Exhibit 10.1
SEVERANCE AGREEMENT AND RELEASE OF CLAIMS
     This Severance Agreement and Release of Claims (“Agreement”) is made and
entered into on February 22, 2010 by and between Roger A. Derse (“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 is the Senior Vice President and Chief Financial Officer.
     B. Executive and the Company are parties to that certain Executive
Employment Agreement dated January 21, 2009 (the “Employment Agreement”).
     C. Executive hereby tenders his resignation which will be effective as of
March 1, 2010 (the “Resignation Date”). Executive has resigned from his position
as Senior Vice President and Chief Financial Officer and any other offices he
holds with the Company and with each of Company’s subsidiaries and affiliated
entities on that date.
     D. 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. Within three days of the Resignation Date, the Company agrees to pay
Executive the cash sum of forty two thousand nine hundred eighty dollars and
thirty five cents ($42,980.35), less all lawfully required withholdings, which
represents (i) his accrued but unused vacation, and (ii) any of his earned but
not paid Base Salary (as defined in the Employment Agreement) through the
Resignation Date. The Company will also pay Executive appropriate expense
reimbursement requests, if any, timely and properly submitted by Executive (with
supporting documentation as required by the Company consistent with existing
Company policy and procedures).
     B. In addition, for a period of eighteen (18) months from the Resignation
Date, the Company shall continue to pay Executive’s Base Salary (as defined in
the Employment Agreement), less all lawfully required withholdings; provided,
however that the Company shall not be required to make any payments under this
Section I.B until the expiration of the Revocation Period (as defined in
Section VIII below), assuming that Executive has not revoked his signature
during that Revocation Period.

 

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     C. If the Executive elects to continue his group health plan coverage
(medical and dental) under Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), the Company shall pay Executive’s COBRA continuation premiums until
the earlier of (i) the date Executive is eligible to receive group health
benefits from another employer or (ii) eighteen (18) months after the
Resignation Date.
     D. The Company and Executive agree to the following concerning outstanding
grants of stock options and restricted stock to Executive:

  •   Executive agrees and represents that immediately prior to the Resignation
Date, the following grants are his only existing option grants: (i) 50,000
options granted on May 26, 2004 at a strike price of $6.38, (ii) 10,000 options
granted on December 15, 2004 at a strike price of $6.45, and (iii) 40,000
options granted on September 12, 2006 at a strike price of $4.70 (together, the
“Existing Options”). The parties also agree that other than 5,834 shares under
the option grant set forth in clause (iii) above, each of these options was
fully vested as of the date immediately prior to the date of this Agreement.
Assuming that Executive has not revoked his signature during the Revocation
Period, the Existing Options shall be fully vested as of the day following the
end of the Revocation Period, exercisable until the tenth (10th) anniversary of
the grant date of such option (and this Agreement shall be deemed an amendment
of all such stock option grants or award agreements for the purpose of the
extension of the period of exercise provided for in this clause); provided,
however, that if the Company determines in good faith that the extension of any
of the Existing Options’ exercise periods results in the options being
considered deferred compensation subject to Section 409A of the Internal Revenue
Code, such extension shall be shortened or nullified as determined in good faith
by the Company. In the event that Executive revokes his signature during the
Revocation Period, the exercisability and vesting of these Existing Options
shall operate pursuant to the applicable option grant or award agreement and
Company equity plan.     •   Executive agrees and represents that he has 25,000
shares of unvested restricted stock relating to the Company’s common stock
pursuant to one (1) outstanding grant with a grant date of December 10, 2008
(the “Unvested RSAs”). Assuming that Executive has not revoked his signature
during the Revocation Period, such Unvested RSAs shall automatically accelerate
and be fully vested as of the day following the end of the Revocation Period. In
the event that Executive revokes his signature during the Revocation Period the
vesting of these Unvested RSAs shall operate pursuant to the applicable grant
agreement and Company equity plan.     •   Executive agrees that any other
unvested right to receive Company securities, if any, shall terminate on the
Resignation Date.

