------- (date) YDI WIRELESS, INC. 20 Industrial Drive East South Deerfield, MA 01373 Ladies and Gentlemen: I wish to exercise my option to purchase ____________ shares of common stock, par value $.01 per share (the "Securities") at a price of $3.34 per share pursuant to the Non-Qualified Stock Option Agreement dated as of February 9, 2005 (the "Agreement") under the Corporation's 2004 Stock Plan. _____ I enclose herewith my check for $_____________________ (the exercise amount). _____ I am paying the exercise price by the following means which has been approved by the Corporation:___________________________________________________ ______________________________________________________________________________. I understand that prior to exercising any options I must have signed an Agreement Not to Compete with the Corporation (if requested by the Corporation) in the form adopted by the Corporation from time to time. I further agree that I will not make any sales or other transfers or dispositions of the securities covered by this letter during the time period following the closing of any public offering by the Corporation of its securities requested by the underwriter or, in the absence of such request, ninety (90) days. Very truly yours, By: - -------------------------- ------------------------------------- (Social Security Number) (Employee) Address to which certificates are to be sent Employee's Home Address: (complete ONLY if different than home address): - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- 5 EX-10.6 7 ex10-6.txt Exhibit 10.6 INCENTIVE STOCK OPTION AGREEMENT -------------------------------- THIS INCENTIVE STOCK OPTION AGREEMENT is made as of ____________ ___, 20__ between YDI WIRELESS, INC., a corporation organized under the laws of the State of Delaware (hereinafter called the "Corporation"), and _____________________ (hereinafter referred to as the "Employee"). WHEREAS, the Employee is in the employ of the Corporation or one of its affiliates and the Corporation considers it desirable and in its best interests to encourage the Employee as an eligible employee under its 2004 Stock Plan (the "Plan") to remain in such employ and to motivate the Employee to exert the Employee's best efforts on behalf of the Corporation and its affiliates; NOW, THEREFORE, it is agreed as follows: 1. Grant of Option. The Corporation hereby grants to the Employee as of the date of this Agreement ("Date of Grant") the right, privilege and option to purchase not more than ____________ shares (the "Grant Number") of the Common Stock of the Corporation, par value $.01 per share, as constituted on the date of this Agreement pursuant to the terms, provisions and conditions of the Plan which is incorporated herein and made a part hereof by reference as if fully set forth herein at length and subject to the terms, provisions and conditions set forth below. 2. Option Price. The option price per share of Common Stock as constituted on the date of this Agreement, as determined in accordance with the Plan, shall be $________ per share. 3. Time of Exercise; Acceleration. This option will vest as to thirty-four percent (34%) of the Grant Number on the first annual anniversary of the Date of Grant and then as to eight and one-quarter percent (8.25%) of the Grant Number on each quarterly anniversary of the Date of Grant (after the first annual anniversary of the Date of Grant) until the option has vested in full (the day on which any options are scheduled to vest under this Agreement is referred to in this Agreement as a "Vesting Date"); provided, however, that upon the event of (i) the completion of a merger or consolidation of the Corporation with any other entity, (ii) the sale of substantially all of the Corporation's assets to another entity, or (iii) the sale of more than 50% of the outstanding capital stock of the Corporation to an unrelated person or group of persons acting collectively in one or a series of transactions, fifty percent (50%) of the unvested options that would have vested on each Vesting Date (rounded down to the nearest whole number if necessary) will be immediately vested. Notwithstanding the foregoing sentence, (a) the number of options that will vest on each Vesting Date, if other than a whole number, will be rounded down to the nearest whole number and (b) any fractional options resulting from the preceding clause will vest on the ninth Vesting Date. Only vested stock options may be exercised. This option may be exercised in whole or in part as to shares which have vested for not in excess of the difference between (i) the total number of shares then vested and (ii) the total number of shares as to which the option has been previously exercised. No partial exercise of this option within any year may be for less than 100 shares (or the remaining shares purchasable under this option if less than 100 shares). 4. Method of Exercise. This option shall be exercisable from time to time as provided above by written notice in the form of Exhibit "A", signed by the person entitled to exercise the option, setting forth in terms of shares of Stock as constituted on the date of this Agreement, the number of shares as to which this option is being exercised. Such notice shall be delivered to the Corporation at its principal place of business and be accompanied by the purchase price. Alternatively, the person entitled to exercise the option may exercise the option and pay the purchase price by any other method that may be authorized by the Corporation from time to time. The Corporation shall make prompt delivery of the shares of Stock as to which the option is exercised against payment of the purchase price; provided, however, that if any law or regulation requires the Corporation to take any action with respect to the Stock before the issuance thereof, then the date of delivery of the Stock shall be extended for the period necessary to take such action. 5. Further Limitations on Exercise. A. Termination of Employment. (i) If Employee's employment with or service to the Corporation terminates other than by reason of death or Disability, (a) no further vesting of this option will occur subsequent to the date of termination, and (b) this option will terminate on the date three months after the date of termination or on the option's specified expiration date, if earlier. Nothing in this Agreement will be deemed to give the Employee the right to continued employment with the Corporation. (ii) If Employee's employment or other service to the Corporation is terminated due to the Employee's death or Disability, this option may be exercised, up to that portion of the option which the Employee could have exercised on the date of death or Disability, by the Employee, or in the case of death, the Employee's estate, personal representative or any beneficiary who has acquired the option by will or by the laws of descent and distribution, at any time prior to the earlier of the specified expiration date of this option or