EXHIBIT 10.43
RETENTION AND SEVERANCE AGREEMENT
This Agreement is dated and effective as of March 30, 1999 ("Effective Date")
by and between Transcrypt International, a Delaware corporation ("Company"), and
Xxxxxxx Xxxxxxx, an Executive of the Company and Vice President of Operations
("Executive").
BACKGROUND
WHEREAS, the Company is engaged in, among other things, the development of a
manufacturing strategy;
WHEREAS, the Executive is engaged in the Company's Vice President of
Manufacturing and in his position, Executive will have a critical role in the
development of the future direction of the Company's organization
WHEREAS, the Company has identified Executive's position in the Company as one
that may be eliminated or redefined in the Company's organization; and
WHEREAS, the Company desires to obtain for its benefit Executive's full
cooperation in the Company's manufacturing strategy and organization changes.
WHEREAS, a number of lawsuits have been filed in federal and state courts in
which the Company, the Executive and others are or were named as defendants
("Civil Litigations").
WHEREAS, the Securities and Exchange Commission ("SEC") has begun an
investigation to determine whether violations of the securities laws were
committed by the Company and/or its officers and directors ("the SEC
Investigation"), which investigation might lead to further investigative,
administrative, enforcement or other legal actions or proceedings;
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
contained herein, the parties hereby agree as follows:
1. SEVERANCE EVENT. Executive shall be entitled to receive Severance Benefits,
as described herein, if during the term set forth in Section 3 upon the
occurrence of (a "Severance Event"):
(a) the Company eliminates Executive's current position with Company and
Executive declines or fails to response to the Company's offer of another
Company position within seven (7) working days; or,
(b) the Company eliminates the Executive's current position with Company
and does not offer the Executive another position with the Company.
2. PAYMENT.
(a) Upon the occurrence of a Severance Event as set forth in Section 1, the
Company shall continue to pay to the Executive, bi-weekly the same salary
Executive was being paid prior to the Severance Event for a period of six (6)
months. Said payment shall be made to Executive, with all required federal and
state tax and other withholdings, including but not limited to, medical and
dental insurance co-payments. The Company will not continue to contributed to
Executive's 401(k) account. The Company shall pay reasonable expense reports
submitted by Executive within ten (10) days after the Severance Event.
(b) Within ten (10) days of the occurrence of a Severance Event as set forth
above, the Executive shall return to the Company all of the Company's property
in his possession, including, but not limited to, the Company's credit card,
cellular phones, Company Car and computer. The Company shall return any personal
property to the Executive within the same ten (10) day period. The Company and
Executive agree that Executive shall have the right to purchase his Company
owned car, which he used during his employment with the Company, at the then
current national published Xxxxxx Blue Book value.
(c) Upon the occurrence of a Severance Event as set forth above, the Company
shall provide the Executive with career transition services for the purposes of
locating other employment, through a career transition consultant selected by
the Company for a period of up to six months following the occurrence of a
Severance Event. The career transition services shall be paid, controlled and
directed by the Company.
(d) Executive has previously promised and agreed to pay to the Company the
principal sum of TWENTY-SEVEN THOUSAND SIX HUNDRED SEVEN DOLLARS AND 58 CENTS
($27,607.58) along with the simple rate of interest of seven percent (7%) per
year ("House Note"). Upon the occurrence of a Severance Event, Executive shall
have the House Note extended under the same terms and conditions for a period of
six (6) months. Notwithstanding anything to the contrary in this section, if
Executive breaches any provision of the House Note or breaches any provision of
this Agreement, all of the unpaid principal and accrued interest thereupon shall
become immediately due and payable without notice.
3. TERM AND TERMINATION.
(a) Subject to the remainder of this Section, the term of this Agreement
shall be deemed to have commenced as of the Effective Date and shall, unless
mutually extended by the parties in writing, expire on June 30, 1999.
