Document:

TransitionandSeparationAgreement2013-08-23

Exhibit 10.1

TRANSITION AND SEPARATION AGREEMENT

This Transition and Separation Agreement (the “Agreement”) is made by and between Clyde R. Wallin (“Executive”) and Micrel, Incorporated, a California corporation (the “Company”), effective as of the date Executive signs this Agreement (the “Effective Date”), with reference to the following facts:

A.    Executive currently serves as the Chief Financial Officer and Vice President of Finance and Human Resources of the Company.

B.     Executive desires to resign and hereby resigns his employment with the Company as of November 15, 2013 (the “Termination Date”).    

C.    Executive and the Company want to transition Executive’s duties and end their relationship amicably and also to establish the obligations of the parties.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

1.Continued Employment.  Unless Executive is terminated by the Company for Cause (as defined below) or Executive voluntarily resigns from the Company at an earlier date, Executive shall continue his current position, duties, compensation arrangements and benefit plan  eligibility through the Transition Date (as defined below).  “Cause” means (i) theft, dishonesty or falsification of any employment or Company records; (ii) malicious or reckless disclosure of the Company’s confidential or proprietary information; (iii) commission of any immoral or illegal act or any gross or willful misconduct, where the Company’s Board of Directors (“Board”) determines that such act or misconduct has (A) seriously undermined the ability of the Board or management to entrust Executive with important matters or otherwise work effectively with Executive, (B) contributed to the Company’s loss of significant revenues or business opportunities, or (C) significantly and detrimentally effected the business or reputation of the Company or any of its subsidiaries; and/or (iv) the failure or refusal by Executive to follow the reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after Executive’s receipt of reasonable notice in writing of such failure or refusal and an opportunity to correct the problem.
2.    Transition Period.  Unless Executive’s employment with the Company is terminated by the Company for Cause or Executive voluntarily resigns from the Company prior to the Termination Date, during the period of time (the “Transition Period”) commencing on the date determined in the sole discretion of the Company (“Transition Date”) and ending on the Termination Date, Executive shall remain employed by the Company as a senior advisor to the Chief Executive Officer and Executive shall provide transition services in Executive’s areas of expertise and work experience and responsibility and such other duties as shall be assigned by the Chief Executive Officer or other officer of the Company designated by the Chief Executive Officer (“Transition Duties”).  During the Transition Period, Executive shall continue his current compensation arrangements and benefit plan eligibility, and shall continue to work at Company offices during normal business hours, or, at Company’s sole discretion, such reduced workweek as deemed appropriate by the Company.  Executive acknowledges and agrees that, during the Transition Period, Executive may only accept employment with third parties to the extent Executive receives written consent from the Company’s Chief Executive Officer.  Without limiting the foregoing, in the event Company terminates Executive’s employment without Cause prior to the Termination Date, then, subject to the execution of this Agreement and Executive’s delivery to the