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     E. Executive acknowledges that upon receipt of the above, he is not owed
any further money or any further equity compensation by the Company. Executive
also agrees to reasonably cooperate to the extent required with respect to
timing of payments hereunder for purposes of complying with Section 409A of the
Internal Revenue Code.
     F. Effective as of the Resignation Date, Executive hereby resigns his
position as an employee and executive officer of the Company, 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 resignation(s). At the
request of Company, Executive agrees to execute any documents reasonably
requested to effectuate or to facilitate his resignation(s) and the transition
of such positions or responsibilities to other employees of the Company.
Executive also agrees that his resignation and departure from his position(s)
from the Company is not because of a disagreement with the Company on any matter
relating to the Company’s operations, policies or practices, including those
that would require disclosure under Item 5.02 of Form 8-K.
II.
     In consideration of the compensation and covenants set forth in Paragraph I
above and the covenants herein:
     A. Executive, on behalf of himself, his marital community if any, and his
heirs or assigns, expressly releases Company and its subsidiaries, affiliated
companies, directors, officers, all of their agents, employees, and attorneys;
and all their predecessors and successors (collectively the “Released Entities”)
from ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTION, OBLIGATIONS,
DAMAGES, PENALTIES, FEES, COSTS, EXPENSES, AND LIABILITIES OF ANY NATURE
WHATSOEVER WHICH EXECUTIVE HAS, HAD, OR MAY HAVE HAD AGAINST COMPANY OR ANY OR
ALL OF THE RELEASED ENTITIES IN CONNECTION WITH ANY CAUSE OR MATTER WHATSOEVER,
WHETHER KNOWN OR UNKNOWN TO THE PARTIES AT THE TIME OF EXECUTION OF THIS
AGREEMENT AND EXISTING FROM THE BEGINNING OF TIME TO THE DATE OF THE EXECUTION
OF THIS AGREEMENT AND INCLUDING, WITHOUT LIMITATION, ALL MATTERS RELATED TO
EXECUTIVE’S SERVICE WITH THE COMPANY AND HIS RESIGNATION.
     By signing this Agreement, Executive agrees to FULLY WAIVE AND RELEASE ALL
CLAIMS without limitation, such as attorneys’ fees, and all rights and claims
arising out of, or relating to, his employment service to the Company including,
BUT NOT LIMITED TO, any claim or other proceeding arising under (without
assuming the applicability of such statute or law to the service of Executive):

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•   The Civil Rights Act of 1866 (“Section 1981”);   •   Title VII of the Civil
Rights Act of 1964 as amended by the Civil Rights Act of 1991;   •   The
Americans with Disabilities Act (“ADA”) and its subsequent amendments;   •   The
Age Discrimination in Employment Act (“ADEA”);   •   The Labor Management
Relations Act (“LMRA”);   •   The National Labor Relations Act (“NLRA”);   •  
The Fair Labor Standards Act (“FLSA”);   •   The Family and Medical Leave Act of
1993 (“FMLA”) and its subsequent amendments;   •   The Arizona Civil Rights Act;
  •   The Arizona Employment Protection Act;   •   The Older Workers Benefit
Protection Act;   •   The Employee Retirement Income Security Act of 1974
(“ERISA”); and/or   •   Any common law or statutory cause of action arising out
of Executive’s employment or termination of employment with the Company.

     This Agreement may be used by the Company to completely bar any action or
suit before any court, arbitral, or administrative body, other than with respect
to any claim under federal, state, local or other law relating to the
obligations under this Agreement. Furthermore, Executive specifically agrees
that, except as set forth herein, he will not be entitled to any further payment
of any kind from the Company or its Board of Directors. Notwithstanding any
provision hereof to the contrary, however, Executive does not release his rights
to indemnification under provisions of the Company’s articles of incorporation,
bylaws or applicable law or to continuing coverage under the Company’s directors
and officers liability insurance policy.
     Executive represents and warrants that he is the sole and lawful owner of
all right, title and interest in and to every claim and other rights that are
being released above and that no other party has received any assignment or
other right of substitution or subrogation to any such claim or right. Executive
also represents that he has the full power and authority to enter into the
waivers and releases set forth in this Agreement. With respect to the foregoing
release, Executive hereby waives all rights or protection under law of any
state, territory, country or any political division thereof, to the extent
applicable, which purports to restrict or govern the granting of waivers and
releases (such foregoing language is not intended to indicate that the law of
any jurisdiction other than Arizona is applicable to this Agreement).
     B. Executive shall deliver to Company any Company property, including any
laptops, computers, equipment, documents, materials, files, or computer files,
or copies, reproductions, duplicates, transcriptions, or replicas thereof,
relating to Company’s business or affairs, which are in Executive’s possession
or control, or of which Executive is aware.