(b) On June 30, 1999, if there has been no occurrence of a Severance Event as
set forth above, the Parties hereby agree that this Agreement shall immediately
and automatically terminate and shall have not legal effect.
(c) The failure of the Company or Executive to perform any obligation assumed
by it hereunder, after giving reasonable written notice of at least ten (10)
days by the other party of such
non-performance, shall entitle the party giving notice to terminate this
Agreement upon written notice to the non-performing party.
(d) This Retention and Severance Agreement shall immediately and
automatically terminate upon the first to occur of:
(i) the determination by the Board of Directors that the Executive has
become disabled and shall not be able to continue his service to the
Company;
(ii) the Executive's death; or,
(iii) a determination by the Board of Directors that the Executive has
engaged or participated in (i) theft or embezzlement, or attempted
theft or embezzlement, of money or property of the Company or any
subsidiary, the perpetration or attempted perpetration of fraud on
the Company or any subsidiary, or the unauthorized appropriation of
or attempt to misappropriate, any tangible or intangible assets or
property of the Company or any subsidiary, (ii) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or other act or
acts injurious to the interest, property, operation, business or
reputation of the Company or any subsidiary; or,
(iv) the Executive has been convicted of a crime the commission of which
results in injury to the Company or any subsidiary; or,
(v) the Executive has materially violated any restriction on the
disclosure or use of confidential information of the Company or any
subsidiary, or on competition with the Company; or, any subsidiary,
or any of their businesses then conducted or planned to be
conducted, in each case as determined in the reasonable judgment or
the Board of Directors.
4. COOPERATION/CONFIDENTIALITY.
(a) COOPERATION. The Parties promise and agree to cooperate with each
other, their agents and attorneys in connection with the foregoing Civil
Litigations and SEC Investigation and any other litigation, proceedings,
investigations, actions or claims, arising out of or relating to the Executive's
employment with the Company or the period during which Executive was employed
with the Company. Said cooperation shall include, but is not limited to,
providing such information and materials that the Company or the Executive or
their respective attorneys may reasonably require in such actions and
proceedings, including the appearance at depositions, hearings, administrative
proceedings, and trial if requested. The Company and Executive agree that said
cooperation shall be provided at no charge or cost to the other, except for
reasonable out-of-pocket travel expenses if required.
5. INSURANCE.
Upon the occurrence of a Severance Event as set forth Section 1, the Company
shall continue to
offer the Executive the same medical, dental, disability and life insurance
benefits, which the Executive currently receives from the Company at the same
price as such benefits are supplied to other Company employees, which
continuation shall be for a period not to exceed a period of six (6) month
period, or until such time as the Executive obtains employment elsewhere,
whichever occurs first. The Executive agrees to provide the Company with
written notice within three days of acceptance of employment elsewhere.
6. STOCK OPTION AGREEMENTS.
(a) Upon the occurrence of a Severance Event as set forth Section 1, the
Executive will hold vested options to purchase up to 35,766 shares of the
Company's common stock less any options exercised between the effective date and
the date of the Severance Event (the "Vested Options") and the parties agree
that no additional shares shall vest or become vested after June 30, 1999.
(b) EXERCISE OF VESTED OPTIONS. The Parties agree that the latest date on
which any Vested Options may be exercised shall be seven (7) months following
the occurrence of a Severance Event or January 31, 2000, whichever is the first
to occur. Any Vested Options which are not exercised pursuant to this section
shall expire. The Executive acknowledges that by virtue of his employment with
the Company that he possesses material non-public information concerning the
Company, its prospects and operations. Accordingly, the Executive hereby agrees
that he will not exercise any Vested Options without the prior written consent
of Company, which consent shall not be unreasonably withheld, with such
obligation lasting until three (3) days after the issuance of the financial
press release for the first quarter after relisting of the Company's stock. In
the event the Company declines to give its consent to such exercise, the time
period in which Executive has to exercise the Vested Options shall be extended
by an equal period of time.
