SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is entered into
on this 7th day of February, 1997 by and between XXXXXXX X. XXXX (the
"Executive") and QUANTUM EPITAXIAL DESIGNS, INC., a Pennsylvania corporation
(the "Company").
Background
The Company currently employs Executive as its Chief
Financial Officer on an "at will" basis. The Company desires to offer to
Executive severance compensation in the event that Executive's employment with
the Company is terminated for certain reasons. In consideration thereof,
Executive is willing to (i) continue his "at will" employment with the Company
and (ii) agree to perform and comply with the covenants and restrictions set
forth in Section 3 of this Agreement in exchange for, among other things, such
severance compensation.
IN CONSIDERATION of the foregoing premises and the mutual
promises, covenants and agreements contained in this Agreement, the parties,
intending to be legally bound, hereby agree as follows:
Section 1. "At Will" Employment. The Company and Executive
hereby acknowledge that Executive's employment with the Company is and shall
continue to be purely "at will."
Section 2. Severance Benefit. In consideration of Executive's
continued employment with the Company and Executive's performance of and
compliance with the covenants and restrictions set forth in Section 3 of this
Agreement, the Company shall provide Executive with severance compensation in
accordance with and subject to the provisions of this Section 2.
(a) Generally. If Executive's employment with the Company
shall cease or be terminated for any reason other than Executive's voluntary
termination, death, Disability (as defined in Section 2(c)), or for Cause (as
defined in Section 2(c)), then the Company shall pay to Executive, during the
twelve (12) month period following the date of such termination (the
"Severance Period"), an amount equal to Executive's then current annual base
salary (the "Severance Benefit").
(b) Payment of Severance Benefit.
(i) The Company shall pay the Severance Benefit in equal
installments during the Severance Period in accordance with the Company's then
regular payroll policy for executive employees, as such policy may be amended
from time to time.
(ii) The Company's obligation to pay Executive any
Severance Benefit shall be subject to (x) the withholding of such amounts
including, without limitation, FICA and other payroll taxes and any other
assessments, as the Company determines should be withheld or paid pursuant to
any applicable law or regulation and (y) Executive's continued compliance with
the provisions of Section 3 of this Agreement. The Company's right to cease
the payment of any Severance Benefit because of Executive's non-compliance
with such Section shall be in addition to any rights and remedies to which the
Company may be entitled pursuant to or as otherwise described in Section 4 of
this Agreement.
(c) Certain Definitions.
(i) "Cause" shall mean any of the following: (A)
Executive's felonious conduct (whether or not related to Executive's
employment with the Company); (B) Executive's intoxication while performing
his employment duties; (C) Executive's act of fraud or dishonesty upon, or
misappropriation of funds of, the Company; (D) Executive's negligence in the
performance of his employment duties or act of misconduct that, in the
Company's board of directors' (the "Board") judgment, has or could have an
adverse effect on the Company's reputation, business, properties or interests;
(E) Executive's failure to comply with a lawful direction of the Board or any
officer to whom Executive reports or failure to comply with the rules,
resolutions or policies established by the Board from time to time; (F)
Executive's appropriation for himself of a Company corporate opportunity
without the express prior written consent of the Board; or (G) any violation
by Executive of the provisions of Section 3 of this Agreement.
(ii) "Disability" shall mean either (x) Executive's
becoming eligible for full benefits under the Company's long-term disability
policy, if any, as a result of Executive's incapacity or (y) the Board's good
faith determination that Executive has been unable, due to physical or mental
illness or incapacity, to perform the essential duties of Executive's
employment with reasonable accommodation for a continuous period of forty-five
(45) days or an aggregate of sixty (60) days during any continuous six (6)
month period.
Section 3. Additional Executive Covenants and Restrictions. In
consideration for Executive's continued employment with the Company and the
Company's agreement to pay to Executive the Severance Benefit during the
Severance Period, Executive shall perform and comply with the covenants and
restrictions contained in this Section 3.