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Company of the General Release of Claims attached hereto as Exhibit A (the “Release of Claims”) that becomes effective and irrevocable on or within thirty (30) days following the date of such termination of employment and Executive’s performance of his continuing obligations pursuant to this Agreement and that certain Confidential Information and Invention Assignment Agreement entered into between Executive and the Company effective as of January 12, 2009, as may be amended from time to time (the “Confidentiality Agreement”), the Company shall accelerate Executive’s restricted stock unit and stock option vesting as set forth in Section 4 hereof and pay to Executive in a cash lump sum as soon as administratively practicable after the Release of Claims becomes effective and irrevocable, an amount equal to the amount of base salary Executive would have earned had he remained an employee of the Company through the Termination Date.  Furthermore, Executive agrees that so long as he is, in good faith, available to provide services to the Company after the Termination Date, and if so requested in writing by the Company on or before the Termination Date, Executive shall continue employment with the Company with his current compensation arrangements and benefit plan eligibility for up to three months but no less than one month beyond the Termination Date.  If the Executive agrees to extend his employment as requested by the Company, Executive will be paid for a minimum of at least one month whether or not the Company requires his services for the entire one month period.
3.    Securities Laws.  Executive acknowledges that, while continuing to serve as the Company’s Chief Financial Officer and Vice President of Finance and Human Resources, Executive shall continue to be subject to the requirements of Section 16 of by the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Executive acknowledges that to the extent required by the Exchange Act, Executive will have continuing obligations under Section 16(a) and 16(b) of the Exchange Act to report his transactions in Company common stock for six (6) months following the Transition Date.  Executive hereby agrees not to undertake, directly or indirectly, any reportable transactions with respect to the common stock of the Company held by Executive until the end of such six (6) month period.
4.    Transition Benefit.  
(a)    Accelerated Vesting.  Without admission of any liability, fact or claim, the Company hereby agrees, subject to Executive’s continued employment with the Company through the Termination Date, the execution of this Agreement and Executive’s delivery to the Company of the Release of Claims that becomes effective and irrevocable on or within thirty (30) days following the Termination Date, and Executive’s performance of his continuing obligations pursuant to this Agreement and the Confidentiality Agreement to provide the acceleration of the vesting of each stock option and restricted stock unit held by Executive to the extent such stock option or restricted stock unit would have vested had Executive’s employment with the Company continued through January 13, 2014, such acceleration to be effective as of the date the Release of Claims first becomes irrevocable.  Executive’s stock options shall remain exercisable until the three month anniversary of the date the Release of Claims first becomes irrevocable.  Any stock options held by Executive but not exercised prior to the three month anniversary of the date Executive terminates employment with the Company will thereupon automatically terminate.        
(b)    Sole Separation Benefit.  Executive agrees that the accelerated vesting provided by this Section 4 is not required under the Company’s normal policies and procedures and is provided solely in connection with this Agreement and the Release of Claims.  Executive acknowledges and agrees that the accelerated vesting referenced in this Section 4 constitutes adequate and valuable consideration, in and of itself, for the promises contained in this Agreement and the Release of Claims.

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5.    Final Paycheck.  Executive acknowledges and agrees that, unless Executive’s employment with the Company is terminated earlier by the Company for Cause or by Executive for any reason, Executive’s status as an employee of the Company will end effective as of the Termination Date.  As soon as administratively practicable on or after the Termination Date, the Company will pay Executive all accrued but unpaid base salary and all accrued and unused vacation earned through the Termination Date, subject to standard payroll deductions and withholdings.  Following the Termination Date, Executive may elect to receive continued healthcare coverage pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
6.    Full Payment.  Executive acknowledges that the payment and arrangements herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and the termination thereof.  
7.    Executive’s Release of the Company.  Executive understands that by agreeing to the release provided by this Section 7, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of its employees or other agents for any reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement.
(a)    On behalf of Executive and Executive’s heirs, assigns, executors, administrators, trusts, spouse and estate, Executive hereby releases and forever discharges the “Releasees” hereunder, consisting of the Company, and each of its owners, affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which Executive now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to Executive’s hire, employment, remuneration or resignation by the Releasees, or any of them, Claims arising under federal, state, or local laws relating to employment, Claims of any kind that may be brought in any court or administrative agency, including any Claims arising under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000 et seq.; the Equal Pay Act, 29 U.S.C. § 206(d); the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq.; the False Claims Act, 31 U.S.C. § 3729 et seq.; the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C.  § 2101 et seq.; the Fair Labor Standards Act, 29 U.S.C. § 215 et seq.; the Sarbanes-Oxley Act of 2002; the California Labor Code; the employment and civil rights laws of California; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

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(b)    Notwithstanding the generality of the foregoing, Executive does not release the following claims:
(i)    Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; 
(ii)    Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;
(iii)    Claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA;
(iv)    Claims to any benefit entitlements vested as the date of Executive’s employment termination, pursuant to written terms of any Company employee benefit plan;
(v)    Claims for indemnification under the Company’s Bylaws, California Labor Code Section 2802 or any other applicable law; and
(vi)    Executive’s right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that Executive does release Executive’s right to secure any damages for alleged discriminatory treatment.
(c)    EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
8.    Non-Disparagement, Transition, Transfer of Company Property and Limitations on Service.  Executive further agrees that:
(a)    Non-Disparagement.  Executive agrees that he shall not disparage, criticize or defame the Company, its affiliates and their respective affiliates, directors, officers, agents, partners, stockholders, employees, products, services, technology or business, either publicly or privately.  The Company agrees that it shall not, and it shall instruct its officers and members of its Board of Directors to not, disparage, criticize or defame Executive, either publicly or privately.  Nothing in this Section 8(a) shall have application to any evidence or testimony required by any court, arbitrator or government agency.