7. EXECUTIVE COVENANTS.
7.1 UNAUTHORIZED DISCLOSURE OF TRADE SECRETS OR CONFIDENTIAL INFORMATION. The
Executive agrees and understands that due to the Executive's position with the
Company, the Executive has been exposed to, and has received, confidential and
proprietary information of the Company relating to the Company's business or
affairs some of which constitutes trade secrets.
(a) For purposes of this Agreement, the 'Confidential Information' shall mean
information, regardless of form, falling within one or more of the following
categories: (a) trade secrets, including any technical or non-technical data,
or other business information, which (i) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable through proper means by, other persons who can obtain economic
value from its use; and (ii) is the subject of reasonable efforts on the part
of the Company to maintain its secrecy; (b) technical know-how, product
specifications, engineering data, and other information related to hardware
design and construction; (c) computer source code, flowcharts, design
documents and specifications, and other related documentation; (d) systems,
plans, processes, procedures, data files, or research and development
information;
(e) customer and vendor lists, marketing plans and surveys, and other
marketing information; and (f) other similar information which the
Company considers and treats as confidential.
(b) Notwithstanding the previous section, Confidential Information shall not
include any information that is: (a) available from public sources or in the
public domain, through no fault of Employee; (b) received at any time from
any third party without breach of a non-disclosure obligation to the Company;
(c) readily discernible from publicly-available products or literature; or
(d) approved for disclosure by prior written permission of a corporate
officer of the Company.
(c) Executive's obligation to not disclose the Confidential Information
shall: (a) be effective contemporaneously with Executive's first access to
Confidential Information of, whether before or after the date of this
Agreement; (b) subject to subsection (c) below, with respect to any
particular disclosure of an item of Confidential Information made under this
Agreement during the Term, the obligations of Executive shall survive for a
period of three (3) years after the date of any Severance Event (the
"Confidentiality Period"); (c) with respect to any item of Confidential
Information constituting a trade secret of the Company, the Confidentiality
Period shall furthermore extend for so long as the Company continues to exert
reasonable efforts, in light of the circumstances, to maintain the item's
secrecy. Upon written request of Executive from time to time, the Company
will provide written notice stating whether or not it still considers any
particular disclosed item of Confidential Information to be a trade secret
under this Agreement, and therefore subject to the continuing obligations
hereunder.
7.2 NON-SOLICITATION. By and in consideration of the Company's entering into
this Agreement, the Executive agrees that the Executive will not, for the period
ending six (6) months for the occurrence of a Severance Event or December 31,
1999, which ever is the earlier to occur, directly or indirectly, whether for
his own account or for the account of any other person (i) solicit, divert or
endeavor to entice away from the Company or any of its affiliates, any Customers
or Clients of the Company, or otherwise engage in any activity intended to
terminate, disrupt or interfere with any person's or entities' relationship with
the Company or any of its affiliates, or (ii) solicit for employment or
recommend to any subsequent employer of the Executive the solicitation for
employment of, any person who, at the time of such solicitation, is employed by
the Company or any affiliate thereof. "Customers" and/or "Clients" shall mean
those persons and entities who, at any time during the Executive's employment
with the Company or at any time up of the occurrence of a Severance Event are or
were customers, distributors or suppliers of the Company or any of its
affiliates or predecessors.
7.3 REMEDIES. The Executive agrees that any breach of the terms of this Section
would result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law; the Executive therefore also
agrees that in the event of said breach or any threat of breach, the Company
shall be entitled to an immediate injunction and restraining order to prevent
such breach and/or threatened breach and/or continued breach by the Executive
and/or any and all persons and/or entries acting for and/or with the Executive,
without having to prove damages, in addition to any other remedies to which the
Company may be entitled at law or in equity. The Executive and Company further
expressly agree that in the event of any judicial determination of a breach of
Section 7, the Company shall no longer be obligated to advance
costs and indemnify the Executive in any proceedings, actions or litigations
arising out of or related to Executive's employment with the Company. The
terms of this paragraph shall not prevent the Company from pursuing any other
available remedies for any breach or threatened breach hereof, including but
not limited to the recovery of damages from the Executive.