(a) Confidential Information. Without the prior written
consent of the Board, except as shall be necessary in the performance of
Executive's assigned duties, Executive shall not disclose or use for
Executive's direct or indirect benefit or the direct or indirect benefit of
any third party, and Executive shall maintain, both during and after
Executive's employment, the confidentiality of any and all of the Company's
Confidential Information. "Confidential Information" shall mean any
information (written, oral or stored in any information storage and/or
retrieval medium or device) that the Company treats as confidential or
proprietary,
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including, but not limited to, any information relating to research and
development plans, methods, efforts and results; manufacturing or production
design, processes, flow-charts and methods; existing and proposed products;
product plans, sketches, and blueprints; computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation); business studies; business
development plans and efforts; business procedures; financial data (including,
but not limited to cost data); personnel information; marketing and sales
data, methods, plans and efforts; the identities of customers, contractors and
suppliers and prospective customers, contractors and suppliers; the terms of
contracts and agreements with customers, contractors and suppliers; the
Company's relationship with actual and prospective customers, contractors and
suppliers and the needs and requirements of, and the Company's course of
dealing with, any such actual or prospective customers, contractors and
suppliers; customer and vendor credit information; any information or data
provided by or on behalf of independent contractors, customers, prospective
customers or others subject to the terms of a confidentiality, non-disclosure
or similar agreement or the reasonable expectation that such information or
data would be treated as "confidential" or non-public information or data; any
information, data or work product created, developed, prepared, compiled or
assembled for or on behalf of the Company, any independent contractor,
customer, prospective customer, or other person or entity, whether by
Executive or by other Company employees, agents or contractors; and any other
information that has not been made available to the general public. Failure to
xxxx any of the Confidential Information as confidential or proprietary shall
not affect its status as Confidential Information under the terms of this
Agreement.
(b) Property. During the term of this Agreement and
thereafter, Executive shall not remove from the Company's offices or premises
any documents, records, notebooks, files, correspondence, reports, memoranda,
computer tapes, computer disks or similar materials of or containing
Confidential Information of the type identified in Section 3(a) of this
Agreement, or other materials or property of any kind, unless necessary in
accordance with Executive's duties and responsibilities of employment, and in
the event that any of such material or property is removed, all of the
foregoing shall be returned to their proper files or places of safekeeping as
promptly as possible after the removal shall have served its specific purpose;
nor shall Executive make, retain, remove or distribute any copies of any of
the foregoing for any reason whatsoever, except as may be necessary in the
discharge of Executive's assigned duties; and upon the termination of
Executive's employment by the Company, Executive shall return to the Company
all originals, copies and extracts of the foregoing, then in Executive's
possession or under Executive's direct or indirect control, and shall delete
or destroy any of the foregoing in his possession or under his direct or
indirect control stored on magnetic or other media or on any information
storage or retrieval device, whether prepared by Executive or by others.
(c) Intellectual Property.
(i) Executive acknowledges and agrees that any and all
writings, documents, inventions, discoveries, improvements, computer programs
or instructions (whether
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in source code, object code, or any other form), plans, memoranda, tests,
research, designs, specifications, models, data, diagrams, flow charts, and/or
techniques (whether reduced to written form or otherwise) that Executive has
made, conceived, discovered, or developed prior to the date of this Agreement,
or may hereafter make, conceive, discover or develop, in each case, either
solely or jointly with any other person, at any time during the term of
Executive's employment (or thereafter, if based upon or incorporating any
Confidential Information), whether during working hours or at the Company's
facility or at any other time or location, and whether upon the request or
suggestion of the Company or otherwise, that relate to or are useful in any
way in connection with any business now or hereafter carried on by the Company
(collectively, "Intellectual Work Product") shall be the sole and exclusive
property of the Company. Executive shall promptly disclose to the Company all
Intellectual Work Product and maintain any and all records thereof. Executive
shall have no claim for additional compensation for the Intellectual Work
Product.
(ii) Executive acknowledges that all the Intellectual
Work Product that is copyrightable shall be considered a work made for hire
under United States Copyright Law. To the extent that any copyrightable
Intellectual Work Product may not be considered a work made for hire under the
applicable provisions of United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, Executive may retain an interest in
any Intellectual Work Product that is not copyrightable, Executive hereby
irrevocably assigns and transfers to the Company any and all right, title,
and/or interest that Executive may have in the Intellectual Work Product under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own
name all copyrights, patents, trade secrets, and trademarks with respect
thereto.
(iii) At the request and expense of the Company, either
before or after the cessation of Executive's employment, Executive shall
assist the Company in acquiring and maintaining copyright, patent, trade
secret, and trade xxxx protection upon, and confirming the Company's title to,
any Intellectual Work Product. Executive's assistance shall include making all
lawful oaths and declarations, executing and delivering all applications for
and other documents prepared in connection with the prosecution, maintenance,
enforcement and or defense of any copyrights, patent rights, trade secret
rights, and trademark rights, cooperating in legal proceedings, and taking any
and all other actions considered necessary or desirable by the Company.
(iv) In the event the Company is unable after reasonable
effort to secure the Executive's signature on any of the documents referenced
in Section 3(c)(iii) above, whether because of Executive's physical or mental
incapacity or for any other reason whatsoever, Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and
agents as the Executive's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further
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the prosecution and issuance of any such copyright, patent, trade secret,
trade xxxx, or other analogous protection, with the same legal force and
effect as if executed by Executive.
(d) Disclosure. Executive shall disclose promptly to the
Company any and all Confidential Information and information relating to all
Intellectual Work Product that Executive may make, conceive, discover or
develop during the period of his employment by the Company (or thereafter, if
based upon or incorporating any Confidential Information).
(e) Covenant Not to Compete.
(i) During the period of Executive's employment by the
Company and for a period of two (2) years thereafter, Executive shall not,
anywhere in the world, directly or indirectly engage or become interested in
(as owner, proprietor, promoter, stockholder, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) any business which
develops, manufactures, markets or sells gallium arsenide wafers or any other
new product or service marketed or sold by the Company during the period of
Executive's employment by the Company (the "Business of the Company").
(ii) During the period of Executive's employment by the
Company and for a period of two (2) years thereafter, Executive shall not,
directly or indirectly, solicit, call on, or otherwise deal in any way with
any customer, supplier or contractor with whom the Company shall have dealt at
any time during the period of Executive's performance of services to the
Company, for a purpose which is competitive with the Business of the Company,
or influence or attempt to influence any customer, supplier or contractor of
the Company to terminate or modify any written or oral agreement or course of
dealing with the Company.
(iii) For a period of two (2) years after the cessation
of Executive's employment with the Company, Executive shall not directly or
indirectly, employ, engage or retain, or arrange to have any other person or
entity employ, engage or retain any person who is an employee, contractor,
consultant or agent of the Company or shall have been employed, engaged or
retained by the Company as an employee, contractor, consultant or agent at any
time during the one (1) year period preceding the date upon which Executive's
employment with the Company ceases; additionally, Executive shall not,
directly or indirectly, influence or attempt to influence any such person to
terminate or modify his employment arrangement or engagement with the Company.
(f) Disclosure of Agreement. Executive agrees that upon and
after his termination or cessation of employment with the Company, until such
time as the obligations of Executive to the Company under this Agreement no
longer exist, Executive shall (i) provide a complete copy of this Agreement to
any prospective employer or other person, entity or association in the
Business of the Company, with whom or which Executive proposes to be employed,
affiliated, engaged, associated or to establish any business or remunerative
relationship prior to the commencement thereof and (ii) shall notify the
Company of the name
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and address of any such person, entity or association prior to her employment,
affiliation, engagement, association or the establishment of any business or
remunerative relationship. Executive shall provide the names and addresses of
any of such persons or entities as the Company may from time to time
reasonably request.
Section 4. Enforcement. Executive acknowledges that it is
impossible to measure fully, in money, the injury that will be caused to the
Company in the event of a breach or threatened breach of any of the provisions
of Section 3 of this Agreement, and Executive waives the claim or defense that
the Company has an adequate remedy at law. Executive shall not, in any action
or proceeding to enforce any of the provisions of such Section 3, assert the
claim or defense that such an adequate remedy at law exists. The Company shall
be entitled to injunctive relief to enforce the provisions of such Sections,
without prejudice to any other remedy the Company may have at law or in
equity, all of which shall be cumulative. The periods of time set forth in
Section 3(e) of this Agreement shall not include and shall be deemed extended
by any time required for litigation to enforce the relevant covenant periods,
provided that the Company is successful on the merits in any such litigation.
The phrase "time required for litigation" as used in this Section 4 shall mean
the period of time from service of process upon Executive through the
expiration of all appeals related to such litigation. If an action at law or
in equity is necessary to enforce or interpret the terms of this Agreement,
then the prevailing party shall be entitled to recover, in addition to any
other relief, reasonable attorney's fees, costs and disbursements.
