SEVERANCE AGREEMENT AND RELEASE OF CLAIMS
Exhibit 10.13
This Severance Agreement and Release of Claims
(“Agreement”) is made and entered into on
August 28, 2008 by and between Xxxxx X. Xxxxxxxxxx
(“Executive”) and White Electronic Designs
Corporation and all of its affiliated companies and divisions
(collectively referred to as “Company”) and is
intended by the parties hereto to settle and dispose of all
claims and liabilities that exist between Executive and Company
as indicated herein.
RECITALS
A. Executive and the Company are parties to that certain
Executive Employment Agreement dated December 13, 2007 (the
“Employment Agreement”).
B. Executive’s last day of employment with Company
will be August 28, 2008 (the “Termination
Date”). Executive will resign from his positions as
Chairman of the Board, Chief Executive Officer, President and
Director and any other positions and offices he holds with the
Company and with each of Company’s subsidiaries and
affiliated entities on that date; and
C. By entering into this Agreement, the parties mutually
and voluntarily agree to be legally bound by the terms set forth
below.
COVENANTS
NOW, THEREFORE, for valuable consideration, the parties agree as
follows:
I.
A. The Company agrees to pay Executive the sum of one
million six hundred thousand dollars ($1,600,000), plus
Executive’s accrued and unused vacation pay, less all
lawfully required withholdings. Payment shall be made
immediately following the expiration of the seven (7) day
revocation period set forth in Section VII, assuming that
Executive has not revoked his signature during that seven
(7) day period. The Company will promptly pay Executive all
appropriate expense reimbursement requests properly submitted by
Executive in compliance with Company policy.
B. If the Executive elects to continue his group health
plan coverage (medical, dental and vision) under Consolidated
Omnibus Budget Reconciliation Act (“COBRA”), the
Company shall pay for eighteen (18) months following the
Termination Date the Company’s portion of the
Executive’s COBRA premium equal to the amount paid by the
Company before the Executive’s Termination Date. Following
such period, until December 13, 2010, the Company shall pay
Executive an amount equal to the Company’s portion of the
Executive’s COBRA premium in order for Executive to secure
health insurance of his choice; provided that such payments
shall cease if, during the COBRA period or thereafter, Executive
is then covered by reasonably equivalent or superior health
insurance provided by any subsequent employer. In addition, the
Company shall continue to provide Executive with up to $4,000
per year for unreimbursed medical expenses and with the auto
allowance and the disability and life benefits he is receiving
from the Company as of the Termination Date, less any required
deductions, until December 13, 2010. The life benefits and
auto allowance received by Executive shall be on an after-tax
basis, such that the Company shall compensate Executive for any
federal or state tax payable with respect to such benefit as
well as any such tax payable with respect to the compensation
called for by this sentence. Such gross up payments shall be
made to Executive no later than the last day of the calendar
year in which Executive pays such taxes.
C. The Company will provide outplacement services to the
Executive at the outplacement provider of his choice for a
period not to exceed eighteen (18) months in the maximum
amount of $50,000.
D. The Company will reimburse Executive for all reasonable
attorneys’ fees incurred in connection with this Agreement
in the maximum amount of $50,000 (so long as such fees are
incurred and paid within six months from the date of this
Agreement).
E. The Company and Executive agree to the following
concerning outstanding grants of stock options, restricted stock
units (“RSUs”) and performance shares to
Executive:
1. The following vested stock options:
(i) 125,000 shares granted on November 10, 1999;
(ii) 125,000 shares granted on November 10, 1999;
(iii) 150,000 shares granted on May 16, 2001 and
(iv) 150,000 shares granted on December 15, 2004
shall terminate, if not exercised, on their respective
expiration dates (i.e. November 10, 2009, November 10,
2009, May 16, 2011, and December 15, 2014,
respectively);
2. The vested stock options to acquire 150,000 shares
granted on December 3, 1998 shall terminate, if not
exercised, on the 90th day following the Termination Date;
3. The vested stock options to acquire 150,000 shares
granted on November 30, 2000 shall terminate on the date
hereof;
4. Assuming Executive does not revoke his signature during
the seven day period set forth in Section VII, the
Committee shall grant to Executive on the 8th day after the
date hereof an option to acquire 150,000 shares of the
Company’s Common Stock at an exercise price of $7.25 per
share, an expiration date of November 30, 2010, and with
such other terms as are contained in the Company’s standard
form of option agreement;
5. Assuming Executive does not revoke his signature during
the seven day period set forth in Section VII, the
50,000 shares of restricted stock granted to Executive
pursuant to that certain Restricted Stock Units Award Agreement
dated December 12, 2007 shall vest on the 8th day
after the date hereof;
6. Assuming Executive does not revoke his signature during
the seven day period set forth in Section VII, one-half
(50,000 shares) of the performance shares granted to
Executive pursuant to that certain Performance Share Award
Agreement dated December 12, 2007 shall vest on the
8th day after the date hereof;
7. Assuming Executive does not revoke his signature during
the seven day period set forth in Section VII, one-half
(50,000 shares) of the performance shares granted to
Executive pursuant to that certain Performance Share Award
Agreement dated December 12, 2007 shall vest if the
Company’s EBITDA for the fiscal year ended in 2009 equals
or exceeds $9,960,000; and
8. Any other unvested right to receive Company stock shall
terminate on the date hereof.
