SEPARATION AGREEMENT AND MUTUAL RELEASE EXHIBIT 10.20
This Separation Agreement and Mutual Release ("Agreement") is entered
into as of March 11, 1998 by and among Siliconix Incorporated, a Delaware
corporation (the "Company"), Vishay Intertechnology, Inc., a Delaware
corporation ("Vishay") and Xxxxxxx X. Xxxxx ("Executive").
RECITALS
1. Executive is currently employed by the Company as its President
and Chief Executive Officer and also serves as a member of the Board of
Directors.
2. Vishay has acquired a majority of the outstanding Common Stock of
the Company.
3. Executive, the Company and Vishay wish to set forth their
agreement whereby Executive will resign from all executive positions and as an
employee and a director of the Company and any subsidiaries and the Company
agrees to accept such resignation. The Company, Vishay and Executive have
further mutually agreed to terminate their employment relationship and to
release each other from any claims arising from or related to the employment
relationship.
4. The Company has provided Executive with various severance
agreements (the "Severance Agreement") and certain loans (the "Loan
Agreements"). This Agreement will terminate and supersede the Severance
Agreements in all respects except as otherwise specifically provided herein.
NOW THEREFORE, in consideration of the mutual promises made herein, the
Company, Vishay and Executive (collectively referred to as the "Parties") hereby
agree as follows:
1. RESIGNATION. Executive hereby resigns from all executive
positions with the Company and any subsidiaries of the Company, including as
President and Chief Executive Officer of the Company, and also as an employee
and a director of the Company on the Effective Date. For purposes of this
Agreement, references to the Company shall include the Company and any wholly-
owned or partially-owned subsidiary of the Company.
2. CONSIDERATION. In consideration of Executive's past services to
the Company, and in consideration for Executive's promises and covenants herein,
the Company shall pay Executive, subject to Section 3 herein, as follows.
Vishay hereby agrees to take such action as is necessary to cause the Company to
make such payments to Executive or, to make such payments itself to Executive
if the Company fails to make such payments.
(a) SALARY. The Company will pay Executive within seventy-two
(72) hours of the Effective Date all salary earned through the Effective Date,
less applicable withholding.
(b) SEPARATION PAYMENTS. Executive shall receive the following
payments: (i) on the Effective Date a payment of $1,500,000; (ii) on the one
year anniversary of the Effective Date a payment of $500,000 (plus interest at
6% on such amount from the Effective Date to the payment date) and (iii) on the
two year anniversary of the Effective Date a payment of $ 779,603 (plus interest
at 6% on such amount from the Effective Date to the payment date). The Parties
hereby agree that of the foregoing payments, the amount of $1,279,603 is being
paid to Executive in consideration of his non-competition and non-solicitation
agreement and is subject to Section 3 of this Agreement.
(c) BUSINESS EXPENSES. The Company shall reimburse Executive
for all business expenses incurred in connection with carrying out the business
of the Company through the Effective Date promptly upon receiving backup
documentation in reasonable detail documenting such expenses.
(d) BENEFITS. Executive shall receive continued coverage,
through March 11, 2001 (the "Continued Coverage Period"), under each Employee
Welfare Benefit Plan (as defined) of the Company in which he was participating
as of March 1, 1998, at no increased cost to Executive, provided that the
Company's obligations under this Section 2(d) shall be reduced to the extent
Executive receives similar coverage and benefits under the plans of a subsequent
employer. Executive shall promptly provide the Company with notice and
information reasonably requested by the Company concerning such plans. If
Executive or any member of his family is precluded from continuing full
participation in any benefit under any Employee Welfare Benefit Plan as provided
in this Section 2(d), then the Company shall provide Employee with at least
sixty (60) days advance written notice and shall make a payment to Executive
equal to 2 times the cost of "COBRA" coverage, for the number of months obtained
by subtracting from (i) 36 months (ii) the number of months from the
Effective Date to the date coverage under the plan became unavailable. Such
amount shall be paid in a lump sum on the date Executive or any member of his
family is no longer covered under such plan. Executive acknowledges and agrees
that Executive can elect continuation coverage under the Company's life,
disability, accidental death, dismemberment, travel and accident plans and that
the payment in Section 2(b)(i) includes all payments owed by the Company for
such coverage. For purposes of this Agreement "Employee Welfare Benefit Plan"
shall mean "any medical, dental, hospitalization, vision, plan or program made
available to the Executive."
