exv10w13






 




    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 resignations.
    Executive agrees he did not resign as a result of a disagreement
    of the type referred to in Item 5.02(a)(1) of
    Form 8-K.



 



    H. By December 31, 2008, Executive’s Employment
    Agreement must be amended to either comply with
    Section 409A of the Internal Revenue Code
    (“Code”) or to qualify for an exception to the
    requirements of Code Section 409A. To qualify for an
    exception to the requirements of Code Section 409A, Executive
    and the Company hereby amend Executive’s Employment
    Agreement by the following:



 



    1. Section 5(f) shall be amended by adding the word
    “material” between the words “A decrease” in
    paragraph (ii) and by adding the following language to the
    end thereof: “Executive shall give written notice of his
    intent to terminate his employment under this Section 5(f)
    and the facts underlying his reasons for termination, and during
    the 10 days thereafter, the Company shall have an
    opportunity to cure the facts giving rise to the
    Executive’s reasons for termination of employment.”



 



    2. Section 6 of the Employment Agreement is amended by
    adding the following Section 6(h): “Notwithstanding
    any provision in this Agreement to the contrary, any severance
    payment paid to you under this Section 6 shall be paid in a
    lump sum within 30 days following the date of your
    termination of employment.”



 



    I. For a period of six (6) months following the
    Termination Date, Executive agrees to provide consultation and
    advice, on an as needed and as requested basis, as an
    independent contractor, to assist in the transition of
    Executive’s duties to other Company employees. Executive
    shall be paid based on an hourly rate of $250 for any such
    services.




    

    2








 







    II.



 



    In consideration of the 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 EMPLOYMENT WITH THE COMPANY, THE EMPLOYMENT
    AGREEMENT AND THE TERMINATION OF HIS EMPLOYMENT.



 



    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 or termination from employment,
    with the Company including, BUT NOT LIMITED TO, any claim
    or other proceeding arising under:



 


			
	 	    • 
	
    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”);

	 
	 	    • 
	
    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”);

	 
	 	    • 
	
    The Arizona Civil Rights Act;

	 
	 	    • 
	
    The Arizona Employment 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 to completely bar any action or suit
    before any court, arbitral, or administrative body with respect
    to any claim under federal, state, local or other law relating
    to this Agreement or to Executive’s employment
    and/or
    termination of employment with Company or its subsidiaries,
    affiliates, related entities, predecessors, parents or
    divisions. Furthermore, Executive specifically agrees that he
    will not be entitled to any further payment of any kind
    following any future “Change in Control” as defined in
    the Employment Agreement. 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.



 



    B. Executive shall deliver to Company any Company property,
    including any 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.



 



    C. Executive hereby agrees to comply with the all of the
    restrictions and requirements in Sections 4, 7 and 14 of
    his Employment Agreement.



 




    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




    

    3








 






    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 that he will not seek nor accept employment 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 prior to
    signing this Agreement.



 




    VI.



 



    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. The Company agrees to
    issue a press release in the form attached hereto as
    Exhibit A to announce this Agreement.



 




    VII.



 



    Executive may revoke this Agreement at any time within seven
    (7) days following his execution of the Agreement. Such
    revocation must be provided in writing and received during the
    seven (7) day revocation period. To be effective, the
    revocation must be received by the following individual:



 



    Roger A. Derse

    Chief Financial Officer

    White Electronic Designs Corporation

    3601 East University Drive, Suite 475

    Phoenix AZ 85034



 



    This Agreement shall not become effective or enforceable until
    the foregoing revocation period has expired.



 




    VIII.



 



    Executive agrees that all requests for employment verification
    with the Company be directed to the Company’s Chief
    Financial Officer. The Company agrees that it will provide only
    Executive’s position, dates of employment and the fact that
    he resigned, in response to such employment verification
    requests.



 




    IX.



 



    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 apply to this Agreement.



 




    XI.



 



    The Company intends that the payments to which Executive is
    entitled under this Agreement comply with the short-term
    deferral exception to the requirements of Code Section 409A
    as defined in Treasury
    Regulation Section 1.409A-1(b)(4).
    In order to meet the requirements of the short-term deferral
    exception, despite any other provision of this Agreement to the
    contrary, such payment shall be paid at the time stated in
    Section 6(h) of the Employment Agreement and in no event
    later than March 15, 2009. In addition, the Company intends
    that the payment of COBRA premiums pursuant to
    Section I.B., the payment of certain outplacement expenses
    pursuant to Section I.C. and the payment of certain legal
    fees pursuant to Section I.D., fit within the exception to
    Section 409A for certain reimbursements as defined in
    Treasury
    Regulation Section 1.409A-1(b)(9)(v).




    

    4








 







    XII.



 



    Except as otherwise provided herein, the Company, on behalf of
    itself and its subsidiaries, affiliated companies, and all their
    predecessors and successors hereby release Executive and his
    heirs or assigns, (collectively the “Released
    Parties”) from ANY AND ALL 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 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 EMPLOYMENT WITH THE COMPANY, THE EMPLOYMENT
    AGREEMENT AND THE TERMINATION OF HIS EMPLOYMENT.



 



    By signing this Agreement, the Company agrees to FULLY WAIVE
    AND RELEASE ALL CLAIMS.



 



    This Agreement may be used to completely bar any action or suit
    before any court, arbitral, or administrative body with respect
    to any claim under federal, state, local or other law relating
    to this Agreement or to Executive’s employment
    and/or
    termination of employment with Company or its subsidiaries,
    affiliates, related entities, predecessors, parents or divisions.



 



    /s/  Hamid
    R. Shokrgozar








    Hamid R. Shokrgozar



 



    Date:          



 



    WHITE ELECTRONIC DESIGNS CORPORATION



 



    /s/  Edward
    A. White








    Edward A. White



 



    Date:          




    

    5