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     C. After the date hereof, Executive hereby agrees to comply with the
“prohibition on securities trading using inside information” and the “treatment
of confidential information” as contained in the Company’s Code of Ethics and
Business Conduct. In addition, Executive hereby agrees to comply with other
provisions of the company’s policies, including the Code of Ethics and Business
Conduct, to the extent such provisions remain relevant to Executive after the
date hereof, particularly with respect to his knowledge of the Company’s
operations and proprietary information. In this regard, the Executive agrees to
comply with the Company’s Insider Trading Policy from the Resignation Date until
such time that he reasonably determines that he no longer is in possession of
non-material public information of the Company (unless otherwise specifically
provided by the Company’s Insider Trading Policy).
     D. Executive acknowledges that in the course of his service with the
Company, he has been allowed to become acquainted with the Company’s business
affairs, information, trade secrets, and other matters which are of a
proprietary or confidential nature, including but not limited to the Company’s
and its affiliates’ operations, business opportunities, price and cost
information, finance, customer information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the “Confidential Information”) concerning the Company’s and its
affiliates’ business. Executive understands and acknowledges that the
Confidential Information is confidential, and he agrees not to disclose such
Confidential Information to anyone outside the Company except to the extent that
(i) Executive is required by order of a court of competent jurisdiction (by
subpoena or similar process) to disclose or discuss any Confidential
Information, provided that in such case, Executive shall promptly inform the
Company of such event, shall cooperate with the Company in attempting to obtain
a protective order or to otherwise restrict such disclosure, and shall only
disclose Confidential Information to the minimum extent necessary to comply with
any such court order; (ii) such Confidential Information becomes generally known
to and available for use in the Company’s industry, other than as a result of
any action or inaction by Executive, directly or indirectly; or (iii) such
information has been published in a form generally available to the public prior
to the date Executive proposes to disclose or use such information. Executive
agrees this covenant shall survive this Agreement and continue to be binding
upon Executive after the expiration or termination of this Agreement. Executive
further agrees that he will not use such Confidential Information in competing,
directly or indirectly, with the Company or provide such Confidential
Information to other party or entity for the purpose of competing with the
Company. Consistent with Section II.B above, as of the date hereof, Executive
will immediately turn over to the Company all Confidential Information,
including papers, documents, writings, electronically stored information, other
property, and all copies of them provided to or created by him during the course
of his service with the Company.
     E. For a period of one (1) year after the Resignation Date, Section 7 of
Executive’s Employment Agreement shall remain in effect and be fully enforceable
against Executive pursuant to the terms thereof.

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III.
     The provisions of this Agreement are severable. This means that if any
provision is invalid, it will not affect the validity of the other provision. If
the scope of any restrictions of this Agreement should ever be deemed to exceed
that permitted by applicable law or be otherwise overbroad, Executive agrees
that a court of competent jurisdiction shall enforce that restriction to the
maximum scope permitted by law under the circumstances.
IV.
     Executive agrees, for a period of two years after the Resignation Date,
that he will not seek nor accept employment or Board of Director service in the
future with the Company or any of its subsidiaries, affiliates, successors, or
divisions.
V.
     By his signature below, Executive affirms that he has been given at least
21 days during which to consider this Agreement. Executive has been advised to
seek legal counsel and his legal counsel has been provided the opportunity to
review and comment on this Agreement prior to signing this Agreement.
VI.
     The parties, by their execution of this Agreement, affirm that the
following statements are true:
     A. The parties have been given the opportunity to, and have, read this
entire Agreement, and have had all questions regarding its meaning answered to
their satisfaction;
     B. The contents of this Agreement are written in a manner understood by the
parties, and they fully understand its content, and understand that it is a FULL
WAIVER AND RELEASE OF ALL CLAIMS;
     C. The parties acknowledge that they enter into this Agreement of their own
free will, that they have not been pressured or coerced in any manner whatsoever
into signing this Agreement, and that they been advised to consult with their
own attorney prior to executing this Agreement;
     D. This Agreement is not to be construed as an admission of liability by
any party; and
     E. The parties shall bear their own costs and attorneys’ fees incurred
herein including, without limitation, any costs or fees incurred in connection
with the negotiation and execution of this Agreement.