The Company shall continue to pay for six (6) months after
the Effective Date the following car payments for Executive's company provided
automobile; (i) monthly car payment, (ii) maintenance, (iii) insurance under the
Company's fleet plan, and (iv) gas and cleaning (or, at the Company's option, a
one-time payment of $1,200 in lieu of actual gas and cleaning).
(e) LOAN AGREEMENTS. The Company and the Executive are parties
to three loan agreements attached hereto as Exhibits X-0, X-0 and A-3
(collectively the "Loan Agreements").
(i) The Company and Executive agree that the loan dated
December 31, 1997 (Exhibit A-1) has an amended loan balance of $180,000 and
accrued interest of $15,272 as of March 2, 1998 and hereby confirm such loan and
accrued interest is canceled and forgiven in its entirety as of March 2, 1998.
(ii) The Company and Executive agree that the loan dated
July 3, 1997 (Exhibit A-2) has an amended loan balance of $100,000 as of the
Effective Date and accrued interest as of such date of $3,908. Such loan is due
and payable on September 28, 1999. The Company and Executive hereby agree that
such loan shall be repaid in its entirety on the one year anniversary of the
Effective Date and that the Company shall reduce the payment in Section 2(b)(ii)
by the amount of $109,408 in full satisfaction of principal and interest on such
loan.
(iii) The Company and Executive agree that the loan
dated December 23, 1997 (Exhibit A-3) has an amended loan balance of $300,000 as
of the Effective Date and accrued interest as of such date of $10,013. Such
loan is due and payable on January 25, 2004. The Company and Executive hereby
agree that such loan shall be repaid in its entirety on the two year anniversary
of the Effective Date and that the Company shall reduce the payment in
Section 2(b)(ii) by the amount of $343,019 in full satisfaction of principal and
interest on such loan.
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(f) NO MITIGATION; LIMITED OFFSET. Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due Executive under this Agreement on account of any remuneration or other
benefit attributable to any subsequent employment that he may obtain except as
specifically provided in Section 2(d).
(g) NATURE OF PAYMENTS. Any amounts due under this Section 2
are in the nature of severance and non-competition payments considered to be
reasonable by the Company and are not in the nature of a penalty.
(h) INDEMNIFICATION. The Company shall continue to provide
Executive with full indemnification under the Company's certificate of
incorporation and by-laws as in effect on March 1, 1998 and the Indemnification
Agreement between the Company and Executive dated May 29, 1991 (copies of which
are attached as Exhibits B-1, B-2 and B-3). For six years the Company shall
use commercially reasonable efforts to continue to include Executive as a named
insured under the Company's director and officer insurance policy with coverage
amounts at least equal to those in effect as of March 1, 1998. Vishay agrees to
take all action necessary to assure that the Company provides the foregoing
indemnification and all action commercially reasonable to provide the foregoing
insurance coverage to Executive.
3. FORFEITURE OF BENEFITS UPON BREACH. In the event that Executive
breaches Section 4 or 5 of this Agreement as the sole and exclusive remedy
(i) all obligations of the Company to make any payments or provide any benefits
under Sections 2(b)(ii) and 2(b)(iii) shall immediately terminate and Executive
shall promptly repay, net of all taxes paid or payable, any amounts he may have
received under these Sections 2(b)(ii) and 2(b)(iii).
