Exhibit 99.1
CONFIDENTIAL SEPARATION AGREEMENT
This Separation Agreement dated as of January 26, 2005 is entered into
Between Xx. Xxxxxxx X. Xxxxxx, ("Executive") and KEMET Corporation, a
Delawarecorporation ("KEMET" or the "Company").
WHEREAS, Executive was the Chief Executive Officer and a Director of the
Company;
WHEREAS, Executive has resigned from the Company as Chief Executive
Officer and Director, effective January 26, 2005;
WHEREAS, Executive and the Company have agreed on certain payments to be
made to Executive and for Executive to enter into certain agreements with the
Company, all as more fully set forth below.
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Resignation Chief Executive Officer and Director. Effective January
26, 2005, Executive has resigned his positions as Chief Executive Officer and
Director of the Company.
2. Severance Payments. In consideration of Executive's agreement not to
compete with the Company contained in Section 8 and as separation pay, the
Company agrees to pay Executive, on its regularly scheduled paydays, an amount
of $35,416.67 per month (the "Severance Payments"), with such payments ending
on the earlier of (x) January 31, 2006, the 12th such payment, (y) the date as
of which Executive begins employment, in any capacity, with another Person and
(z) the date that Executive breaches any provision of this Separation Agreement.
Executive shall not be entitled to any payments in respect of any bonus under
the Company's Executive Bonus Plan for any period, or under any other policy of
the Company relating to the ending or termination of employment with the
Company. For purposes of this Separation Agreement, "Person" will be broadly
defined to include any individual, corporation, limited liability company,
partnership, limited liability partnership, joint venture, association, joint-
stock company, trust, unincorporated organization or government, or any agency
or political subdivision thereof.
3. Non-Disclosure of Confidential Information. Executive promises and
represents that he has not disclosed or used any Confidential Information while
he was employed by KEMET Corporation (except to the extent he was required to
disclose or use such Confidential Information in the performance of his assigned
duties for the Company). Executive further promises and represents that after
his employment at KEMET Corporation, Executive will not disclose or use any
Confidential Information for any purpose whatsoever. Executive will continue
to use his best efforts to safeguard the Confidential Information and protect it
against disclosure, misuse, espionage, loss or theft.
(a) "Confidential Information." shall mean all information (whether or
not specifically labeled or identified as "confidential"), in any form or
medium, that is or was disclosed to, or developed or learned by, Executive and
that relates to the business, products, services, research or development of
KEMET Corporation and its Subsidiaries, or their respective suppliers, distri-
Butors or customers. "Subsidiary" means any corporation of which the Company
Owns securities having a majority of the ordinary voting power in electing the
Board of directors directly or through one or more subsidiaries. Confidential
Information shall include the following:
(i) internal business information (including information relating
to strategic and staffing plans and practices, business, training, marketing,
promotional and sales plans and practices, cost, rate and pricing structures
and accounting and business methods);
(ii) identities of, individual requirements of, specific contractual
arrangements with, and information about, the Company's or its
Subsidiaries' suppliers, distributors and customers and their confidential
information;
(iii) compilations of data and analyses, techniques, systems,
formulae, research, records, reports, manuals, documentation, models, data
and data bases relating thereto; and
(iv) trade secrets, ideas, inventions, designs, developments,
devices, methods and processes (whether or not patented, patentable or
reduced to practice).
(b) Confidential Information shall not include information that
Executive can clearly demonstrate has been published in a form generally
Available to the public prior to the date upon which Executive proposes to
disclose such information. Information shall not be deemed to have been
published merely because individual portions of the information have been
separately published, but only if all the material features comprising such
information have been published in combination.
4. Company Ownership of Intellectual Property. Executive hereby assigns
to the Company all right, title, and interest in and to any Intellectual
Property conceived, contributed to or made by Executive at any time during his
Employ ment with the Company (whether alone or jointly with others) to the
extent such Intellectual Property is not owned by the Company as a matter of
law. Executive agrees that he shall promptly and fully communicate to the Com-
pany all such Intellectual Property and shall cooperate with the Company to
protect the Company's interests in such Intellectual Property. This xxxxxx-
ation shall include providing assistance to the Company in securing patent
protection and copyright registrations and signing all documents reasonably
requested by the Company, even if such request occurs after termination of his
employment with the Company. "Intellectual Property" shall mean patent
applications, copyrightable works, mask works, and applications for
registration related thereto, all Confidential Information, and all other
intellectual property rights created, conceived or owned by, the Company.
5. Return of Materials. Executive acknowledges and represents that
as of the date of the cessation of his employment with the Company, Executive
has returned to the Company all copies of Confidential Information in his
possession or control, including all laptop computers, computer drives (in-
ternal and external), computer disks, written records, manuals, lab notebooks,
computer printouts, customer and supplier lists, and all other materials
containing any Confidential Information.
6. Assignment of Intellectual Property. Executive hereby
acknowledges and agrees that any Intellectual Property contributed to, or
conceived or made by, Executive (whether alone or jointly with others) within
twelve months after his employment with the Company ends may have been
conceived or made in significant part during, or as a result of, Executive's
employment with the Company. Accordingly, Executive agrees that such
Intellectual Property will be presumed to have been conceived or made during
the period of his employment with the Company, unless and until he establishes
the contrary, and he hereby assigns such Intellectual Property to the Company.
7. Release by Executive. Executive (for himself, his heirs, assigns
and executors) releases and forever discharges the Company, all of its
affiliates, and its and their respective directors, officers, agents, ad-
visors and employees from any and all claims, suits, demands, causes of action,
contracts, covenants, obligations, debts, costs, expenses, attorneys' fees,
liabilities of whatever kind or nature in law or in equity, by statute or
otherwise, whether now known or unknown, vested or contingent, suspected or
unsuspected, and whether or not concealed or hidden, which have existed or
may have existed, or which do exist, through the date this Separation
Agreement becomes effective and enforceable, (collectively, "Claims") of any
kind, which relate in any way to Executive's employment with the Company or
the termination of that employment, except those Claims arising out of the
performance of this Separation Agreement and Executive's rights under the
employee benefit plans of the Company. Such released Claims include,
without in any way limiting the generality of the foregoing language, any and
all Claims of employment discrimination under any local, state, or federal law
or ordinance, including, without limitation, Title VII or the Civil Rights Act
of 1964, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990; the Age Discrimination in Employment Act of 1967,
as amended; or the South Carolina Human Rights Act.
(a) In signing this Separation Agreement, Executive
acknowledges that he intends that it shall be effective as a bar to each and
every one of the Claims hereinabove mentioned or implied. Executive
expressly consents that this Separation Agreement shall be given full force
and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected Claims
(notwithstanding any state statute that expressly limits the effectiveness of a
general release of unknown, unsuspected and unanticipated Claims), if any,
as well as those relating to any other Claims hereinabove mentioned or
implied. Executive acknowledges and agrees that this waiver is an essential
and material term of this Separation Agreement and without such waiver the
Company would not have made or agreed to make, the Severance Payments
described in paragraph 2. Executive further agrees that in the event he
brings his own Claim in which he seeks damages against the Company, or in
the event he seeks to recover against the Company in any Claim brought by
a governmental agency on his behalf, this release shall serve as a complete
defense to such Claims.
(b) By signing this Separation Agreement, Executive acknowledges that he:
(i) has been given twenty-one days after receipt of this separation
Agreement within which to consider it;
(ii) has carefully read and fully understands all of the provisions
of this Separation Agreement;
(iii) knowingly and voluntarily agrees to all of the terms set forth
in this Separation Agreement;
(iv) knowingly and voluntarily agrees to be legally bound by this
Separation Agreement;
(v) has been advised and encouraged in writing (via this
agreement) to consult with an attorney of his own choosing prior to
signing this Separation Agreement; and
(vi) understands that this Separation Agreement, including the
release, shall not become effective and enforceable until the eighth day
following execution of this Separation Agreement, and that at any time
prior to the effective day he can revoke this Separation Agreement.
8. Non-Competition.
(a) Executive represents and agrees that from the date hereof until
January 31, 2006 (such period is referred to as the "Non-Competition Period"),
Executive shall not, directly or indirectly, either for himself or for any other
Person, Participate in any business or enterprise which is in competition with
the Business of the Company as conducted or proposed to be conducted by the
Company or a Subsidiary as of the date of this Separation Agreement and
while any payments are being made to Executive pursuant to this Separation
Agreement or otherwise by the Company. "Business" means, as of the date
hereof, the business of developing, manufacturing, marketing, selling or distri-
buting solid (manganese dioxide and conductive polymer counter-
electrodes) tantalum capacitors, multilayer ceramic capacitors and solid alum-
inum capacitors, and shall include any other business engaged in or proposed to
be engaged in by the Company or a Subsidiary as of the date of this Separation
Agreement and while any payments are being made to Executive pursuant to this
Separation Agreement or otherwise by the Company. For purposes of this
Separation Agreement, the term "Participate" includes any direct or indirect
interest in any enterprise, whether as an officer, director, employee, partner,
sole proprietor, agent, representative, independent contractor, consultant,
franchisor, franchisee, creditor, owner or otherwise; provided that the term
"Participate" shall not include ownership of less than one percent of the
stock of a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market. Executive agrees that
this non-competition covenant is reasonable with respect to its duration,
geographical area and scope.
(b) During the Non-Competition Period, Executive agrees not to
sell or manufacture, or Participate in the sale or manufacture of, products of
the type sold or manufactured by the Company or any of its Subsidiaries, (ii)
solicit or attempt to solicit any customer of the Company or any of its
Subsidiaries to purchase products of the type sold by the Company or any of
its Subsidiaries from any Person other than the Company or any of its Sub-
sidiaries, or in any way interfere with the relationship between the Company
or any of its Subsidiaries and any customer, (iii) induce or attempt to induce
any supplier, licensee, licensor, franchisee, or other business relation of the
Company or any of its Subsidiaries to cease doing business with them, or in
any way interfere with the relationship between the Company or any of its
Subsidiaries and any such supplier or other business relation, or (iv) recruit
or hire or attempt to recruit or hire any individual employed by the Company
or any of its Subsidiaries (other than employees who shall have been discharged
or laid off by the Company or any of its Subsidiaries prior to any contact
by Executive) or encourage any individual employed by the Company or any of
its Subsidiaries to terminate such employment, or in any way interfere with the
relationship between the Company or any of its Subsidiaries and any of their
employees.
(c) In the event that Executive is alleged to have breached or
otherwise violated any of the provisions of this paragraph 8, the Non-
Competition Period described above will be tolled until such alleged breach
or violation is resolved. Executive agrees that this restriction is reasonable.
(d) If, at the time of enforcement of any of the provisions of this
paragraph 8, a court or arbitration panel holds that the restrictions stated
therein are unreasonable under the circumstances then existing, Executive
agrees that the maximum period, scope, or geographical area reasonable under
such circumstances will be substituted for the stated period, scope or area.
(e) Executive agrees that the covenants he has made in this paragraph
8 shall be construed as an agreement independent of any other provision of this
Separation Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Separation Agreement.
9. Continuation of Health, Group Life and Disability Insurance. The
Company agrees to continue the current health insurance, group life insurance
and disability insurance of the Executive and the Executive's dependents, con-
sistent with the currently existing arrangement between the Company and Exe-
cutive, for a period beginning on the date hereof and ending on the earlier of
(x) July 31, 2005, (y) such time as Executive is employed, in any capacity, by
any other Person and (z) the date that Executive breaches any provision of this
Separation Agreement. The Company also agrees that it will provide the
Executive with a notice under the Consolidated Omnibus Budget Reconciliation
Act (COBRA) as it relates to the continuation of health insurance for the
Executive and his dependents.
10. Outplacement Service. The Company has arranged, at the Companys
expense, to provide Executive with assistance in obtaining new employment at a
cost to the Company not to exceed $15,000 in the aggregate. This service will
be made available at the request of the Executive, and can commence at anytime
during the next twelve months. If the service has not been activated by January
31, 2006, then the Executive will no longer be eligible to receive the service
at Company expense. Executive may use any other service he desires, but the
Company will not pay for any such other services.
11. Deferred Compensation Plan. For the period beginning on the date
hereof and ending on the date Executive is no longer receiving payments pur-
suant to paragraph 2 of this Separation Agreement, Executive shall be entitled
to continue to elect to defer a portion of such compensation in accordance with
the Company's existing deferred compensation plan as applicable to Executive;
provided, that the Company will not provide any matching contribution to such
plan with respect to any amounts received by Executive pursuant to paragraph 2
of this Separation Agreement or any other amounts Executive elects to defer on
or after February 1, 2005.
12. Car Allowance. The Company agrees to provide Executive with a
monthly car allowance, in the amount equal to $1,768.35, until the earlier of
(x) July 31, 2005, (y) the date on which Executive is first employed, in any
capacity, by any other Person and (z) the date that Executive breaches any
provision of this Separation Agreement.
13. Confidentiality of this Separation Agreement. Executive under-
stands and agrees that the terms of this Separation Agreement, and all
negotiations leading up to the Separation Agreement, are to remain con-
fidential, and that disclosure by Executive of any of the terms of this
Separation Agreement or of any of the negotiations leading up to the drafting
or signing of this Separation Agreement will be deemed a breach by Executive
of this Separation Agreement. Executive understands that under the terms of
this Separation Agreement, he can divulge only the fact that he has settled his
differences with the Company. Executive understands that the Company maybe
required to disclose this Separation Agreement under the rules and regulations
of governmental agencies or the rules of the New York Stock Exchange.
14. No Other Agreement. This Separation Agreement contains the entire
agreement between the Company and Executive with respect to the subject matter
hereof, and Executive acknowledges that the Company made no warranties,
promises, or representations of any kind, express or implied, upon which
Executive has relied in entering into this Separation Agreement. In addition,
if any terms or provisions of this Separation Agreement conflict with or are
inconsistent with any existing Company policy or practice, the terms of this
Separation Agreement shall supercede such policy or practice and control. The
terms and conditions of this Separation Agreement are contractual and not a
mere recital. No part of this Separation Agreement may be changed except in
writing executed by a duly authorized representative of KEMET Corporation and
by Executive. Even if the Company waives Executive's compliance with or
breach of a part of this Separation Agreement, Executive understands and agrees
that such an act shall not constitute a waiver by the Company of any other time
or any other provisions or conditions of this Separation Agreement.
15. Binding in Fact. This Separation Agreement shall be binding
upon and inure to the benefit of the Company and Executive and the heirs,
executors, administrators, successors and assigns of each party.
16. Governing Law; Severability. The validity, interpretation, con-
struction and performance of this Separation Agreement shall be governed by
the internal laws of the State of South Carolina. The invalidity or
unenforceability of any provisions of this Separation Agreement shall not
affect the validity or enforceability of any other provision of this Separation
Agreement, which shall remain in full force and effect.
17. Non-Compliance. Executive acknowledges and agrees that the
Company would suffer irreparable and continuing harm for which the Company
would have no adequate legal remedy if Executive breached any of the cove-
nants or agreements, or failed to comply with any term or provision, contained
in this Separation Agreement. Executive further agrees that if Executive
breaches any such covenant or agreement or fails to comply with any term or
provision of this Separation Agreement, Executive shall forfeit all right to
any further Severance Payments described in paragraph 2, the benefits described
in paragraphs 9, 10, 11 and 12 of this Separation Agreement, and that in the
event the Company has reasonable grounds to believe that there has been a
breach, the Company will then have the right to withhold from Executive any
further Severance Payments and such benefits and to proceed against Executive
in a court of law or before an arbitration panel for additional breach-of-
contract damages, other damages, and/or injunctive relief. In addition, not-
withstanding any other provision in this Separation Agreement, in the event
that Executive initiates any action, suit or proceeding against the Company, or
any of its officers, directors, employees, advisors or agents, or publicly
threatens any such action, suit or proceeding (other than an action, suit or
proceeding specifically limited to enforcing a provision of this Separation
Agreement), Executive shall forfeit all rights to any further Severance
Payments described in paragraph 2 of this Separation Agreement. In the event
of an alleged or threatened breach by Executive of any of the provisions of
this Separation Agreement, the Company or its successors or assigns may, in
addition to all other rights and remedies existing in its favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the provisions
hereof without the posting of bond or other security, in addition to whatever
other remedies it may have.
* * * * *
KEMET CORPORATION
By: ___________________________________
Xxxxx X. XxXxxxx
Vice President,
Human Resources
I have read this Separation Agreement carefully and understand all of its
terms. I understand I have the right to and have been advised and encouraged
in writing to obtain the advice of legal counsel of my own choosing prior to
signing this Separation Agreement and have been provided time to consider
this Separation Agreement before signing it. I have not been forced or
pressured in any manner whatsoever to sign this Separation Agreement, and I
agree to all of its terms voluntarily.
SUBSCRIBED AND SWORN
to before me this __ Day
of __________, 2005
_________________________
_________________________
Notary Public Xx. Xxxxxxx X. Xxxxxx
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