one year after the Employee's death or Disability. B. Condition to Exercise. As a condition of the Corporation's obligation to issue Stock upon exercise of this option, the Employee or other person entitled to exercise this option, if requested by the Corporation, shall concurrently with the exercise of this option execute an Agreement Not to Compete with the Corporation (in such form as adopted by the Corporation from time to time), which obligates the Employee to refrain from certain activities (if the person exercising the option has not already executed such an agreement). C. Payment. The option price shall be paid as follows: (i) by check, and/or (ii) to the extent the Stock is publicly traded, by delivery to the Corporation by the Employee of Stock already owned by such Employee, properly endorsed and having a fair market value equal to the purchase price (if permitted by the Corporation) and/or (iii) in any other manner permitted 2 by the Corporation from time to time. For purposes of this Section 5(C), the market value of such stock to be delivered to the Corporation in payment of the option price shall be determined in accordance with the Plan. D. Non-Transferability. This option is not transferable by the Employee, except by will or by laws of descent and distribution, and is exercisable during the Employee's lifetime only by the Employee. E. Adjustment. If a dividend is declared upon the Stock payable in Stock, then the shares of Stock then subject to this option (and the number of shares reserved for issuance) shall be increased proportionately without any change in the aggregate purchase price. If the outstanding Stock is changed into or exchanged for a different number or class of shares of stock of the Corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) there shall be substituted for each such share of Stock then subject to this option (and for each share reserved for issuance) the number and class of shares of Stock into which each outstanding share of Stock is so changed or exchanged, all without any change in the aggregate purchase price for the shares then subject to this option and (ii) the vesting schedule set forth in Section 3 above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. F. Withholding Taxes. Whenever under this Agreement Stock is to be issued, the Corporation shall have the right to require the recipient to remit to the Corporation an amount sufficient to satisfy federal, state and local withholding tax requirements prior to delivery of any certificate or certificates representing the Stock. 6. Stock Ownership. An optionee shall be entitled to the privilege of stock ownership only as to such shares of Stock as are issued upon exercise of this option. 7. Requirements of Law. The granting of this option and issuance of shares of Stock upon the exercise of this option shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of such shares. 8. Expiration Date. This option and all rights granted in this Agreement shall, in all events, expire five (5) years from the Date of Grant. 9. Legend. The Employee hereby agrees that the stock certificates delivered upon exercise of this option may bear a legend or legends in the form designated by the Corporation to ensure compliance with legal or contractual restrictions. 10. Definitions. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the same meanings as in the Plan. The term "Stock" shall mean shares of Common Stock of the Corporation as constituted on the date of this Agreement and such other stock as shall be substituted therefor or issued thereon as provided in Section 5(E) above or as shall be substituted for or issued upon or in exchange for Stock issued pursuant to the options. 3 11. Disposition of Stock. The Employee acknowledges that the "incentive stock option" rules set forth in Section 422 of the Internal Revenue Code of 1986, as amended, will not be applicable to any Stock issued to the Employee pursuant to this Agreement if such Stock is disposed of either within two (2) years of the Date of Grant or within one (1) year of the issuance of such Stock to the Employee. The Employee shall give the Corporation prompt notice of a Disqualifying Disposition. 12. Notices. All notices under this Agreement shall be sufficient if in writing and delivered in hand or mailed, registered or certified mail, postage prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 8000 Lee Highway, Falls Church, VA 22042, Attn: Chief Financial Officer or to the Employee at the address set forth under the Employee's signature below. Either party may change the address to which notices shall be delivered by like notice given at least ten (10) days before the effective date of such change of address. 13. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Employee, his legal representatives, heirs, legatees and assigns. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument all as of the date and year first above written. YDI WIRELESS, INC. By: ----------------------------------- Title: -------------------------------- EMPLOYEE -------------------------------------- Name: -------------------------- -------------------------- -------------------------- 4 EXHIBIT A --------- --------------------------------- (date) YDI WIRELESS, INC. 20 Industrial Drive East South Deerfield, MA 01373 Ladies and Gentlemen: I wish to exercise my option to purchase ____________ shares of common stock, par value $.01 per share (the "Securities") at a price of $________ per share pursuant to the Incentive Stock Option Agreement dated as of _____________ ___, 20__ (the "Agreement") under the Corporation's 2004 Stock Plan. Check one of the following boxes: |_| I have enclosed a check for $_____________________ (the exercise amount). |_| I am paying the exercise price by the following means which has been approved by the Corporation:___________________________________________________ ______________________________________________________________________________. I understand that prior to exercising any options I must have signed an Agreement Not to Compete with the Corporation (if requested by the Corporation) in the form adopted by the Corporation from time to time. I further agree that I will not make any sales or other transfers or dispositions of the securities covered by this letter during the time period following the closing of any public offering by the Corporation of its securities requested by the underwriter or, in the absence of such request, ninety (90) days. Very truly yours, By: - -------------------------------- ---------------------------------------- Employee Social Security Number Employee Signature (on line above) Employee Name (printed):________________ Address to which certificates are to be sent Employee's Home Address: (complete ONLY if different than home address): - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- - ----------------------------- ----------------------------------------------- 5 -----END PRIVACY-ENHANCED MESSAGE-----