SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is entered into
on this 7th day of February, 1997 by and between XXXXXX X. XXXXX (the
"Executive") and QUANTUM EPITAXIAL DESIGNS, INC., a Pennsylvania corporation
(the "Company").
Background
The Company currently employs Executive as its President
pursuant to that certain Employment Agreement between Executive and the
Company dated August 30, 1989 (the "Employment Agreement"). The Company and
Executive desire to terminate the Employment Agreement, and in lieu thereof,
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) terminate the
Employment Agreement and to continue his employment with the Company on an "at
will" basis, 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. Termination of Employment Agreement. The Company
and Executive hereby terminate the Employment Agreement. Accordingly, from and
after the date of this Agreement, neither the Company nor Executive shall have
any further rights, or duties or obligations to the other, under the Employment
Agreement, and Executive's employment with the Company shall 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 Executive's felonious
conduct (whether or not related to Executive's employment with the Company),
habitual intoxication, willful misconduct, any repeated violation of express
directions or rules or regulations established the Company's board of directors
(the "Board") from time to time regarding the conduct of the Company's business
after notice and a reasonable cure period, or any violation by Executive of the
provisions of Section 3 of this Agreement after notice and a reasonable cure
period.
(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
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and/or retrieval medium or device) that the Company treats as confidential or
proprietary, 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.
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(c) Intellectual Property.
(i) Executive acknowledges and agrees that any
and all writings, documents, inventions, discoveries, improvements, computer
programs or instructions (whether 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,
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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 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
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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 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
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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 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:
Xxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to the Company:
Quantum Epitaxial Designs, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman of the Board
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.
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(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.
(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:__________________________ _______________________________
Xxxxxx X. Xxxxx
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