8. WAIVER AND GENERAL RELEASE.
8.1 CONSULTATION WITH ATTORNEY. The Executive has been advised to consult with
an attorney before signing this Agreement, and hereby warrants that he has done
so.
8.2 WAIVER OF RIGHTS. Executive understands and agrees that he is waiving any
rights he may have had, now has, or in the future may have to pursue any and all
remedies available to him under any causes of action, including without
limitation, claims of wrongful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, misrepresentation, violation of public
policy, defamation, physical injury, emotional distress, claims under Title VII
of the 1964 Civil Rights Act, as amended, the Nebraska Fair Employment and
Housing Act, the Equal Pay Act of 1963, the Age Discrimination in Employment
Act, all waivable sections of the All State Fair Employment laws, including but
not limited to the provisions of the Neb. Rev. Stat. 20-131, 20-168, 00-000-000,
48-1004, and 00-0000-00, all waivable sections of the All Minnesota State
employment laws, including but not limited to the provisions 181.08, 181.09,
181.10, 181.101, 181.11, 181.13, 181.14, 181.145, 181.15, the Minnesota Equal
Pay for Equal Work Law and Minnesota Prompt Payment Act, the Federal and State
Family and Medical Leave Acts, the Civil Rights Act of 1866, the Employment
Retirement Income and Security Acts of 1976 ("ERISA"), and any other applicable
laws and regulations relating to employment or employment discrimination.
8.3 MUTUAL RELEASE. The Executive hereby expressly waives any and all claims,
demands, and causes of action which he has, claims to have, or may have, whether
known or unknown, including but not limited to those referred to in Section 8.2,
against the Company and all of its past, present and future corporate parents,
divisions, subsidiaries, affiliates, related entities, successors, assigns,
directors, officers, attorneys, Executives and agents. As used in this
Agreement, "claims," "demands," and "causes of action" include, but are not
limited to, contract claims, whether express or implied, tort claims, equitable
claims, claims for breach of fiduciary duty, fraud claims, claims arising out of
federal, state or local laws, regulations or ordinances prohibiting
discrimination on account of race, sex, sexual orientation, religion, age or
national origin, including claims under the Age Discrimination in Employment
Act, wage claims, claims for vacation pay, overtime pay, severance pay, back
pay, fringe benefits, debts, accounts, compensatory damages, punitive damages,
and/or liquidated damages.
9. MISCELLANEOUS.
9.1 BINDING EFFECT: ASSIGNMENT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
representatives, estates, successors and assigns, including any successor or
assign to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise; PROVIDED, HOWEVER, that the Executive, or any beneficiary
or legal representative of the Executive, shall not assign all or any portion of
the Executive's rights
or obligations under this Agreement without the prior written consent of the
Company.
9.2 NOTICES. Whenever notice is required to be given under the terms of this
Agreement, such notice shall be in writing and delivered by hand or by
registered or certified mail, postage prepaid, or transmitted by telex, telegram
or telecopier, addressed as follows:
(a) If to the Company, to it at:
Transcrypt International, Inc.
Attn: Chief Financial Officer
0000 X.X. 0xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Executive, to him at:
Xxxxxxx Xxxxxxx
00000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
or to such other address as either party shall have specified for itself from
time to time to the other party in writing. All such notices shall be
conclusively deemed to be received and shall be effective, if sent by hand
delivery, upon receipt, or if sent by registered or certified mail, upon
receipt, or if transmitted by telex, telegram or telecopier (which shall be
followed promptly by hand delivery), upon confirmation of such transmission
9.3 GOVERNING LAW. This Agreement and the rights and obligations of the parties
hereto shall be construed and enforced in accordance with and governed by the
laws of the State of Nebraska without giving effect to the conflict of law
principles thereof.
