Exhibit 10.5
SEVERANCE AGREEMENT
THIS 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 Patricia M. Hollister, currently an officer
and employee of FSI (hereinafter “Employee”).
WHEREAS, FSI and Employee are parties
to an Employment Agreement dated January 15, 1996 (the
“Prior Agreement”) which the parties desire to amend
and restate in its entirety with this Agreement;
WHEREAS, FSI and Employee are parties
to an Amended and Restated Management Agreement of even date
herewith (the “Management Agreement”);
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) wilful 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 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
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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,
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 Company under this
Agreement, commencing on the Effective Date and continuing until
March 28, 2009 (the “Original Term”), unless
earlier terminated pursuant to Section 9 of this Agreement,
and for successive one-year periods thereafter (each an
“Extended Term”), unless earlier terminated pursuant to
Section 9 of this Agreement; except that either party may give
written notice of at
2
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
Section 4 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 her employment by FSI, and the wages, salary, and
employee benefits to be provided to Employee by FSI and in view of
the provisions of Section 4, Employee and FSI hereby agree as
follows:
1. Employee acknowledges and
agrees:
a. That
in the course of her 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 her 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 her
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.
2. a. During her 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 her 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
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(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 her 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 Subsection b(i), Employee may accept employment
with a business organization that is engaged or about to engage in
selling, marketing, producing, distributing, leasing, or d
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