Exhibit 10.17
October 29, 2019
Robert Plaschke
Re:Transition and Separation Agreement
Dear Bob:
This letter (the “Agreement”) sets forth the terms and conditions that Sonim Technologies, Inc. (the “Company” or “Sonim”) is offering to aid in your employment transition.
1. EMPLOYMENT AND TRANSITION PERIOD. As discussed, your service as Chief Executive Officer (“CEO”) of Sonim ended effective October 29, 2019 (the “Transition Date”), as of which date the Company’s Board of Directors (the “Board”) elected a new CEO. Subject to the terms of this Agreement, you will remain employed by the Company as a Senior Advisor to the Board as described below from the Transition Date through April 30, 2020 (or such earlier date as your employment may be terminated by you or the Company pursuant to Section 1(i) (Early Termination) below) (the “Separation Date”). Additionally, you hereby resign from the Board effective as of the Transition Date. The period from the Transition Date through the Separation Date shall be deemed the “Transition Period” and your continued employment shall be subject to the following terms:
(a) Title/Position. As of the Transition Date, your title shall change to “Senior Advisor,” and you agree that you will be deemed to have resigned from any other office or position you may hold within the Company, except that you will remain employed through the Separation Date as contemplated in this Agreement. You agree to provide any documentation requested by the Company to confirm any such resignation. You further agree that after the Transition Date, you will not have authority to bind the Company and shall not purport to bind the Company to any representation, promise, or agreement, except with the prior written consent of the Company’s CEO.
(b) Duties. During the Transition Period, you shall be responsible for providing transition information to the CEO and other Sonim personnel, including electronic files, a written briefing, face to face meetings, and personal assistance in transitioning key customer relationships, as requested, with respect to any matters about which you are knowledgeable; and you shall remain available, as requested, to assist with management, oversight, or execution with respect to projects and matters in which you have been involved and to work to finalize deals with customers in which you have been involved (collectively, the “Transition Duties”). You agree to make yourself available to perform Transition Duties for up to 40 hours per week for the duration of Transition Period.
(c) Compensation. During the Transition Period, you will continue to be paid the same base salary now in effect, on the Company’s normal employee payroll schedule, subject to standard deductions and withholdings.
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(d) Benefits. During the Transition Period, you will be eligible to receive the same employment benefits made available to the Company’s employees generally, in accordance with the terms and conditions of the Company’s benefit plans and policies which may be in effect from time to time and may utilize any and all vacation or paid time off benefits available to you under the Company’s policies.
(e) Equity. Any outstanding unvested equity awards shall continue to vest during the Transition Period and, if the Company terminates the Transition Period without Cause pursuant to Section 1(i) below, then a portion of your outstanding unvested equity awards shall accelerate and vest, at the date of such termination, to the same extent as they would have vested had you remained in service until April 30, 2020, subject to your satisfaction of the conditions for receipt of the Severance Benefits (as set forth below). If you resign your employment during the Transition Period, no amount of unvested equity awards shall be accelerated.
(f) Facilities. During the Transition Period, you shall have continued use of a workspace at the Company’s offices, but will not be required to work from the Company’s offices except as requested by the CEO. During the Transition Period, you shall have continued use of your Sonim email and voicemail accounts, and you will be expected to perform Transition Duties using such accounts. After the Separation Date, you shall no longer have access to your Sonim email and voicemail accounts, and you shall provide the Company access and passwords to facilitate monitoring of such accounts by the Company thereafter to ensure Sonim business matters are timely handled. Upon the Separation Date, an automatic reply message shall be set on your Sonim email account, and an out of office greeting shall be recorded on your Sonim voicemail account, both of which shall be mutually-agreed between you and the Company.
(g) Outside Activities. During the Transition Period, you may enter into other employment or consulting relationships or otherwise provide services to or engage in business activities for other persons and entities (collectively, “Outside Activities”), provided that such Outside Activities do not: (i) interfere with your availability to perform the Transition Duties; (ii) involve competition with the Company or preparation for such competition; (iii) create an actual, apparent, or potential conflict of interest with the Company, or (iv) harm or threaten to harm the Company’s business or reputation, all as determined in good-faith by the Company in its sole discretion. To ensure compliance with the foregoing provision, you agree not to engage in any Outside Activities without providing specific information to the Board about any such proposed Outside Activities and obtaining the Board’s advance written approval which approval shall not be unreasonably delayed or withheld.
(h) Compliance with Company Policies and Insider Trading Laws. During the Transition Period, you will continue to be required to abide by all Company employment policies and procedures, as adopted or modified from time to time. If requested, you will acknowledge in writing your receipt and understanding of existing, modified, or new Company policies. The Company may modify, suspend, or revoke any such policies in whole or in part, at any time, without advance notice. You further agree to comply with all laws applicable to the Company and your continued service to the Company.
(i) Early Termination. Nothing in this Agreement alters your employment at-will status. Accordingly, during the Transition Period you are entitled to resign your
employment with or without Cause (as defined below) or advance notice, and the Company may terminate your employment with or without Cause or advance notice.
(i) If prior to April 30, 2020, you resign your employment for any reason, then you will be eligible for the Severance Benefits in Section 2 (and not Section 3) as set forth below, provided that you have satisfied the conditions for receipt of the Severance Benefits (as set forth below, including without limitation satisfactory transition of duties during the Transition Period, as determined in good faith by the Board).
(ii) If prior to April 30, 2020, the Company terminates your employment with Cause, then you will no longer be eligible for participation in any Company benefit plans, and you will not be entitled to any Severance Benefits.
(iii) If you remain employed through April 30, 2020 or if the Company terminates your employment without Cause prior to April 30, 2020, you will be eligible for the Severance Benefits in Section 3 (and not Section 2), provided that you have satisfied the conditions for receipt of the Severance Benefits (as set forth below, including without limitation satisfactory transition of duties during the Transition Period, as determined in good faith by the Board).
(j) Definition of Cause. For purposes of this Agreement, “Cause” is defined as any of the following: (i) theft, dishonesty, or falsification of any employment or Company record; (ii) conviction (including any plea of guilty or nolo contendere) of a felony or any criminal act that impairs your ability to perform your duties with the Company; (iii) failure or inability to perform any reasonable assigned duties after written notice from the Board of Directors of the Company of, and a reasonable opportunity to cure (of no fewer than 10 business days), such failure or inability, if capable of cure; (iv) improper disclosure of the Company’s confidential or proprietary information; (v) commission of an intentional or grossly negligent act that has a material detrimental effect on the Company’s reputation or business; or (vi) any material breach of any written agreement with the Company, which breach is not cured pursuant to the terms of such agreement (or, if no cure provision is specified therein, after written notice from the Board of Directors of the Company of such breach providing no fewer than 10 business days to cure), if capable of cure, or a material breach of a confidentiality or proprietary information and inventions agreement, which breach shall be deemed non-curable.
(k) Final Pay and Benefits. On the Separation Date, you will cease to be employed by or hold any office or position with the Company and the Company will pay you all accrued wages, including all accrued and unused paid time off earned through the Separation Date, subject to standard payroll deductions and withholdings. You are entitled to these payments by law.
2.SEVERANCE BENEFITS IF RESIGNATION FOR ANY REASON BEFORE APRIL 30,
2020. If prior to April 30, 2020, you resign your employment for any reason, and: you (i) timely
sign and return this Agreement to the Company, (ii) comply fully with your obligations hereunder (including without limitation satisfactorily transitioning your duties during the Transition Period); and (iii) within twenty-one (21) days after the Separation Date, execute and return to the Company the a release of claims in the form attached hereto as Exhibit A (the
“Separation Date Release”) and allow the Separation Date Release to become effective, then, you and the Company agree that, in full satisfaction of any obligations for the Company to provide you with severance benefits as stated in the Employment Agreement between you and the Company dated August 18, 2018 (the “Offer Letter”), the Company will provide you with the following severance benefits:
(a) Cash Severance. The Company will pay you salary continuation as if you remained employed through April 30, 2020, at your base salary in effect as of the Separation Date, subject to standard payroll deductions and withholdings (“Early Termination Severance Pay”). Your Early Termination Severance Pay will be paid in the form of salary continuation payments. The salary continuation payments will be paid in equal installments on the Company’s regular payroll schedule and will be subject to applicable tax withholdings over the period beginning on the Separation Date and ending on April 30, 2020; provided, however, that no payments will be paid prior to the 30th day following the Separation Date. On the 30th day following your Separation Date, the Company will pay you in a lump sum the salary continuation payments that you would have received on or prior to such date under the original schedule but for the delay while waiting for the 30th day in compliance with Section 409A of the Code and the effectiveness of the release, with the balance of the salary continuation payments being paid as originally scheduled.
(b)Health Care Continuation Coverage.
(i) COBRA. To the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.
(ii) COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will pay your COBRA premiums to continue your coverage (including coverage for eligible dependents, if applicable) (“COBRA Premiums”) through the period (the “COBRA Premium Period”) starting on the Separation Date and ending on the earliest to occur of: (i) April 30, 2020; (ii) the date you become eligible for group health insurance coverage through a new employer; or (iii) the date you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer's group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company in writing of such event.
(iii) Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without a substantial risk of violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall pay to you, on the first day of each calendar month, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including premiums for you and your eligible dependents who have elected and remain enrolled in such COBRA coverage), subject to applicable tax withholdings (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash
Payments toward the cost of COBRA premiums. On the thirtieth (30th) day following your Separation from Service, the Company will make the first payment to you under this paragraph, in a lump sum, equal to the aggregate Special Cash Payments that the Company would have paid to you through such date had the Special Cash Payments commenced on the first day of the first month following the Separation from Service through such thirtieth (30th) day, with the balance of the Special Cash Payments paid thereafter on the schedule described above.
3.SEVERANCE BENEFITS IF THE TRANSITION PERIOD ENDS ON APRIL 30, 2020
OR TERMINATION WITHOUT CAUSE PRIOR THERETO. If, prior to April 30, 2020, the Company
terminates your employment without Cause, or, if you remain employed through April 30, 2020, and: you (i) timely sign and return this Agreement to the Company, (ii) comply fully with your obligations hereunder (including without limitation satisfactorily transitioning your duties during the Transition Period through April 30, 2020); and (iii) within twenty-one (21) days after the Separation Date, execute and return to the Company the Separation Date Release and allow the Separation Date Release to become effective, then, you and the Company agree that, in full satisfaction of any obligations for the Company to provide you with severance benefits as stated in the Offer Letter, the Company will provide you with the following severance benefits:
(a)Severance.
(i) If, prior to April 30, 2020, the Company terminates your employment without Cause, the Company will pay you salary continuation as if you remained employed through April 30, 2020, at your base salary in effect as of the Separation Date, subject to standard payroll deductions and withholdings; and
(ii) Regardless of payments under Section 3(a)(i) above, if any, the Company will pay you a lump sum amount equal to not less than three (3), but no more than six (6), months of your base salary, subject to standard payroll deductions and withholdings (excluding payments under Section 3(a)(i), if any, “Full Period Severance Pay”). Your Full Period Severance Pay will be determined by the Board, in its sole discretion, based on your performance as a Senior Advisor during the Transition Period. On the 30th day following the Separation Date, the Company will pay you the Full Period Severance Pay amount that the Board determined to pay to you, in its sole discretion, based on your performance.
(b)Health Care Continuation Coverage.
(i) COBRA. To the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.
(ii) COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will pay your COBRA premiums to continue your coverage (including coverage for eligible dependents, if applicable) (“COBRA Premiums”) through the period (the “COBRA Premium Period”) starting on the Separation Date and ending on the earliest to occur of: (i) July 30, 2020; (ii) the date you become eligible for group health insurance coverage
through a new employer; or (iii) the date you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer's group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company in writing of such event.
(iii) Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without a substantial risk of violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall pay to you, on the first day of each calendar month, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including premiums for you and your eligible dependents who have elected and remain enrolled in such COBRA coverage), subject to applicable tax withholdings (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash Payments toward the cost of COBRA premiums. On the thirtieth (30th) day following your Separation from Service, the Company will make the first payment to you under this paragraph, in a lump sum, equal to the aggregate Special Cash Payments that the Company would have paid to you through such date had the Special Cash Payments commenced on the first day of the first month following the Separation from Service through such thirtieth (30th) day, with the balance of the Special Cash Payments paid thereafter on the schedule described above.
(c) Extended Exercise Period. The Company will agree to extend the exercise period applicable to your stock options until October 30, 2020. To the extent the stock options were granted as “incentive stock options” under the Internal Revenue Code, an extension of the exercise period of the stock options may cause them to lose such status and the stock options instead may be treated as non-qualified stock options for federal tax purposes. This change may be less advantageous to you from a personal tax perspective in certain respects, including an obligation on your part to satisfy any income and employment tax withholding obligations that arise when you exercise the stock options. The Company makes no representation or guarantees regarding the status of your stock options as incentive stock options or otherwise. You acknowledge that the Company is not providing tax advice to you and that you have been advised by the Company to seek independent tax advice with respect to the exercise and modification of the stock options and any other compensation and benefits that you are receiving under this Agreement. You acknowledge and agree that, as a condition to any exercise of your stock options, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company (except for the employer’s share of any FICA), arising by reason of the exercise of your stock options with respect to the vested shares. Except as expressly modified herein, your rights, duties, and obligations with respect to your equity awards (including your right to exercise any vested shares) shall continue to be governed by the terms set forth in the applicable equity plans and agreements.
4. EQUITY. You were granted options to purchase shares of the Company’s common stock, pursuant to the Company’s 2012 Equity Incentive Plan (the “Plan”). Except as specifically provided with respect to accelerated vesting under certain conditions set forth in Section 1(e) above and with respect to an extended exercise period under certain conditions set forth in Section 3(c) above, vesting will cease as of the Separation Date and, your rights to
exercise any vested options shall be as set forth in the applicable stock option grant notice, stock option agreement, and/or the Plan and your options shall continue to be governed by the terms of the applicable grant notices, stock option agreements and the Plan.
5. OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation (including base salary, bonus, incentive compensation, or equity), severance, or benefits after the Separation Date, with the exception of any vested right you may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account) or any vested equity interests.
6. EXPENSE REIMBURSEMENTS. You agree that, within ten (10) days after the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice.
7. RETURN OF PROPERTY. By the Separation Date, you agree to return to the Company all Company documents (and all copies thereof) and other Company property which you have in your possession or control, including, but not limited to, Company files, notes, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, customer lists, prospect information, pipeline reports, sales reports, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, computers, printers, mobile telephones, servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). You agree that you will make a diligent search to locate any such documents, property and information by the Separation Date. If you have used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, within five (5) business days after the Separation Date, you shall provide the Company with a computer-useable copy of such information and then permanently delete and expunge such Company confidential or proprietary information from those systems; and you agree to provide the Company access to your system as requested to verify that the necessary copying and/or deletion is done. Your timely compliance with this paragraph is a condition precedent to your receipt of the Severance Benefits.
8. PROPRIETARY INFORMATION OBLIGATIONS. Both during and after your employment you acknowledge your continuing obligations under your Employee Confidential Information and Invention Assignment Agreement, including your obligations not to use or disclose any confidential or proprietary information of the Company. A copy of your Employee Confidential Information and Invention Assignment Agreement is attached hereto as Exhibit B.
9. NONDISPARAGEMENT. You agree not to disparage the Company and its officers, directors and employees in any manner likely to be harmful to them or their business, business reputations or personal reputations; provided that you may respond accurately and fully to any question, inquiry or request for information when required by legal process (e.g., a valid
subpoena or other similar compulsion of law) or as part of a government investigation. In addition, nothing in this provision or this Agreement is intended to prohibit or restrain you in any manner from making disclosures that are protected under the whistleblower provisions of federal or state law or regulation.
10. NO VOLUNTARY ADVERSE ACTION; COOPERATION. Other than with respect to claims brought on your own behalf with respect to unreleased claims you may have against the Company and with respect to claims of breach of this Agreement (“Claims by You”), you agree that you will not voluntarily provide assistance, information or advice, directly or indirectly (including through agents or attorneys), to any person or entity in connection with any proposed or pending litigation, arbitration, administrative claim, cause of action, or other formal proceeding of any kind brought against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents, nor shall you induce or encourage any person or entity to bring any such claims; provided that you may respond accurately and fully to any question, inquiry or request for information when required by legal process (e.g., a valid subpoena or other similar compulsion of law) or as part of a government investigation. In addition, other than with respect to Claims by You, you agree to voluntarily cooperate with the Company if you have knowledge of facts relevant to any existing or future litigation or arbitration initiated by or filed against the Company by making yourself reasonably available without further compensation for interviews with the Company or its legal counsel, for preparing for and providing deposition testimony, and for preparing for and providing trial testimony.
11. NO ADMISSIONS. You understand and agree that the promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by the Company to you or to any other person, and that the Company makes no such admission.
12.RELEASE OF CLAIMS.
(a) General Release. In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, you hereby generally and completely release the Company, and its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released Claims”).
(b) Scope of Release. The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (“ADEA”), and the California Labor Code (as amended).
(c) ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA (“ADEA Waiver”), and that the consideration given for the waiver and release in this Section is in addition to anything of value to which you are already entitled. You further acknowledge that you have been advised, as required by the ADEA, that: (i) your waiver and release do not apply to any rights or claims that may arise after the date that you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days to consider this Agreement (although you may choose voluntarily to sign it earlier); (iv) you have seven (7) days following the date you sign this Agreement to revoke the ADEA Waiver (by providing written notice of your revocation to me); and (v) the ADEA Waiver will not be effective until the date upon which the revocation period has expired unexercised, which will be the eighth day after you sign this Agreement (“Effective Date”). Nevertheless, your general release of claims, except for the ADEA Waiver, is effective immediately, and not revocable.
(d) SECTION 1542 WAIVER. In giving the release herein, which include claims which may be unknown to you at present, you acknowledge having read and understood Section 1542 of the California Civil Code, which reads as follows: “A ge