Exhibit 10.2
SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE
AGREEMENT (this “Agreement”) is made and entered into
as of the 28 th day of March,
2008 (the “Effective Date”), by and between FSI
International, Inc., a Minnesota corporation (hereinafter
“FSI”), and Benno G. Sand currently an officer and
employee of FSI (hereinafter “Employee”).
RECITALS
FSI and Employee are parties to a
Separation Agreement dated March 14, 2001 (the “Prior
Agreement”), which the parties desire to amend and restate in
its entirety with this Agreement.
FSI and Employee are parties to an
Amended and Restated Management Agreement of even date herewith
(the “Management Agreement”).
In October 2004, the American
Jobs Creation Act of 2004 (the “Act”) was enacted,
Section 885 of which Act added new provisions to the Internal
Revenue Code pertaining to deferred compensation.
The Treasury Department has issued
final regulations regarding the deferred compensation provisions of
the Act, which permit service providers and service recipients a
transition period to modify existing deferred compensation
arrangements to bring them into compliance with the Act.
The parties agree that it is in their
mutual best interests to modify, amend and clarify the terms and
conditions of the Prior Agreement, as set forth in this Agreement
and that certain Management Agreement of even date herewith, with
the full intention of complying with the Act so as to avoid the
excise taxes and penalties imposed under the Act.
NOW, THEREFORE, in consideration of
the foregoing premises and the respective agreements of FSI and
Employee set forth below, FSI and Employee, intending to be legally
bound, agree as follows:
DEFINITIONS
Specific terms used in this Agreement
have the following meanings:
A. “Base Annual
Salary” shall mean the highest annual rate of the
Employee’s base salary with the Company during the twelve
(12) months preceding the date of termination of the
Employee’s employment with the Company (without reduction for
any salary reduction or other deferral contribution to any employee
benefit plan sponsored by the Company).
B. “Cause” shall
mean and be limited to, (i) willful and gross neglect of
duties by the Employee or (ii) an act or acts committed by the
Employee constituting a felony under United States federal or
applicable state law and substantially detrimental to the Company
or any
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Subsidiary or the reputation of the Company or any Subsidiary, so
long as Employee is given written notice thereof and fails to
promptly cure (if such “Cause” can be cured) and
subsequently there is a determination by a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting thereof called and held for
such purpose (after reasonable notice is provided to the Employee
and the Employee is given an opportunity to be heard before the
Board) finding that in the good faith opinion of the Board the
Employee is guilty of the conduct described above in (i) or
(ii).
C. “Company” means,
separately and collectively, FSI and any entity in which FSI has an
ownership interest, directly or indirectly, of at least twenty
percent (20%) of the outstanding shares of such entity.
D. “Competing
Product” means,
a. for
the period which Employee is an employee of the Company, any
product or service that competes with or will compete with any
product, product line, or service that is sold, marketed, produced,
distributed, leased, or under development by the Company with
respect to which Employee performed services of any kind or nature
during the twenty-four (24) month period ending on the date of
the conduct at issue; and
b. for
the period after Employee’s employment with the Company has
ended, any product or service that competes with or will compete
with any product, product line, or service that is sold, marketed,
produced, distributed, leased, or under development by the Company
with respect to which Employee performed services of any kind or
nature during the twenty-four (24) month period ending on the
date Employee’s employment with the Company ends.
E. “Confidential
Information” means certain proprietary information maintained
in confidence by the Company as intellectual property, trade
secrets, or otherwise, including but not limited to information
relating to (i) the Company’s finances, processes,
products, services, research, and development, and (ii) its
manufacturing, purchasing, accounting, engineering, designing,
marketing, merchandising, selling, distributing, leasing, and
servicing systems and techniques; it also includes plans or
proposals with regard to any of the foregoing, whether implemented
or not. All information originated by Employee, or disclosed to
Employee, or to which Employee otherwise gains access, during the
period of Employee’s employment with the Company that the
Employee has reason to believe is Confidential Information, or that
is characterized or treated by the Company as being Confidential
Information, or that would be of economic value to a third party,
shall be presumed to be Confidential Information.
F. “Customer” means
any firm, person, corporation, or other entity
a. to
whom or to which the Company has sold, distributed, or leased its
products or services, or
b. whom
or which the Company has solicited for sales, distribution, or
leasing of its products or services,
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whether
directly or indirectly, and whether by or through employees of the
Company or through its affiliated sales organizations.
G. “Customer
Information” means information relating to Customers’
operations, processes, products, and research and development and
to Customers’ manufacturing, purchasing, and engineering
systems and techniques.
H. “Restricted
Country” means any nation or country in which the Company had
Customers, had business operations, or otherwise did business,
directly or indirectly, in the twenty-four (24) month period ending
on the Termination Date.
I. “Term” means the
period of Employee’s employment with the under this Agreement
commencing on the Effective Date and continuing until
March 28, 2009 (the “Original Term”), unless
earlier terminated pursuant to Section 10 of this Agreement,
and for successive one-year periods thereafter (each an
“Extended Term”), unless earlier terminated pursuant to
Section 10 of this Agreement; except that either party may
give written notice of at least 90 days prior to the
expiration of the Original Term or the Extended Term then in effect
that such party elects not to extend the term of this
Agreement.
J. “Termination
Date” means the date on which Employee’s termination of
employment with the Company is effective. For purposes of
Sections 4 and 5 of this Agreement only, the Termination Date
shall mean the date on which a “separation from
service” has occurred for purposes of Section 409A of the
Internal Revenue Code and the regulations and guidance thereunder
(the “Code”).
Terms
not specifically defined will be interpreted in light of the
context in which they appear.
AGREEMENT
In
consideration of his employment by FSI, and the wages, salary, and
employee benefits to be provided to Employee by FSI, Employee and
FSI hereby agree as follows:
1. Employee acknowledges and
agrees:
a. That
in the course of his employment with the Company during and after
the Term, Employee may have access to Confidential Information;
that the Company has developed and established and will continue to
develop and establish a valuable and extensive trade in its
products and services; and that the Company would suffer great loss
and irreparable injury if Employee were to disclose any of the
Confidential Information, or use it in the solicitation of
Customers or use it to compete with the Company.
b. That
in the course of his employment with the Company during and after
the Term, Employee may have access to Customer Information; that
Customer Information obtained by Employee during the course of his
employment with the Company is a valuable asset of the Company; and
that the Company would suffer great loss and irreparable injury if
Employee were to use Customer Information in the solicitation of
Customers or to otherwise compete with the Company.
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2. a. During his employment with
the Company both during and after the Term, and at all times
thereafter, Employee shall maintain in strictest confidence and
shall not, without FSI’s express advance written consent,
directly or indirectly (whether through written or printed
materials, electronic media, or oral communications, and whether
Employee’s source of information is written or printed
materials, electronic media, oral communications, or his own
memory),
(i) copy,
or
(ii) transmit,
publish, communicate, or otherwise disclose or make available, or
permit or cause to be transmitted, published, communicated or
otherwise disclosed or made available, to any other firm, person,
corporation or other entity, or
(iii) use
as owner, director, officer, manager, trustee, partner, employee,
independent contractor, agent, or consultant in any business
venture or other enterprise or endeavor,
any
Confidential Information or Customer Information.
b. An
exception to the provisions of Paragraph 2(a), above, is that
in the scope and course of his employment with FSI, Employee may,
in furtherance of the Company’s business interests,
communicate Confidential Information or Customer Information to
other responsible Company personnel, Customers, and other persons
or entities with whom or which the Company has dealings, who have a
need to know such information.
3. During Employee’s
employment with the Company during and after the Term and for a
period of one (1) year following termination of
Employee’s employment, whether voluntary or involuntary, and
whether before or after expiration of the Term:
a.
Employee will inform any new employer, prior to accepting
employment, of the existence of this Agreement and provide such
employer with a copy of this Agreement.
b.
(i) Except for ownership of one percent (1%) or less of the
shares of any company listed on a national or regional stock
exchange, Employee will not own any shares of stock or other
ownership interest, either directly or indirectly, or serve as a
director, officer, manager, trustee, partner, employee, independent
contractor, agent, or consultant, or otherwise become active or
involved in the management, operation, or representation of a
business or other enterprise that is engaged in or about to engage
in selling, marketing, producing, distributing, leasing, designing,
or developing a Competing Product in any Restricted Country.
(ii) Notwithstanding
the provisions of Subparagraph b(i), Employee may accept employment
with a business organization that is engaged or about to engage in
selling, marketing, producing, distributing, leasing, or developing
a Competing Product in a Restricted Country if (x) such
business organization is diversified to the extent that it has
significant operations other than that portion of the business
organization that is engaged or about to engage in selling,
marketing, producing, distributing, leasing, or developing a
Competing Product; (y) during the entire one year period
following termination of employment with the Company, such Employee
will be rendering services to that portion of the business
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organization that is not engaged or about to engage in selling,
marketing, producing, distributing, leasing, or developing a
Competing Product; and (z) prior to acceptance of employment by
Employee with such business organization, separate written
assurances satisfactory to FSI shall be received and accepted by
FSI from both the Employee and the business organization, in each
case stating that during the entire one year period following
termination of employment with the Company, Employee will not be
rendering services to any portion of the business organization
that, directly or indirect
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