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VII.
     The Company and Executive mutually agree not to disparage the other, either
directly or indirectly. However, nothing in this Section precludes either party
from testifying or participating in any legal proceeding in which the party is
required by law to provide information about the other party.
VIII.
     The parties agree that upon the Resignation Date, the parties shall execute
the Re-Affirmation Certificate in substantially the form attached hereto at
Exhibit A and Executive will have a seven (7) days revocation period in which he
can revoke this Agreement following such date (the “Revocation Period”). A
revocation by the Executive must be provided in writing and received before the
end of the Revocation Period. To be effective, the revocation must be received
by the following individual:
Gerald R. Dinkel
White Electronic Designs Corporation
3601 East University Drive, Suite 475
Phoenix, AZ 85034
     This Agreement shall not become enforceable until the foregoing Revocation
Period has expired.
IX.
     Other than as specifically and explicitly set forth herein and in the
Employment Agreement, this Agreement supersedes and replaces all prior
discussions, understandings, and oral agreements between the parties except as
noted herein, and contains the entire agreement between them on the matters
herein contained. This Agreement may not be changed orally, but only by a
written agreement signed by Executive and Company.
X.
     The laws of the State of Arizona will govern and apply to this Agreement.
XI.
     Except as to claims, rights or demands that arise from Executive’s
obligations to Company under this Agreement, the Company, on behalf of itself
and its subsidiaries, affiliated companies, and all their predecessors and
successors hereby release Executive and his attorneys, heirs or assigns,
(collectively the “Released Parties”) from ANY AND ALL KNOWN RIGHTS, CLAIMS,
DEMANDS, CAUSES OF ACTION, OBLIGATIONS, DAMAGES, PENALTIES, FEES, COSTS,
EXPENSES, AND LIABILITIES OF ANY NATURE WHATSOEVER WHICH THE COMPANY HAS, HAD OR
MAY HAVE HAD AGAINST THE RELEASED PARTIES OR ANY OR ALL OF THE RELEASED PARTIES
IN CONNECTION WITH ANY CAUSE OR MATTER

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WHATSOEVER, WHETHER KNOWN OR UNKNOWN TO THE PARTIES AT THE TIME OF EXECUTION OF
THIS AGREEMENT AND EXISTING FROM THE BEGINNING OF TIME TO THE DATE OF THE
EXECUTION OF THIS AGREEMENT AND INCLUDING, WITHOUT LIMITATION, ALL MATTERS
RELATED TO EXECUTIVE’S SERVICE WITH THE COMPANY, WHETHER AS AN EMPLOYEE OR
EXECUTIVE OFFICER.
     Other than with respect to his obligations under this Agreement, this
Agreement may be used by Executive to bar any action or suit before any court,
arbitral, or administrative body with respect to any claim under federal, state,
local or other law.

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The parties execute this Agreement as of the date first written above.

          EXECUTIVE
      /s/ Roger A. Derse       Roger A. Derse              WHITE ELECTRONIC
DESIGNS CORPORATION
      /s/ Gerald R. Dinkel       By: Gerald R. Dinkel      Title:   Chief
Executive Officer       

[SIGNATURE PAGE OF
SEVERANCE AGREEMENT]

 

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EXHIBIT A
Reaffirmation of Separation Agreement and Release of Claims
(NOT TO BE EXECUTED UNTIL THE RESIGNATION DATE, MARCH 1, 2010)
     For the consideration set forth in that certain Separation Agreement and
Release of Claims dated February 22, 2010, between the parties set forth in the
signature lines below (the “Agreement”), Executive and the Company hereby
reaffirm their respective covenants, obligations, representations and releases
contained in this Agreement. Terms not otherwise defined in this Reaffirmation
are defined in the Agreement.
FOR THE SAKE OF CLARITY, BY SIGNING THIS DOCUMENT, THE PARTIES REAFFIRM AND
BRING DOWN ALL RELEASES, WAIVERS AND OBLIGATIONS INCLUDED IN THE AGREEMENT TO
THE DATE HEREOF.
Dated: March 1, 2010
EXECUTIVE:
 
Dated: March 1, 2010
WHITE ELECTRONIC DESIGNS CORPORATION
 
By:
Title: