Exhibit 10.27
 
SOMERA COMMUNICATIONS, INC.
EMPLOYMENT AGREEMENT
 
OSMO HAUTANEN
 
This Agreement is made as of this 15th day of July 2002, by and between Osmo
Hautanen, whose residence is located at 1304 Chatsworth Court East Colleyville,
TX 76034 (hereafter “Executive”) and Somera Communications, Inc., a Delaware
corporation with its principal location at 5383 Hollister Avenue, Santa Barbara,
California 93111 (hereafter “Company”).
 

 
1.
 
The Employment Clause

 
The Company hereby agrees to and does hereby employ the Executive, and the
Executive hereby agrees to and shall be employed by the Company as of the
commencement date and for the period set forth in Paragraph 2 below (the
“Employment Period”), in the position and with the duties and responsibilities
set forth in Paragraph 3 below, and upon the other terms and conditions set
forth in this Agreement.
 

 
2.
 
Period of Employment

 
The Employment Period shall commence on July 15, 2002 and shall continue, unless
otherwise terminated by either party with or without cause, at any time for any
reason or no reason whatsoever, upon no less than thirty (30) prior written
notice, subject only to the terms and conditions of this Agreement.
 

 
3.
 
The Position

 

 
(a)
 
The Executive shall initially serve as the President of the Americas for the
Company and shall report to the President and Chief Executive Officer of the
Company.

 

 
(b)
 
At all times during the Employment Period, the Executive shall hold a position
of responsibility and importance with the functions, duties, and
responsibilities of a member of senior management of the Company. It is
expressly understood that nothing in the foregoing shall preclude the President
and Chief Executive Officer from making such organizational and reporting
changes as the President and Chief Executive Officer may, in good faith, deem
desirable and for the good of the Company.

 

 
4.
 
The Performance Clause

 
Throughout the Employment Period, the Executive agrees to devote the Executive’s
full time and undivided attention to the business and affairs of the Company
and, in particular, to performance of all the duties and responsibilities as
President of the Americas of the Company.
 
The Company agrees that during the Employment Period the Executive may serve as
a member on no more than two (2) Boards of Director and serve as a member of the
Nokia Ventures Advisory Board, so long as such relationships do not impede or
impair the Executive’s performance of his duties and responsibilities.
 

 
5.
 
Signing Bonus

 
The Company shall pay to the Executive a signing bonus in payable installments
as follows: $22,500 on or before August 1, 2002; $45,000 on or before January 1,
2003; and $45,000 on or before January 1, 2004. In the event of the termination
of the Executive’s employment for any reason prior to the date for payment of
any installment, such installment amount shall be paid on a prorated basis and
the Company shall not have obligation to make any further installments.

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6.
 
Temporary Living Allowance

 
During the first twelve (12) months of the Employment Period the Company agrees
to pay to the Executive a monthly allowance of $5,000 to compensate the
Executive to defray any temporary living costs and expenses that the Executive
may incur related to fulfilling the duties of The Position as described in
Paragraph 3 herein. Any additional amounts paid to the Executive would be made
by mutual agreement of both Parties.
 

 
7.
 
The Compensation Clause

 

 
(a)
 
For all services to be rendered by the Executive in any capacity during the
Employment Period, including, without limitation, services as an executive,
officer, director, or member of any committee of the Company and its
subsidiaries, divisions, and affiliates, the Executive shall be paid the
following as compensation:

 

 
(1)
 
For calendar years 2002 and 2003, a base or fixed salary, payable at the end of
each semi-monthly period (or such other period as may be fixed for salary
payments to senior management), at the rate of $15,625.00 per semi-monthly
period, $375,000 on an annualized basis (“Base Annual Salary”); and

 

 
(2)
 
The Executive shall be a participant in the Company’s 2002 Incentive Plan or
such equivalent successor plan (“the Incentive Plan”) as may be adopted by the
Company; and

 

 
(3)
 
For the 2002 fiscal year, the Executive shall receive the sum of $25,000 if the
Company achieves its planned Operating Profits in the third fiscal quarter of
2002 and $25,000 if the Company achieves its planned Operating Profits in the
fourth fiscal quarter of 2002. The Company shall make an additional payment to
the Executive for each fiscal quarter referred to herein that the Company
exceeds its planned Operating Profits. The specific amount(s) of the payment(s)
shall be determined by the Company. Such amounts shall be payable consistent
with the payment schedule pursuant to the Incentive Plan. Determination of the
actual performance and the calculation thereof for any payments from the
Incentive Plan shall be made at the sole discretion of the Company.

 

 
(4)
 
For the 2003 fiscal year, the Executive shall participate in the Company’s 2003
Incentive Plan that shall provide the Executive with the opportunity to receive
periodic payments totaling $300,000 (“the Target Bonus”) for achievement of
various, predetermined performance criteria as stipulated by the Incentive Plan.
The Incentive Plan shall have a provision for the Executive to receive periodic
payments totaling up to $450,000 plus a percentage of the Company’s Operating
Profits if the predetermined criteria described herein are exceeded. All such
amounts would include and not be additive to the Target Bonus described herein.
Determination of the actual performance and the calculation thereof for any
payments from the Incentive Plan shall be made at the sole discretion of the
Company.

 

 
(5)
 
Any increase to the Base Annual Salary would be made at the sole discretion of
the Company. The Executive will be eligible for a Base Annual Salary adjustment
in accordance with the Companies established pay review process.

 

 
(b)
 
The compensation provided for in Paragraph 7(a) above, together with the
perquisites and benefits set forth in Paragraph 9 below, are in addition to the
benefits provided for in Paragraph 5, 6 and 12 of this Agreement.

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8.
 
Participation in Stock Option Plan

 

 
(a)
 
Initial Stock Option.    As of the commencement of this agreement, and subject
to the unanimous written consent (“Consent”) of the Board of Directors of the
Company Executive shall be granted a stock option (the “Stand Alone Stock
Option”) to purchase a total of 900,000 shares of the Company’s common stock
with a per share exercise price equal to the fair market value of the Company’s
common stock as of the date of said Board’s Consent. The Stand Alone Stock
Option shall be for a term of ten (10) years (or shorter upon termination of
employment relationship with the Company) and shall vest as follows: twenty-five
percent (25%) of the shares subject to the Stand Alone Stock Option shall vest
twelve (12) months after the commencement of the Employment Period and one
thirty sixth (1/36th) of the remaining shares subject to the Stand Alone Stock
Option shall vest each month thereafter at the end of the month, so as to be one
hundred percent (100%) vested on the four (4) year anniversary of the
commencement of the Employment Period, conditioned upon Executive’s continued
employment with the Company as of each vesting date. Except as specified
otherwise herein, the Stand Alone Stock Option is in all respects subject to the
terms, definitions and provisions of the Company’s standard form of stock option
agreement (the “Option Agreement”).

 

 
(b)
 
Performance Based Stock Option.    As of the commencement of this agreement, and
subject to the unanimous written consent (“Consent”) of the Board of Directors
of the Company, Executive shall be granted a stock option (the
“Performance-Based Stock Option”) to purchase a total of 350,000 shares of the
Company’s common stock with a per share exercise price equal to the fair market
value of the Company’s common stock as of the date of said Board’s Consent. The
terms and conditions of the Performance-Based Stock Option shall be set forth in
a schedule to be attached to the Option Agreement governing the
Performance-Based Stock Option, conditioned upon Executive’s continued
employment with the Company as of each vesting date. Except as specified
otherwise herein, the Performance-Based Stock Option is in all respects subject
to the terms, definitions and provisions of the Company’s standard form of the
Option Agreement.

 

 
(c)
 
The granting to the Executive of any additional shares to those amounts
described in 8(a) and (b) above would be made by, and at the sole discretion of
the Company. The Executive will be eligible for any such grants in accordance
with the Companies established process for making said grants.

 

 
9.
 
Employment Benefit Plans

 

 
(a)
 
In accordance with the Company’s policies and practices and the specific terms
and conditions of each of the employee benefit plans of the Company, the
Executive shall be entitled to participate in any and all of the following such
plans: Healthcare Plan, including medical, dental and vision care insurance
coverages, 401(k) Plan, Life Insurance Plan, Accidental Death and Dismemberment
Insurance Plan, Travel Accident Insurance Plan, Short Term Disability Plan, Long
Term Disability Plan, Flexible Spending Account Plan, AFLAC Optional Insurance
Plan including intensive care, accident and cancer insurance coverages, Employee
Stock Purchase Plan, Paid Time Off Plans including holiday, sick and vacation
pay benefits, all Federal and State mandated statutory benefit plans applicable
to the employees of the Company and any other present or equivalent successor
employee benefit plans and practices of the Company, its subsidiaries and
divisions, for which similarly situated employees, their dependents, and
beneficiaries are eligible to participate in and to receive all payments

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or other benefits under any such plans or practices subsequent to the Employment
Period as a result of participation in such plans or practices during the
Employment Period.

 

 
(b)
 
The Company reserves the right at its sole discretion to amend, interpret,
modify or terminate any or all of the employee benefit plans described herein at
any time and for any reason. The Executive shall accrue no rights or implication
of a right to continued employment as a result of the Executive’s participation
in any of the Company’s employee benefit plans during or after the Employment
Period.

 

 
10.
 
Severance Benefits

 

 
(a)
 
In the event of termination or Constructive Termination as described herein, of
the employment of the Executive by the Company for any reason other than for
cause, as defined in Paragraph 10(e) below (“For Cause”), the Company shall make
to the Executive continued payments for twelve months after the Effective Date
of termination or Constructive Termination, each payment in an amount equal to
one-twelfth of the Executive’s Base Annual Salary through 2004. If such
termination occurs beyond December 31st, 2004 the Severance Benefit shall be
continued payments for twelve months after the Effective Date of termination or
Constructive Termination, each payment in an amount equal to one-twelfth of the
Executive’s annual salary in effect on the effective date of termination or
Constructive Termination plus the Target Bonus amounts as described herein as
Section 7(a), (1) and (4) plus the annualized amount of any remaining Signing
Bonus installment described in Paragraph 5 herein(“Signing Bonus Installment”).
Additionally, the Company shall waive the cost for the Executive to continue his
Healthcare Plan coverage with the Company should he decide to exercise his right
to do so in accordance with Title X of the Consolidated Budget Reconciliation
Act of 1985, as amended (“COBRA”). Such waiver of cost shall cease upon the
earlier of 12 months from the effective date of such coverage or the date in
which the Executive obtains equivalent coverage elsewhere.

 

 
(b)
 
In the event of a termination of the employment of the Executive by the Company
within the first twelve months of the Employment Period for any reason other
than For Cause, in addition to the payments and benefits set forth in Paragraph
10(a) above, the vesting of the Stand Alone Stock Options shall be accelerated
so that upon the Executive’s termination one forty-eighth (1/48th) of the Stand
Alone Options shall be vested for each full month of the Executive’s employment.
In the event of a termination of the employment of the Executive by the Company
after the first twelve months of the Employment Period for any reason other than
for cause, in addition to the payments and benefits set forth in Paragraph 10(a)
above, the vesting period of the then unvested Stand Alone Stock Options shall
be accelerated by 12 months.

 

 
(c)
 
If, prior to a Change of Control, Executive’s employment with the Company is
terminated by the Company other than for (x) For Cause, (y) Executive’s death,
or (z) Executive’s Disability, then, in place of but not in addition to the
amounts described in 10(a) and (b) herein and subject to Executive executing and
not revoking a standard form of mutual release of claims with the Company, (A)
Executive’s Stock Option (and any other stock option, not to include the
Performance-Based Stock Option, granted to Executive following the commencement
of Employment Period) shall have its vesting accelerated to receive an
additional twelve (12) months of vesting, provided, that, if such employment
termination takes place within twelve (12) months from the commencement of the
Employment Period, then Executive’s Stock Option shall have its vesting
accelerated such that 50% of the shares underlying such Stock Option shall vest;
(B) Executive shall receive continued payments of the Base Salary plus the pro
rata portion of the Target Bonus plus the Signing Bonus Installment

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earned by Executive in the time employed during such year, less applicable
withholding, in accordance with the Company’s standard payroll practices; (C)
the Company shall waive the cost for the group health, dental and vision plan
continuation coverage premiums for the Executive and his covered dependents
under COBRA through the lesser of (x) twelve (12) months from the date of
Executive’s termination of employment, or (y) the date upon which Executive and
his covered dependents obtain similar coverage elsewhere.

 

 
(d)
 
If, on or within the twelve (12) month period immediately following a Change of
Control, Executive’s employment with the Company is terminated by the Company
other than for (x) Cause, (y) Executive’s death, or (z) Executive’s disability,
then, in place of but not in addition to the amounts described in 10(a) and (b)
herein and subject to Executive executing and not revoking a standard form of
mutual release of claims with the Company, (A) Executive’s Stock Option shall
have its vesting accelerated such that 100% of the shares underlying such Stock
Option shall vest; (B) Executive shall receive continued payments of the Base
Salary plus the Signing Bonus Installment plus the pro rata portion of the
Target Bonus earned by Executive in the time employed during such year, less
applicable withholding, in accordance with the Company’s standard payroll
practices; (C) the Company shall waive the cost for the group health, dental and
vision plan continuation coverage premiums for the Executive and his covered
dependents under COBRA through the lesser of (x) twelve (12) months from the
date of Executive’s termination of employment, or (y) the date upon which
Executive and his covered dependents obtain similar coverage elsewhere.

