EXHIBIT 10.46
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is made and entered
into as of February 14, 2003 by and between Xxxxxx Micro Inc., a Delaware
corporation (the "Company"), and XXXXX X. XXXXXX ("Executive") (the Company and
Executive hereinafter referred to together as the "Parties").
WHEREAS, the Parties have heretofore entered into that certain
Executive Retention Agreement between the Parties dated as of January 31, 2000,
attached as Exhibit A hereto (as modified by this Agreement, the "Retention
Agreement").
WHEREAS, the Parties have agreed that Executive will terminate
his employment with the Company on February 14, 2003.
WHEREAS, for purposes of determining Executive's payments and
benefits hereunder, the Parties intend to treat the termination of Executive's
employment with the Company as a "Constructive Event" within the meaning of the
Retention Agreement.
WHEREAS, the purpose of this Agreement is to confirm the agreed
upon terms, conditions and arrangements concerning the termination of
Executive's employment with the Company.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises and agreements herein contained, the sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound, agree as
follows:
1. Resignation. Effective as of February 14, 2003 (the "Effective
Date"), and subject to Executive's not revoking the Release (as defined below),
(a) Executive agrees to resign all of his positions with the Company and the
Company agrees to accept Executive's resignation from such positions, and (b)
each of the Parties agrees to execute and deliver to the other a Release (the
"Release") in the form attached hereto as Exhibit B.
2. Separation Payments.
(a) Subject to all of the terms and conditions of the Retention
Agreement and any other applicable benefit or compensation plans or
arrangements of the Company in which the Executive is a participant, the
Company agrees to make the payments and to provide the benefits to
Executive as set forth in this Section 2; provided, however, that no
payments or benefits shall be paid or provided pursuant to Section 2(d)
or (e), below, sooner than eight (8) days after the date on which
Executive executes and delivers the Release.
(b) On the Effective Date, the Company shall pay Executive, in
accordance with Section 2.04(b)(i) of the Retention Agreement,
Executive's "Accrued Compensation" (as defined in Section 2.03(a) of the
Retention Agreement) through and including the Effective Date; provided,
however, that the Company shall reimburse Executive for his unreimbursed
business expenses as soon as practicable after submission
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by Executive of proper documentation in accordance with the Company's
policy with respect to reimbursement of such expenses.
(c) The Company shall provide to Executive, in accordance with
Section 2.04(b)(ii) of the Retention Agreement, Executive's "Accrued
Benefits" (as defined in Section 2.03(a) of the Retention Agreement)
through and including the Effective Date.
(d) Subject to Executive's not revoking the Release, the Company
shall pay Executive, in accordance with Section 2.04(b)(iii) of the
Retention Agreement, in equal installments at the times and in
accordance with the applicable Company payroll system, over a period of
thirteen (13) months measured from the Effective Date, the sum of
Executive's "Basic Termination Benefit," "Bonus Amount" and "Basic Bonus
Amount" (each as defined in Section 2.04(a)(iii), 2.03(b)(ii) and
2.03(c), respectively, of the Retention Agreement). Notwithstanding any
interpretation of the Retention Agreement to the contrary, the Parties
agree that this sum shall be six hundred five thousand three hundred
thirty seven dollars ($605,337.00). For purposes of this Agreement,
notwithstanding any interpretation of the Retention Agreement to the
contrary, the Parties agree further that the "Payment Period" pursuant
to the Retention Agreement and this Agreement shall be thirteen (13)
months measured from the Effective Date.
(e) Subject to Executive's not revoking the Release, the Company
shall provide to Executive, in accordance with Section 2.04(b)(iv) of
the Retention Agreement, Executive's "Additional Benefits" (as defined
in Section 2.03(d) of the Retention Agreement and as may be modified
below) through and in respect of the "Payment Period" (as set forth in
Section 2(d) above). Notwithstanding any interpretation of the Retention
Agreement to the contrary, the Parties agree that such Additional
Benefits shall consist solely of the following:
(i) Executive's continued participation under the
Company's medical care and dental plans (or any successor
medical or dental plans adopted by the Company) in which
Executive participates as in effect immediately prior to the
Effective Date (subject to changes in coverage levels applicable
to all employees generally covered by such plans), if he elects
to receive continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), for the applicable
period under COBRA commencing with the Effective Date; provided,
however, that if Executive elects such coverage, the Company
will provide such coverage at the Company's expense during the
Payment Period, and Executive shall be eligible after the
Payment Period to participate in the Company's retiree medical
plan at his own expense in accordance with the terms and
conditions of such retiree medical plan;
(ii) reimbursement of the documented costs, including
laboratory and test fees, of an annual physical examination for
Executive in an amount not to exceed $1,500;
(iii) Executive's participation in the Company's
Supplemental Executive Deferred Compensation Plan during the
Payment Period up to the full
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amount of employee contributions permitted; provided, however,
that the Company will not be required to make any matching
contributions with respect to Executive's contributions during
the Payment Period; and
(iv) continued vesting, during the Payment Period, of
outstanding stock options granted to Executive prior to the
Effective Date pursuant to the Company's "Stock Plans" (as
defined in Section 2.02(b) of the Retention Agreement). A
summary of the status of Executive's stock options as of
February 14, 2003 is attached hereto as Exhibit C.