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(b)    Transition.  Each of the Company and Executive shall use their respective reasonable efforts to cooperate with each other in good faith to facilitate a smooth transition of Executive’s duties to other executive(s) of the Company.
(c)    Transfer of Company Property.  On or before the Termination Date, Executive shall turn over to the Company all files, memoranda, records, and other documents, and any other physical or personal property which are the property of the Company and which he has in his possession, custody or control on the Termination Date.
9.    Executive Representations.  Executive warrants and represents that (a) he has not filed or authorized the filing of any complaints, charges or lawsuits against the Company or any affiliate of the Company with any governmental agency or court, and that if, unbeknownst to Executive, such a complaint, charge or lawsuit has been filed on his behalf, he will immediately cause it to be withdrawn and dismissed, (b) he has reported all hours worked as of the date of this Agreement and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to him, except as provided in this Agreement, (c) he has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law, (d) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject, and (e) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms.  
10.    No Assignment by Executive.  Executive warrants and represents that no portion of any of the matters released herein, and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to any other person, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law or otherwise.  If any claim, action, demand or suit should be made or instituted against the Company or any other Releasee because of any actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company and all other Releasees against such claim, action, suit or demand, including necessary expenses of investigation, attorneys’ fees and costs.  In the event of Executive’s death, this Agreement shall inure to the benefit of Executive and Executive’s executors, administrators, heirs, distributees, devisees, and legatees.  None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only upon Executive’s death by will or operation of law.  
11.    Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California or, where applicable, United States federal law, in each case, without regard to any conflicts of laws provisions or those of any state other than California.
12.    Miscellaneous.  This Agreement, collectively with the Confidentiality Agreement, the Release of Claims and the agreements evidencing the outstanding equity awards, constitutes the entire agreement between the parties with regard to the subject matter hereof and supersedes, in their entirety, any other agreements between Executive and the Company with regard to the subject matter hereof. Executive acknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations, discussions, representations or agreements.  This Agreement may be modified only in writing, and such writing 

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must be signed by Executive and a duly authorized officer of the Company or member of the Board and recited that it is intended to modify this Agreement.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.  
13.    Company Assignment and Successors.  The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise).  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns, personnel and legal representatives.    
14.    Maintaining Confidential Information.  Executive reaffirms his obligations under his Confidentiality Agreement.  
15.    Executive’s Cooperation.  After the Termination Date, Executive shall cooperate with the Company and its affiliates, upon the Company’s reasonable request, with respect to any internal investigation or administrative, regulatory or judicial proceeding involving matters within the scope of Executive’s duties and responsibilities to the Company or its affiliates during his employment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s reasonable request to give testimony without requiring service of a subpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come into Executive’s possession during his employment); provided, however, that any such request by the Company shall not be unduly burdensome or interfere with Executive’s personal schedule or ability to engage in gainful employment.   

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have caused this Transition and Separation Agreement to be duly executed and delivered as of the date indicated next to their respective signatures below.

DATED:  August 23, 2013
/s/ Clyde R. Wallin____________
Clyde R. Wallin

Micrel, Incorporated
    
DATED:  August 23, 2013

By: /s/ Raymond D. Zinn_______
Raymond D. Zinn
President and Chief Executive Officer

                        

                        

 

EXHIBIT A

GENERAL RELEASE OF CLAIMS

This General Release of Claims (“Release”) is entered into as of _________________, 2013, between Clyde R. Wallin (“Executive”) and Micrel, Incorporated, a California corporation (the “Company”) (collectively referred to herein as the “Parties”), effective eight (8) days after Executive’s signature hereto (the “Effective Date”), unless Executive revokes his acceptance of this Release as provided in Paragraph 1(c), below.