Section 5. Miscellaneous.
(a) Assignment; Binding Effect. This Agreement is not
assignable by Executive without the Company's prior written consent, but
otherwise shall be binding upon and insure to the benefit of the parties and
to their successors and assigns.
(b) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between Executive and the Company with respect to the
subject matter of this Agreement and supersedes all prior agreements,
understandings and negotiations, whether written or oral, with respect to the
subject matter of this Agreement. No amendment of any provision to, or waiver
of any right of Executive or the Company under, this Agreement shall be
effective unless it is in writing and executed by party against whom
enforcement of any such amendment or waiver is sought.
(c) Severability. If any provision of this Agreement shall
be determined to be void, invalid, unenforceable or illegal for any reason,
then the validity and enforceability of all of the remaining provisions of
this Agreement shall not be affected thereby. If any particular provisions of
this Agreement shall be adjudicated to be invalid or unenforceable, then such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such amendment to apply only to
the operation of such provision in the particular jurisdiction in which such
adjudication is made; provided that, if any one or more of
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the provisions contained in this Agreement shall be adjudicated to be invalid
or unenforceable because such provision is held to be excessively broad as to
duration, geographic scope, activity or subject, then such provision shall be
deemed amended by limiting and reducing it so as to be valid and enforceable
to the maximum extent compatible with the applicable laws of such
jurisdiction, such amendment only to apply with respect to the operation of
such provision in the applicable jurisdiction in which the adjudication is
made.
(d) No Waiver Of Rights. No failure or delay on the part of
either Executive or the Company in the exercise of any power or right under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right. The waiver by Executive or the
Company of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach under this Agreement.
(e) Notices. All notices and other communications under this
Agreement (collectively, the "Notices") shall be in writing and may be
personally served or sent by certified or registered mail, return receipt
requested, proper postage prepaid, or recognized overnight delivery service,
proper charges prepaid. All Notices shall be delivered to the party to receive
the same at the addresses indicated below (or at such other address(es) as a
party may specify in a written notice):
If to Executive:
Xxxxxxx X. Xxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
If to the Company:
Quantum Epitaxial Designs, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President
All Notices shall be deemed to be received when delivered if
delivered personally, the next business day after the date sent if sent by a
national overnight delivery service with proper charges prepaid, or three (3)
business days after the date mailed if mailed by certified or registered mail,
return receipt requested with proper postage prepaid. Whenever the giving of
notice is required, the giving of such notice may be waived in writing by the
party entitled to receive such notice.
(f) Headings. The headings used in this Agreement are for
convenience only and are not intended to define or limit the contents or
substance of any provision of this Agreement.
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(g) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(h) Governing Law/Jurisdiction. This Agreement shall be
governed and construed as to its validity, interpretation and effect by the
laws of the Commonwealth of Pennsylvania notwithstanding the choice of law
rules of Pennsylvania or any other jurisdiction. IN ADDITION, IN THE CASE OF
ANY DISPUTE UNDER OR IN CONNECTION WITH THIS AGREEMENT, EACH OF EXECUTIVE AND
THE COMPANY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE
COURTS OF THE COMMONWEALTH OF PENNSYLVANIA IN AND FOR THE COUNTY IN WHICH THE
COMPANY MAINTAINS ITS PRINCIPAL PLACE OF BUSINESS OR THE FEDERAL DISTRICT
COURT FOR SUCH GEOGRAPHIC LOCATION, PROVIDED THAT SUCH FEDERAL COURT HAS
SUBJECT MATTER JURISDICTION OVER SUCH DISPUTE, AND EXECUTIVE HEREBY WAIVES ANY
CLAIM HE MAY HAVE AT ANY TIME AS TO FORUM NON CONVENIENS WITH RESPECT TO SUCH
VENUE. Notwithstanding anything to the contrary set forth in the preceding
sentence, the Company shall have the right to institute any legal action
arising out of or relating to this Agreement in any appropriate court and in
any jurisdiction.
IN WITNESS WHEREOF, each of Executive and the Company has
caused this Agreement to be duly executed as of the date set forth above.
QUANTUM EPITAXIAL DESIGNS, INC.
Attest:___________________________ By:____________________________________
Title: Print Name:
Title:
Witness:__________________________ _______________________________________
Xxxxxxx X. Xxxx
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