3. Stock Option Exercises. Executive shall be entitled to exercise his
stock options granted pursuant to the Company's "Stock Plans" (as defined in
Section 2.02(b) of the Retention Agreement), to the extent vested, until the
earlier of (a) the fifth (5th) anniversary of the Effective Date or (b) the last
day of the term of such option. Any unvested stock options shall terminate
automatically as of the last day of the Payment Period.
4. Long Term Incentive Plan.
(a) With respect to the Company's 2002 Long-Term Executive Cash
Incentive Award Program (the "2002 LTIP"), Executive shall receive a
payment equal to twenty-six thirty-sixths (26/36) of the final
calculated payout amount attributable to Executive's award under the
2002 LTIP. Such payment shall be (i) made in accordance with the
applicable Company payroll system at or about the same time as the
Company makes payments to other participants in the 2002 LTIP and (ii)
in full satisfaction of any and all amounts payable to Executive under
the 2002 LTIP.
(b) With respect to the Company's 2003 Long-Term Executive Cash
Incentive Award Program (the "2003 LTIP"), Executive shall receive a
payment equal to fourteen thirty-sixths (14/36) of the final calculated
payout amount attributable to Executive's award under the 2003 LTIP.
Such payment shall be (i) made in accordance with the applicable Company
payroll system at or about the same time as the Company makes payments
to other participants in the 2003 LTIP and (ii) in full satisfaction of
any and all amounts payable to Executive under the 2003 LTIP.
5. Attorney's fees. The Company shall pay the reasonable legal fees
incurred by Executive for the services of his attorney in regard to the analysis
of Executive's rights under the Retention Agreement and negotiation of this
Agreement; provided, however, that the Company's obligation with respect to such
legal fees shall not exceed seven thousand five hundred dollars ($7,500.00).
6. Survival of Retention Agreement; Entire Agreement. This Agreement is
intended to modify the Retention Agreement only insofar as the terms and
conditions of this Agreement require. In all other respects, the Retention
Agreement shall remain in effect in accordance with its terms. This Agreement
and the Retention Agreement (as modified by this Agreement) constitute and are
intended to constitute the entire agreement of the Parties concerning the
subject matter hereof and thereof. No covenants, agreements, representations or
warranties of any kind whatsoever have been made by any Party hereto, except as
specifically set forth herein.
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All prior discussions and negotiations with respect to the subject matter hereof
and thereof are superseded by this Agreement and by the Retention Agreement (as
modified by this Agreement).
7. Successors. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective principals, partners, officers,
directors, shareholders, employees, trustees, trust beneficiaries, agents,
independent contractors and the successors, assigns, heirs, executors,
administrators and representatives of each of the foregoing.
8. Further Assurances. The Parties shall, from time to time, promptly
execute and deliver such further instruments, documents and papers and perform
such further acts as may be necessary or proper to carry out and effect the
terms of this Agreement.
9. Headings. Headings in this Agreement are for convenience and
reference only and shall not be used to construe its provisions.
10. Governing Law. This Agreement shall be interpreted in accordance
with the plain meaning of its terms and not strictly for or against any of the
Parties. This Agreement and all provisions hereof shall be governed by and
construed under the laws of the State of California without regard to the choice
of law rules thereof.
11. Modification; Waiver. This Agreement may not be modified or
terminated orally and no modification, termination or waiver shall be valid
unless in writing and signed by all of the Parties. No waiver of any breach of
any provision of this Agreement shall be deemed to be a waiver of any other
breach of this Agreement.
12. Voluntary Execution of Agreement. Executive understands and agrees
that he is receiving the amounts and benefits described in this Agreement as
consideration for his execution of this Agreement and fulfillment of the
covenants and promises contained herein, including without limitation his
execution and nonrevocation of the Release. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
either Party. Executive acknowledges that he has had the opportunity to be
represented and advised by legal counsel concerning the terms and conditions of
this Agreement and his execution of it.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute but one and the same agreement.
14. Severability. If any provision of this Agreement, or the application
thereof, is for any reason held to any extent to be invalid or unenforceable,
the remainder of this Agreement and application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision and to execute any amendment,
consent or agreement deemed necessary or desirable by the Company to effect such
replacement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Xxxxxx Micro Inc.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
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Xxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
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