9.4 SEVERABILITY. If any term or other provision of this Agreement, or any
application thereof to any circumstances is invalid, illegal or incapable of
being enforced by any rule of law or public policy, in whole or in part,
provision or application shall to that extent be severable and shall nor affect
other provisions or applications of this Agreement.
9.5 ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
Parties hereto with respect to its subject matter hereof and supersedes all
prior agreements and understandings, oral or written, between them as to such
subject matter, including, but not limited to, any and all employment
agreements, whether written, oral or implied.
9.6 OBLIGATION TO TELL THE TRUTH. Nothing herein shall prevent or be construed
to prevent either party from responding truthfully to inquiries from
governmental agencies or authorities or otherwise compelled by law.
9.7 NO ADMISSION. Nothing in this Agreement shall be construed as an admission
of fraud,
liability or wrongdoing by the Executive, and the Executive expressly denies
any fraud, liability or wrongdoing.
9.8 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one instrument.
9.9 PLURALS: GENDER: HEADINGS. Under this Agreement, unless the context
otherwise requires, words in the singular number or in the plural number shall
each include the singular number and the plural number, and the use of any
gender shall Include all genders. The headings in this Agreement are for
reference purpose only and shall not limit or otherwise affect the meaning or
interpretation of this Agreement.
9.10 FURTHER ASSURANCES. Each party hereto shall do and perform or cause to be
done and performed all further acts and things and shall execute and deliver an
other agreements, certificates, instruments, and documents as any other party
hereto reasonably may request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
9.11 AMENDMENT AND MODIFICATION. This Agreement may not be amended, nor may any
provision hereof be modified or waived, except by an instrument in writing duly
signed by the party to be charged.
9.12 WAIVER. No provision of this Agreement may be waived or discharged unless
such waiver or discharge is agreed to in writing and signed by the affected
party, and no waiver or discharge of any breach by any party hereto of any
provision of this Agreement to be performed by such party, shall be deemed a
waiver or discharge of any other provisions or a waiver or discharge of any
breach of any other provisions, respectively, at the same or at any prior or
subsequent time.
9.13 INTERPRETATION. For purposes of interpretation this Agreement shall be
deemed to have been jointly drafted by the Executive and the Company.
9.14 DEFINITIONS.
(a) The term "affiliate" shall mean, with respect to any person, any other
person directly or indirectly controlling, controlled by, or under common
control with such person.
(b) The term "person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentally thereof.
9.15 WARRANTIES.
(a) Each party entering into this Agreement, and each person executing
this Agreement on behalf of any party, has full authority to do so and to make
the covenants, promises, representations, and warranties set forth herein.
(b) There are no other agreements or understandings between the parties
relating to the matters and releases referred to in this Agreement other than as
set forth herein. The mutual obligations and undertakings of the parties
expressly set forth in this Agreement are the sole and only consideration of
this Agreement, and no representations, promises or inducements of any nature
whatsoever have been made by the parties other than as appear in this Agreement.
(c) This Agreement has been read carefully by each of the parties and its
contents are known and understood by each of the parties. This Agreement is
signed freely and voluntarily by each party hereto.
9.16 ATTORNEYS' FEES. In the event of any litigation between the parties in
connection with the enforcement, interpretation or defense of this Agreement, or
the defense of any claim barred by this Agreement, the prevailing party or
parties shall be entitled to reimbursement from the other party of all
reasonable costs and expenses incurred by it in connection with the litigation,
including attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates provided below.
/S/ XXXXXXXXXXX X. XXXXXX
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Xxxxxxxxxxx X. Xxxxxx
Vice President of Human Resources
Transcrypt International, Inc.,
/S/ XXXXXXX X. XXXXXXX
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Xxxxxxx Xxxxxxx