1.    Executive’s Release of the Company.  Executive understands that by agreeing to this Release, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of its employees or other agents for any reason whatsoever based on anything that has occurred as of the date Executive signs this Release.
(a)    On behalf of Executive and Executive’s heirs, assigns, executors, administrators, trusts, spouse and estate, Executive hereby releases and forever discharges the “Releasees” hereunder, consisting of the Company, and each of its owners, affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which Executive now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to Executive’s hire, employment, remuneration or resignation by the Releasees, or any of them, including Claims arising under federal, state, or local laws relating to employment, Claims of any kind that may be brought in any court or administrative agency, any Claims arising under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621, et seq.; Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000 et seq.; the Equal Pay Act, 29 U.S.C. § 206(d); the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq.; the False Claims Act , 31 U.S.C. § 3729 et seq.; the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C.  § 2101 et seq. the Fair Labor Standards Act, 29 U.S.C. § 215 et seq., the Sarbanes-Oxley Act of 2002; the California Labor Code; the employment and civil rights laws of California; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees. 
(b)    Notwithstanding the generality of the foregoing, Executive does not release the following claims:
(i)    Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; 

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(ii)    Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;
(iii)    Claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA;
(iv)    Claims to any benefit entitlements vested as the date of Executive’s employment termination, pursuant to written terms of any Company employee benefit plan;
(v)    Claims for indemnification under the Company’s Bylaws, California Labor Code Section 2802 or any other applicable law; and
(vi)    Executive’s right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that Executive does release Executive’s right to secure any damages for alleged discriminatory treatment.
(c)    In accordance with the Older Workers Benefit Protection Act of 1990, Executive has been advised of the following:
(i)    Executive has the right to consult with an attorney before signing this Release;
(ii)    Executive has been given at least twenty-one (21) days to consider this Release;
(iii)    Executive has seven (7) days after signing this Release to revoke it, and Executive will not receive the severance benefits provided by Section 4 of that certain Transition and Separation Agreement entered into between the Parties as of August 23, 2013 (the “Transition and Separation Agreement”) unless and until such seven (7) day period has expired.  If Executive wishes to revoke this Release, Executive must deliver notice of Executive’s revocation in writing, no later than 5:00 p.m. Pacific Time on the 7th day following Executive’s execution of this Release to Micrel General Counsel, fax: 408-474-1077.
(d)    EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” 

BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

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2.    Executive Representations.  Executive represents and warrants that:
(a)    Executive has returned to the Company all Company property in Executive’s possession;
(b)    Executive is not owed wages, commissions, bonuses or other compensation, other than the accelerated vesting which provided in Section 4 of the Transition and Separation Agreement;
(c)    During the course of Executive’s employment Executive did not sustain any injuries for which Executive might be entitled to compensation pursuant to worker’s compensation law or Executive has disclosed any injuries of which he is currently, reasonably aware for which he might be entitled to compensation pursuant to worker’s compensation law;
(d)    From the date Executive executed the Transition and Separation Agreement through the date Executive executes this Release, Executive has not made any disparaging comments about the Company, nor will Executive do so in the future; and
(e)    Executive has not initiated any adversarial proceedings of any kind against the Company or against any other person or entity released herein, nor will Executive do so in the future, except as specifically allowed by this Release.
3.    Maintaining Confidential Information.  Executive reaffirms his obligations under that certain that certain Confidential Information and Invention Assignment Agreement entered into between Executive and the Company effective as of January 12, 2009, as may be amended from time to time (the “Confidentiality Agreement”).    
4.    Cooperation with the Company.  Executive reaffirms his obligations to cooperate with the Company pursuant to Section 14 of the Transition and Separation Agreement.  
5.    Severability.  The provisions of this Release are severable.  If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.
6.    Choice of Law.  This Release shall in all respects be governed and construed in accordance with the laws of the State of California, including all matters of construction, validity and performance, without regard to conflicts of law principles.
7.    Integration Clause.  This Release and the Transition and Separation Agreement contain the Parties’ entire agreement with regard to the transition and separation of Executive’s employment, and supersede and replace any prior agreements as to those matters, whether oral or written. This Release may not be changed or modified, in whole or in part, except by an instrument in writing signed by Executive and the Chief Executive Officer of the Company.
8.    Execution in Counterparts.  This Release may be executed in counterparts with the same force and effectiveness as though executed in a single document.  Facsimile signatures shall have the same force and effectiveness as original signatures.
9.    Intent to be Bound.  The Parties have carefully read this Release in its entirety; fully understand and agree to its terms and provisions; and intend and agree that it is final and binding on all Parties. 

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IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed the foregoing on the dates shown below.