 

 
    
 
The Company will take reasonable actions upon Change of Control to avoid any
excise tax or related penalties under IRC Section 280G or Section 4999. Unless
otherwise agreed by the Executive, the Company may not reduce the value of any
payment to the Executive as required by Change of Control.

 

 
    
 
For the purposes of this Agreement, “Change of Control” is defined as: Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; or The consummation of a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or The consummation
of the sale by the Company of all or substantially all of the Company’s assets.

 

 
    
 
For the purposes of this Agreement, “Disability” shall mean Executive’s mental
or physical impairment which has or is likely to prevent Executive from
performing the responsibilities and duties of his position for three (3) months
or more in the aggregate during any six (6) month period. Any question as to the
existence or extent of Executive’s disability upon which the Executive and the
Company cannot agree shall be resolved by a qualified independent physician who
is an acknowledged expert in the area of the mental or physical impairment,
selected in good faith by the Board and approved by the Executive, which
approval shall not unreasonably be withheld.

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(e)
 
For the purposes of this Agreement, any termination of the Executive’s
employment initiated by the Company shall be deemed to have been “For Cause”,
if:

 

 
(1)
 
Such termination of the Executive’s employment shall have been the result of an
act or acts of serious misconduct on the part of the Executive, which shall
include, but is not limited to, fraud, theft, embezzlement, breach of the
Company’s Code of Conduct and Conflicts of Interest policy on the part of the
Executive and any material breach of the Executive’s responsibilities as an
employee; or (2) failure to perform the material duties of The Position as
described in Paragraph 4 herein (“Cause”) after receipt of a written notice from
the Company to do so except if such failure to perform is the result of a
Disability. If such Cause is reasonably curable, the Company shall not terminate
the Executive’s employment hereunder unless it has first given the Executive
notice of its intention to terminate and the grounds of such termination and the
Executive has not, within 30 days following the receipt of notice, cured such
Cause. The Company will provide written notice of the reason for the termination
in the case of any termination For Cause. A termination by the Company for any
other reason shall be considered a termination without Cause.

 

 
    
 
For the purposes of this Agreement, “Constructive Termination” means (1) a
material reduction in Executive’s Base Salary or bonus level, or (2) a reduction
in Executive’s title or a material reduction in Executive’s authority or duties

 

 
11.
 
Legal Expenses

 
The Company, upon receipt of an invoice from Executive’s counsel, either pays
such invoice or reimburses Executive for such costs incurred by the Executive
for legal counsel with respect to this Agreement. The payment or reimbursement
amount by the Company shall not exceed $5,000.
 

 
12.
 
Successor in Interest

 
This Agreement and the rights and obligations hereunder shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, and shall also bind and inure to the benefit of any successor
of the Company by merger or consolidation or any purchaser or assignee of all or
substantially all of its assets, but, except to any such successor, purchaser,
or assignee of the Company, neither this Agreement nor any rights or benefits
hereunder may be assigned by either party hereto.
 

 
13.
 
Invalid Provision

 
In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest extent permitted
by law.
 

 
14.
 
Arbitration of Disputes

 
The parties agree that any controversy or claim arising out of or relating to
this Agreement, or any dispute arising out of the interpretation or application
of this Agreement, which the parties hereto are unable to resolve, shall be
finally resolved and settled exclusively by arbitration as provided in the
Arbitration Agreement between the Company and the Executive which is
incorporated by reference herein.

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15.
 
Governing Laws

 
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of California.
 

 
16.
 
Entire Agreement

 
This Agreement shall constitute the entire Agreement between the parties
superseding all prior Agreements, and may not be modified or amended and no
waiver shall be effective unless by written document signed by both parties
hereto; provided, however, that any increase in Compensation as described in
Paragraph (7) herein, Stock Options as described in Paragraph (8) herein or
Severance Benefits as described in Paragraph (10) herein, shall become an
amendment to this Agreement when approved by the Board of Directors of the
Company.
 
The Company and the Executive have caused this Agreement to be executed as of
the day and date first above written.
 

       
SOMERA COMMUNICATIONS, INC.
   
/S/    OSMO HAUTANEN        

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BY:
 
/s/    RICK DARNABY        

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OSMO HAUTANEN
     
TITLE:
 
President and CEO