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Exhibit 10.1 SEVERANCE AGREEMENT AND RELEASE OF
CLAIMS This Severance
Agreement and Release of Claims (" Agreement ") is made and
entered into on August 28, 2008 by and between Hamid R.
Shokrgozar (" Executive ") and White Electronic Designs
Corporation and all of its affiliated companies and divisions
(collectively referred to as " Company ") and is intended by
the parties hereto to settle and dispose of all claims and
liabilities that exist between Executive and Company as indicated
herein. RECITALS
A. Executive and the Company are
parties to that certain Executive Employment Agreement dated
December 13, 2007 (the " Employment Agreement ").
B. Executive’s last day of
employment with Company will be August 28, 2008 (the "
Termination Date "). Executive will resign from his
positions as Chairman of the Board, Chief Executive Officer,
President and Director and any other positions and offices he holds
with the Company and with each of Company’s subsidiaries and
affiliated entities on that date; and
C. By entering into this
Agreement, the parties mutually and voluntarily agree to be legally
bound by the terms set forth below. COVENANTS
NOW, THEREFORE, for valuable
consideration, the parties agree as follows: I.
A. The Company agrees to pay
Executive the sum of one million six hundred thousand dollars
($1,600,000), plus Executive’s accrued and unused vacation
pay, less all lawfully required withholdings. Payment shall be made
immediately following the expiration of the seven (7) day
revocation
period set
forth in Section VII, assuming that Executive has not revoked
his signature during that seven (7) day period. The Company
will promptly pay Executive all appropriate expense reimbursement
requests properly submitted by Executive in compliance with Company
policy. B. If the Executive
elects to continue his group health plan coverage (medical, dental
and vision) under Consolidated Omnibus Budget Reconciliation Act
("COBRA"), the Company shall pay for eighteen (18) months
following the Termination Date the Company’s portion of the
Executive’s COBRA premium equal to the amount paid by the
Company before the Executive’s Termination Date. Following
such period, until December 13, 2010, the Company shall pay
Executive an amount equal to the Company’s portion of the
Executive’s COBRA premium in order for Executive to secure
health insurance of his choice; provided that such payments
shall
cease if, during the COBRA period or thereafter, Executive is
then covered by reasonably equivalent or superior health insurance
provided by any subsequent employer. In addition, the Company shall
continue to provide Executive with up to $4,000 per year for
unreimbursed medical expenses and with the auto allowance and the
disability and life benefits he is receiving from the Company as of
the Termination Date, less any required deductions, until
December 13, 2010. The life benefits and auto allowance
received by Executive shall be on an after-tax basis, such that the
Company shall compensate Executive for any federal or state tax
payable with respect to such benefit as well as any such tax
payable with respect to the compensation called for by this
sentence. Such gross up payments shall be made to Executive no
later than the last day of the calendar year in which Executive
pays such taxes. C. The Company
will provide outplacement services to the Executive at the
outplacement provider of his choice for a period not to exceed
eighteen (18) months in the maximum amount of $50,000.
D. The Company will reimburse
Executive for all reasonable attorneys’ fees incurred in
connection with this Agreement in the maximum amount of $50,000 (so
long as such fees are incurred and paid within six months from the
date of this Agreement). E. The
Company and Executive agree to the following concerning outstanding
grants of stock options, restricted stock units (" RSUs ")
and performance shares to Executive:
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1.
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The following vested stock options: (i) 125,000 shares
granted on November 10, 1999; (ii) 125,000 shares granted
on November 10, 1999; (iii) 150,000 shares granted on
May 16, 2001 and (iv) 150,000 shares granted on
December 15, 2004 shall terminate, if not exercised, on their
respective expiration dates (i.e. November 10, 2009, November
10, 2009, May 16, 2011, and December 15, 2014,
respectively);
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2.
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The vested stock options to acquire 150,000 shares granted on
December 3, 1998 shall terminate, if not exercised, on the
90th day following the Termination Date;
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3.
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The vested stock options to acquire 150,000 shares granted on
November 30, 2000 shall terminate on the date hereof;
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4.
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Assuming Executive does not revoke his signature during the
seven day period set forth in Section VII, the Committee shall
grant to Executive on the 8th day after the date hereof an option
to acquire 150,000 shares of the Company’s Common Stock at an
exercise price of $7.25 per share, an expiration date of
November 30, 2010, and with such other terms as are contained
in the Company’s standard form of option agreement;
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5.
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Assuming Executive does not revoke his signature during the
seven day
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period set forth in Section VII, the 50,000 shares of
restricted stock granted to Executive pursuant to that certain
Restricted Stock Units Award Agreement dated December 12, 2007
shall vest on the 8th day after the date hereof;
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6.
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Assuming Executive does not revoke his signature during the
seven day period set forth in Section VII, one-half (50,000
shares) of the performance shares granted to Executive pursuant to
that certain Performance Share Award Agreement dated
December 12, 2007 shall vest on the 8th day after the date
hereof;
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7.
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Assuming Executive does not revoke his signature during the
seven day period set forth in Section VII, one-half (50,000
shares) of the performance shares granted to Executive pursuant to
that certain Performance Share Award Agreement dated
December 12, 2007 shall vest if the Company’s EBITDA for
the fiscal year ended in 2009 equals or exceeds $9,960,000; and
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8.
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Any other unvested right to receive Company stock shall
terminate on the date hereof.
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F. Executive acknowledges
that upon receipt of the above, he is not owed any further money or
any further equity compensation by the Company.
G. Executive hereby resigns his
positions of Chairman of the Board, Chief Executive Officer,
President and Director and any other positions he holds with the
Company and with each of Company’s subsidiaries and
affiliated entities and the Company hereby accepts the resi
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