                    

	
						
	EXECUTIVE
	 
	 
	MICREL, INCORPORATED

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 

	Clyde R. Wallin
	 
	 
	By: Raymond D. Zinn

	 
	 
	 
	 
	Title:  President and Chief Financial Officer

	 
	 
	 
	 
	 
	 

	Date:
	 
	 
	 
	Date:
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

                        

                    

A-4hisints1ex101082013.htm

Exhibit 10.1

 

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is made and entered into by and between HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC. a Delaware corporation (the “Purchaser”) and GRAN NEVADA Beverage, Inc., a New York corporation (the “Seller”); the Seller and the Purchaser being sometimes hereinafter collectively referred to as (the “Parties”).

PREAMBLE:

WHEREAS, the Purchaser desires to purchase from the Seller, an exclusive license to sell and distribute sellers all natural drink products (the “Product”); throughout the United States, Mexico and Canada.

WHEREAS, the Seller is agreeable to grant such license, provided that the Purchaser agrees to enter into arrangements to set up its operations in accordance with Industry standards and sellers specifications;

NOW THEREFORE, in consideration of the premises, as well as for the sum of $10.00 and other good and valuable consideration, the value of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

WITNESSETH:

ARTICLE ONE

SALE

1.1            Purchase Price.

Subject to the conditions hereinafter set forth, the Seller hereby sells to the Purchaser and the Purchaser hereby purchases from the Seller, an exclusive license to sell and distribute the Sellers natural drink products,  as well as certain other products in the future (the “Products”), for following royalty payments which are payable every 6 months.

(a)           Royalty Payments.

Ÿ         Sales of less than $1 million will pay five percent (5%) of the gross sales prices defined as final invoiced price of goods sold

Ÿ  Over $1 million to $2.5 million will pay three percent (3%) of gross sales price

Ÿ  Over $2.5 million to $5 million will pay two and one half percent (2.5%) of gross sales price

Ÿ  Over $5 million will pay two (2%) percent of gross sales price

 

 

  

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(b)           Form of Payment.

Ÿ            Year 1: 100% Stock

Ÿ            Year 2: 75% Stock; 25% Cash

Ÿ            Year 3: 50% Stock; 50% Cash

Ÿ            Year 4: Purchaser’s option

Ÿ            Year 5: Purchaser’s option

1.2            Term.

The term of the Agreement shall be for an initial period of five (5) years.  At the end of the fifth year, Seller shall grant to Purchaser an option to renew the Agreement for an additional five (5) year term unless a 90 day notice to terminate has been provided by either party to this Agreement.

1.3            Condition Precedent.

The obligations of the Parties assumed hereby are subject to the condition that the Purchaser is operating in accordance with sellers specifications, subject to periodic inspections at Purchasers place of business to verify industry standards and specifications are met.

ARTICLE TWO

SELLERS REPRESENTATIONS

2.1            Exclusive License.

Seller hereby represents to Purchaser as an inducement for entry into this agreement, that Seller shall not grant a license to sell and distribute its products to any individual or any entity without the prior written consent of Purchaser. The Parties hereby agree that in the event a third party license is granted, Purchaser and Seller shall split all royalties on an equal (50/50) basis.

2.2            Buy-Out Provision.

In the event the Seller’s brand is sold during the term of this Agreement, the Parties agree as follows:

(a)           Year 1: If sold for up to $1 million, Purchaser receives nothing and if sold for over $1 million, Purchaser receives two and one half percent (2.5%) of the final sales price.

(b.)           Year 2: If sold for $1 million to $5 million, Purchaser would be entitled to three percent (3%) and if sold for more than $5 million, Purchaser would be entitled to five percent (5%) of the final sales price.

(c.)           Year 3: If sold for $5 million to $10 million, Purchaser would receive five percent (5%) and if sold for $10 million or more, Purchaser would be entitled to seven and one half percent (7.5%) of the final sales price.

 

 

  

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(d.)           Year 4: If sold for $10 million to $20 million then Purchaser would receive ten percent (10%) and if sold for greater than $20 million, than Purchaser would be entitled to twelve and one half percent (12.5%) of the final sales price.

(e.)           Year 5: If sold for up to $20 million plus, Purchaser would receive fifteen percent (15%) of the final purchase price.

 

	
  

	
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Final purchase price is defined as the price paid by buyer less all outstanding  debt and payables of seller.