F. Executive acknowledges that upon receipt of the above,
he is not owed any further money or any further equity
compensation by the Company.
G. Executive hereby resigns his positions of Chairman of
the Board, Chief Executive Officer, President and Director and
any other positions he holds with the Company and with each of
Company’s subsidiaries and affiliated entities and the
Company hereby accepts the resignations. At the request of
Company, Executive agrees to execute any documents reasonably
requested to effectuate or to facilitate his resignations.
Executive agrees he did not resign as a result of a disagreement
of the type referred to in Item 5.02(a)(1) of
Form 8-K.
H. By December 31, 2008, Executive’s Employment
Agreement must be amended to either comply with
Section 409A of the Internal Revenue Code
(“Code”) or to qualify for an exception to the
requirements of Code Section 409A. To qualify for an
exception to the requirements of Code Section 409A, Executive
and the Company hereby amend Executive’s Employment
Agreement by the following:
1. Section 5(f) shall be amended by adding the word
“material” between the words “A decrease” in
paragraph (ii) and by adding the following language to the
end thereof: “Executive shall give written notice of his
intent to terminate his employment under this Section 5(f)
and the facts underlying his reasons for termination, and during
the 10 days thereafter, the Company shall have an
opportunity to cure the facts giving rise to the
Executive’s reasons for termination of employment.”
2. Section 6 of the Employment Agreement is amended by
adding the following Section 6(h): “Notwithstanding
any provision in this Agreement to the contrary, any severance
payment paid to you under this Section 6 shall be paid in a
lump sum within 30 days following the date of your
termination of employment.”
I. For a period of six (6) months following the
Termination Date, Executive agrees to provide consultation and
advice, on an as needed and as requested basis, as an
independent contractor, to assist in the transition of
Executive’s duties to other Company employees. Executive
shall be paid based on an hourly rate of $250 for any such
services.
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II.
In consideration of the covenants set forth in Paragraph I
above and the covenants herein:
A. Executive, on behalf of himself, his marital community
if any, and his heirs or assigns, expressly releases Company and
its subsidiaries, affiliated companies, directors, officers, all
of their agents, employees, and attorneys; and all their
predecessors and successors (collectively the “Released
Entities”) from ANY AND ALL RIGHTS, CLAIMS, DEMANDS,
CAUSES OF ACTION, OBLIGATIONS, DAMAGES, PENALTIES, FEES, COSTS,
EXPENSES, AND LIABILITIES OF ANY NATURE WHATSOEVER WHICH
EXECUTIVE HAS, HAD, OR MAY HAVE HAD AGAINST COMPANY OR ANY OR
ALL OF THE RELEASED ENTITIES IN CONNECTION WITH ANY CAUSE OR
MATTER WHATSOEVER, WHETHER KNOWN OR UNKNOWN TO THE PARTIES AT
THE TIME OF EXECUTION OF THIS AGREEMENT AND EXISTING FROM THE
BEGINNING OF TIME TO THE DATE OF THE EXECUTION OF THIS AGREEMENT
AND INCLUDING, WITHOUT LIMITATION, ALL MATTERS RELATED TO
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, THE EMPLOYMENT
AGREEMENT AND THE TERMINATION OF HIS EMPLOYMENT.
By signing this Agreement, Executive agrees to FULLY WAIVE
AND RELEASE ALL CLAIMS without limitation, such as
attorneys’ fees, and all rights and claims arising out of,
or relating to, his employment or termination from employment,
with the Company including, BUT NOT LIMITED TO, any claim
or other proceeding arising under:
• | The Civil Rights Act of 1866 (“Section 1981”); | |
• | Title VII of the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991; | |
• | The Americans with Disabilities Act (“ADA”); | |
• | The Age Discrimination in Employment Act (“ADEA”); | |
• | The Labor Management Relations Act (“LMRA”); | |
• | The National Labor Relations Act (“NLRA”); | |
• | The Fair Labor Standards Act (“FLSA”); | |
• | The Family and Medical Leave Act of 1993 (“FMLA”); | |
• | The Arizona Civil Rights Act; | |
• | The Arizona Employment Protection Act; | |
• | The Employee Retirement Income Security Act of 1974 (“ERISA”); and/or | |
• | Any common law or statutory cause of action arising out of Executive’s employment or termination of employment with the Company. |
This Agreement may be used to completely bar any action or suit
before any court, arbitral, or administrative body with respect
to any claim under federal, state, local or other law relating
to this Agreement or to Executive’s employment
and/or
termination of employment with Company or its subsidiaries,
affiliates, related entities, predecessors, parents or
divisions. Furthermore, Executive specifically agrees that he
will not be entitled to any further payment of any kind
following any future “Change in Control” as defined in
the Employment Agreement. Notwithstanding any provision hereof
to the contrary, however, Executive does not release his rights
to indemnification under provisions of the Company’s
articles of incorporation, bylaws or applicable law.
