Exhibit 10.13
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:
1. 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);
2. 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;
3. The vested stock
options to acquire 150,000 shares granted on November 30,
2000 shall terminate on the date hereof;
4. 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;
5. Assuming
Executive does not revoke his signature during the seven day 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;
6. 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;
7. 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
8. Any other
unvested right to receive Company stock shall terminate on the date
hereof.
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
resignations. At the request of Company, Executive agrees to
execute any documents reasonably requested to effectuate or to
facilitate his resi
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