4. NON-COMPETITION. For a period of twenty-four (24) months
following the Effective Date, Executive agrees as follows. Executive shall not
provide services, whether for compensation or otherwise, as an officer,
director, employee, consultant or in any other capacity to any person or entity
that competes, directly or indirectly, with the Company's current product line
offered commercially on the Effective Date (the "Company Products"). In this
regard, Executive acknowledges that the business of the Company is national and
international in nature. Executive also acknowledges that this period of time,
scope of business and geographic extent are reasonably necessary to protect the
legitimate business interests of the Company. The foregoing restrictions shall
not apply to and Executive shall have the right to, directly or as an officer,
director, employee, consultant or in any other capacity with any person or
entity, assemble, test, develop and manufacture any products, and to assemble,
test and manufacture for other persons or entities products that compete with
the Company Products, provided Executive or such person or entity does not
market and sell any product which competes with the Company Products directly to
the market (OEM customers) or to distributors and Executive or such person or
entity is not involved in research and development, wafer fabrication, software
design or "fabless" activity (using foundry production) of any product which
competes with the Company Products.
The Company and Vishay agree that the foregoing non-competition
provision does not apply to IRDC products or products of any companies or
entities not including the Company that Vishay acquired at the time of its
acquisition of the majority ownership of the Company.
5. NON-SOLICITATION. For a period of twelve (12) months following
the Effective Date, Executive shall not, and shall not intentionally or
knowingly allow others under his direction to, solicit, directly or indirectly,
any then current Company employee to terminate his or her employment with the
Company for the purpose of working as an officer, director, employee, consultant
or in any other capacity for either Executive or any of his employers. For
purposes of the above, an employer of Executive's will be deemed to include
(i) any parent or subsidiary of such an employer or (ii) any person or company
for which Executive provides consulting
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services or for which he acts in the capacity of director. The foregoing
shall not prohibit Executive or any employee with which Executive may be
affiliated from hiring an employee or former employee of the Company;
provided that such hiring results from such employee's initiative in
contacting Executive or any employer Executive is affiliated with. In
addition, if Executive or such employer desires to hire such employee after
such contact, Executive agrees to contact the Company and to work with the
Company to find a reasonable transition to enable the Company to replace such
employee or modify the organization, provided such transition shall not
exceed three (3) months.
6. CONFIDENTIALITY. Executive acknowledges that the Employment,
Invention, Authorship, Proprietary and Confidential Information Agreement dated
June 1, 1987 (the "Confidentiality Agreement") that he signed in connection with
his employment and that is appended to this Agreement as Exhibit C, shall
remain in full force and effect.
7. PAYMENT OF SALARY. Executive acknowledges and represents that,
upon full performance of its obligations under this Agreement, the Company will
have paid or made all salary, bonuses, severance amounts and any and all other
compensation or benefits due to Executive as of the Effective Date as in
connection with the termination of his employment with the Company.
8. RELEASE OF CLAIMS. The Parties acknowledge and agree that this
Agreement represents settlement in full of all obligations and claims arising
out of or relating to Executive's employment by the Company and the termination
of such employment as provided in this Agreement. Executive, the Company and
Vishay, on behalf of themselves, and their respective heirs, executors,
officers, directors, employees, investors, shareholders, administrators,
predecessor and successor corporations, and assigns, hereby fully and forever
release each other and their respective heirs, executors, officers, directors,
employees, investors, shareholders, administrators, predecessor and successor
corporations, and assigns, of and from any claim, duty, obligation or cause of
action relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that any of them may possess arising from any
omissions, acts or facts that have occurred up until and including the Effective
Date including, without limitation,
(a) any and all claims relating to or arising from Executive's
employment by (or services for) the Company, his employment relationship with
the Company and the termination of that relationship;
(b) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied; negligent or intentional infliction
of emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage; and
defamation;
(c) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, the Employment Retirement
Income Security Act of 1974, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, and the California Fair Employment and
Housing Act;
(d) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;
(e) any claims arising out of or related to the Severance
Agreements;
(f) any and all claims for attorneys' fees and costs;
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(g) all claims arising out of or relating to Executive's
conduct as an employee, officer, director, agent or representative of the
Company;
(h) all claims arising out of or relating to duties owed by
Executive to the Company or to any of its directors, officers, employees,
agents, affiliates, stockholders, lenders, investors, predecessor or successor
corporations, assigns, attorneys, accountants or other representatives; and
(i) any claims Executive may have against Temic Telefunken
microelectronic Gmbh ("Temic") for payments under any severance or other
agreement or plan that Executive participates in arising from a termination of
Executive by Temic after the acquisition of Temic by Vishay, provided that this
release shall not apply to amounts owed by Temic to Executive under such plans
prior to or in connection with successful completion of such acquisition.