B. Executive shall deliver to Company any Company property,
including any documents, materials, files, or computer files, or
copies, reproductions, duplicates, transcriptions, or replicas
thereof, relating to Company’s business or affairs, which
are in Executive’s possession or control, or of which
Executive is aware.
C. Executive hereby agrees to comply with the all of the
restrictions and requirements in Sections 4, 7 and 14 of
his Employment Agreement.
III.
The provisions of this Agreement are severable. This means that
if any provision is invalid, it will not affect the validity of
the other provision. If the scope of any restrictions of this
Agreement should ever be deemed to exceed
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that permitted by applicable law or be otherwise overbroad,
Executive agrees that a court of competent jurisdiction shall
enforce that restriction to the maximum scope permitted by law
under the circumstances.
IV.
Executive agrees that he will not seek nor accept employment in
the future with the Company or any of its subsidiaries,
affiliates, successors, or divisions.
V.
By his signature below, Executive affirms that he has been given
at least 21 days during which to consider this Agreement.
Executive has been advised to seek legal counsel prior to
signing this Agreement.
VI.
The Company and Executive mutually agree not to disparage the
other, either directly or indirectly. However, nothing in this
Section precludes either party from testifying or participating
in any legal proceeding in which the party is required by law to
provide information about the other party. The Company agrees to
issue a press release in the form attached hereto as
Exhibit A to announce this Agreement.
VII.
Executive may revoke this Agreement at any time within seven
(7) days following his execution of the Agreement. Such
revocation must be provided in writing and received during the
seven (7) day revocation period. To be effective, the
revocation must be received by the following individual:
Xxxxx X. Xxxxx
Chief Financial Officer
White Electronic Designs Corporation
0000 Xxxx Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx XX 00000
Chief Financial Officer
White Electronic Designs Corporation
0000 Xxxx Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx XX 00000
This Agreement shall not become effective or enforceable until
the foregoing revocation period has expired.
VIII.
Executive agrees that all requests for employment verification
with the Company be directed to the Company’s Chief
Financial Officer. The Company agrees that it will provide only
Executive’s position, dates of employment and the fact that
he resigned, in response to such employment verification
requests.
IX.
This Agreement supersedes and replaces all prior discussions,
understandings, and oral agreements between the parties except
as noted herein, and contains the entire agreement between them
on the matters herein contained. This Agreement may not be
changed orally, but only by a written agreement signed by
Executive and Company.
X.
The laws of the State of Arizona will apply to this Agreement.
XI.
The Company intends that the payments to which Executive is
entitled under this Agreement comply with the short-term
deferral exception to the requirements of Code Section 409A
as defined in Treasury
Regulation Section 1.409A-1(b)(4).
In order to meet the requirements of the short-term deferral
exception, despite any other provision of this Agreement to the
contrary, such payment shall be paid at the time stated in
Section 6(h) of the Employment Agreement and in no event
later than March 15, 2009. In addition, the Company intends
that the payment of COBRA premiums pursuant to
Section I.B., the payment of certain outplacement expenses
pursuant to Section I.C. and the payment of certain legal
fees pursuant to Section I.D., fit within the exception to
Section 409A for certain reimbursements as defined in
Treasury
Regulation Section 1.409A-1(b)(9)(v).
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XII.
Except as otherwise provided herein, the Company, on behalf of
itself and its subsidiaries, affiliated companies, and all their
predecessors and successors hereby release Executive and his
heirs or assigns, (collectively the “Released
Parties”) from ANY AND ALL RIGHTS, CLAIMS, DEMANDS,
CAUSES OF ACTION, OBLIGATIONS, DAMAGES, PENALTIES, FEES, COSTS,
EXPENSES, AND LIABILITIES OF ANY NATURE WHATSOEVER WHICH THE
COMPANY HAS, HAD, OR MAY HAVE HAD AGAINST THE RELEASED PARTIES
OR ANY OR ALL OF THE RELEASED PARTIES IN CONNECTION WITH ANY
CAUSE OR MATTER WHATSOEVER, WHETHER KNOWN OR UNKNOWN TO THE
PARTIES AT THE TIME OF EXECUTION OF THIS AGREEMENT AND EXISTING
FROM THE BEGINNING OF TIME TO THE DATE OF THE EXECUTION OF THIS
AGREEMENT AND INCLUDING, WITHOUT LIMITATION, ALL MATTERS RELATED
TO EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, THE EMPLOYMENT
AGREEMENT AND THE TERMINATION OF HIS EMPLOYMENT.
By signing this Agreement, the Company agrees to FULLY WAIVE
AND RELEASE ALL CLAIMS.
This Agreement may be used to completely bar any action or suit
before any court, arbitral, or administrative body with respect
to any claim under federal, state, local or other law relating
to this Agreement or to Executive’s employment
and/or
termination of employment with Company or its subsidiaries,
affiliates, related entities, predecessors, parents or divisions.
/s/ Xxxxx
X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
Date:
/s/ Xxxxxx
X. Xxxxx
Xxxxxx X. Xxxxx
Date:
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