The Company, Vishay and Executive agree that the release set forth in this
Section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release does not extend to any
obligations arising under, incurred under, or preserved by this Agreement.
9. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date. Executive acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that (a) he should consult with an attorney PRIOR to
executing this Agreement; (b) he has at least twenty-one (21) days within which
to consider this Agreement; (c) he has at least seven (7) days following the
execution of this Agreement by the Parties to revoke the Agreement; and (d) this
Agreement shall not be effective until the revocation period has expired.
10. CIVIL CODE SECTION 1542. The Parties represent that they are not
aware of any claim by any of them other than the claims that are released by
this Agreement. Executive, the Company and Vishay acknowledge that they have
been advised by legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.
Executive, the Company and Vishay, being aware of said Code section,
agree to expressly waive any rights they may have thereunder, as well as under
any other statute or common law principles of similar effect.
11. PAYMENT ON DEATH. In the event of death of Executive, all unpaid
amounts shall be accelerated and paid to Executive's surviving spouse or to
Executive's estate if Executive has no surviving spouse.
12. FEES AND EXPENSES. Each of the Parties hereto shall bear their
own fees and expenses, including attorneys fees, incurred in connection with the
negotiation of this Agreement or otherwise arising out of, or by
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reason of, this Agreement.
13. TAXES. All payments to be made by the Company to Executive under
this Agreement will be subject to reduction to the extent necessary in order to
comply with applicable Federal, state and local tax withholding requirements.
The Company hereby warrants to Executive that no payments under this Agreement
will be deemed an "excess parachute payment" under Internal Revenue Code
Section 280G.
14. CONFIDENTIALITY. The Parties hereto each agree to use their best
efforts to maintain in confidence the existence of this Agreement, the contents
and terms of this Agreement, and the consideration for this Agreement, except
where disclosure of the terms of this Agreement is otherwise required by law and
except for disclosure in confidence to financial, tax, and legal advisors and
disclosure by Executive in confidence to prospective employers.
15. DISPARAGEMENT. Each Party agrees to refrain from any
disparagement, criticism, defamation, and slander of the other Party.
16. NO REPRESENTATIONS. Each Party represents that it or he has had
the opportunity to consult with an attorney, and has carefully read and
understands the scope and effect of the provisions of this Agreement. No Party
has relied upon any representations or statements made by any other Party hereto
which are not specifically set forth in this Agreement.
17. ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement
and those portions of the Loan Agreements preserved by this Agreement represent
the entire agreement and understanding between the Company, Vishay and Executive
concerning Executive's separation from the Company, and supersede and replace
any and all prior agreements and understandings concerning Executive's
relationship with the Company and his compensation by the Company, including
without limitation, the Severance Agreements, except as otherwise provided in
this Agreement.
18. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns. No rights or obligations of the Company or Vishay under this Agreement
may be assigned or transferred by the Company or Vishay except that such rights
or obligations shall be assigned or transferred pursuant to a merger or
consolidation in which the Company or Vishay is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the Company
or Vishay, and the Company or Vishay shall provide that such assignee or
transferee expressly assumes all the liabilities, obligations and duties of the
Company or Vishay, as contained in this Agreement. In connection with any
transfer or assignment of its rights, duties, or obligations under this
Agreement, the Company or Vishay shall take whatever action it legally can to
cause such assignee or transferee to expressly assume the labilities,
obligations and duties of the Company or Vishay hereunder. The Company and
Vishay shall, in any event, remain as unconditional guarantor of prompt payment
and prompt satisfaction of all such liabilities, obligations and duties. No
rights, obligations or duties of the Executive under this Agreement may be
assigned or transferred, other than his rights to compensation and benefits,
which may be transferred only by will or operation of law, except as provided in
Section 23 below.
19. REPRESENTATIONS. The Company and Vishay represent and warrant
that each is fully authorized and empowered by any required corporate action to
enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any law, regulation or order of any agreement between
it and any other person. The Executive represents and warrants that he is not
subject to any agreement or obligation that conflicts with or would be breached
by the provisions of this Agreement.
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20. AMENDMENT OR WAIVER. No provision in this Agreement may be
amended unless such amendment is set forth in a writing signed by the Parties.
No waiver by either Party of any breach of any condition or provision contained
in this Agreement shall be deemed a waiver of a similar or dissimilar condition
or provision at the same or any prior or subsequent time. To be effective, any
waiver must be set forth in writing and signed by the waiving Party.
21. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remainder of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by law
so as to achieve the purposes of this Agreement.
22. SURVIVORSHIP. Except as otherwise expressly set forth in this
Agreement, the respective rights and obligations of the Parties hereunder shall
survive the termination of Executive's employment. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by any
Party.
23. BENEFICIARIES/REFERENCES. The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executives's death, by giving written notice to the Company. In the event of
the Executive's death or a judicial determination of his incompetence,
references in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
24. RESOLUTION OF DISPUTES. Any claim arising out of or relating
to this Agreement or out of Executive's employment by, or services for the
Company, shall be resolved by confidential arbitration, to be held in Santa
Xxxxx County, California, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitrator(s) shall explain the
reasons and basis of his (their) award in detail and in writing, and judgment
upon the award may be entered in any court having jurisdiction thereof. Each
Party shall bear their own respective costs and expenses relating to
resolving any such claim. Pending the final and conclusive resolution of any
such claim, the Company and Vishay shall continue prompt payment of all
amounts due the Executive under this Agreement and prompt provision of all
benefits to which the Executive or his successors and assigns are entitled.
25. NOTICES. Any notice, consent, demand, request, or other
communication given to a Party in connection with this Agreement shall be in
writing and shall be deemed to have been given (a) when delivered personally to
the Party specified or (b), provided that reasonable steps are taken to assure
that the communication is actually received by the Party specified, five
business days after being sent by certified or registered mail, postage prepaid,
return receipt requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently give
notice of:
If to the Company and/or Vishay:
Vishay Intertechnology, Inc.
00 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Avi Eden
With a copy sent by the same means to:
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Siliconix, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attn: General Counsel
If to the Executive:
Xxxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx Xxxxx, XX 00000-0000
With a copy sent by the same means to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
26. HEADINGS. The headings of the Sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
27. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of California, without reference to its choice of law principles.
28. COUNTERPARTS. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
29. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of their own choice or that
they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this
Agreement and of the releases it contains;
(d) They are fully aware of the legal and binding effect of
this Agreement.
30. EFFECTIVE DATE. The Effective Date of this Agreement shall be
seven (7) days after execution by all parties as required under ADEA.
IN WITNESS WHEREOF, the Parties have executed this Agreement on
the respective dates set forth below.
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SILICONIX INCORPORATED
Dated: March 11, 1998 By: /s/Xxxxx Xxxxxxxxxxxxx
------------------------
Dated: March 11, 1998 VISHAY INTERTECHNOLOGY, INC.
By: /s/Avi Eden
------------------------
Dated: March 11, 1998 /s/Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
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