2.3            Conditions.

As a material inducement for the Purchaser to enter into this Agreement, Seller hereby makes the following acknowledgments and representations:

(a)           That, it owns the tradenames to the Products described herein.

(b)           The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of the Agreement will not result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, other agreement or instrument to which the Seller is a party or by which it or its assets are bound; or to the best of Seller's  knowledge, any applicable regulation, judgment, order or decree of any governmental instrumentality or court, domestic or foreign, having jurisdiction over the Seller or its properties;

(c)           There are presently no contingent liabilities, factual circumstances, threatened or pending litigation, contractually assumed obligations or unasserted possible claims which might result in a material adverse change with respect to the premises being purchased herein;

(d)           The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not require the consent, authority or approval of any other person or entity except such as have been obtained;

(e)           To the best of Sellers knowledge and belief no transactions have been entered into either by or on behalf of the Seller, other than in the ordinary course of business nor have any acts been performed which would adversely affect goodwill with respect to the premises being purchased herein;

(f)           The entering into of this Agreement and the performance thereof has been duly and validly authorized by all required corporate action, and does not require any consents, corporate, governmental or otherwise, other than such as have been unconditionally obtained;

(g)           The trademark/tradename, documentation, a copy of which is annexed hereto and made a part hereof as Exhibit A accurately reflects the current ownership and registration of the Seller and no additional information is required in order to render the information so provided not misleading;

 

 

  

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(h)           As of the date of the execution of this written Agreement no events have occurred nor have any facts been discovered which materially alter in detrimental manner the trademarks of the Seller;

(i)           The foregoing representations and warranties do not contain any untrue statements nor do they fail to disclose information necessary in order to render the information provided not misleading;

(j)           The foregoing representations and warranties shall also be true, complete and accurate on and as of the Closing Date, as if initially provided on such date, the Seller hereby covenanting and agreeing to do all things required therefore (including within such obligation the abstinence from any actions, the performance of which would render any of the foregoing representations and warranties inaccurate, as of the Closing Date);

2.4            Indemnification.

Seller acknowledges that Purchaser shall be indemnified against any and all losses arising from infringement of Sellers trademark rights.  Seller further acknowledges that it will aggressively defend such trademark infringement to the extent necessary to reasonably protect Purchasers interests as set forth in this Agreement.

ARTICLE THREE

PURCHASERS REPRESENTATIONS

3.1            Operations.

Purchaser acknowledges that is shall set up and maintain its operations in accordance with industry standards and seller’s specifications during the term of this Agreement.  Purchaser shall make its operations accessible for periodic inspections by Seller representatives. Purchaser must outperform each previous year for five years with initial year’s sales being the baseline.

3.2            Vendor Debt.

Upon licensing the sellers brand, the Purchaser shall pay all existing vendor debt including financing or credit facilities used for inventory and production prior to assuming the revenues from sellers brand.

ARTICLE FOUR

MISCELLANEOUS

4.1            Notices.

 

 

  

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All notices, demands or other communications hereunder shall be in writing, and unless otherwise provided, shall be deemed to have been duly given on the first business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as indicated on Exhibit A annexed hereto and made a part hereof.

4.2            Termination.

Either party may terminate this Agreement upon providing written, faxed, or emailed notice.

(a.)           From Purchaser to Seller: All royalties owed must be paid in full by termination date;

(b.)           From Seller to Purchaser: If terminated after year 3, Seller must honor the terms of the buy-out provision for the remainder of the time left on the original Agreement. For example, if Seller terminates the licensing agreement in year 3, Seller percentages set forth in Section 2.2 hereof for the remaining 2 years of the original Agreement.

4.3            Amendment.

No modification, waiver, amendment, discharge of change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought.

4.4            Merger.

This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein.  All prior agreements, whether written or oral, are merged herein and shall be of no force or effect.

4.5            Survival.

The several representations and warranties of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party.

4.6            Severability.

If any provision or any portion of any provision of this Agreement, or the application of such provision or any portion thereof to any person or circumstance, shall be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby.

4.7            Governing Law and Venue.

 

 

  

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This Agreement shall be construed in accordance with the laws of the State of Florida and any proceeding arising between the Parties in any matter pertaining or related to this Agreement shall, to the extend permitted by law, be held in Long Island City, New York.

4.8            Litigation.

In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, trials and  appeals, whether or not litigation is initiated.

4.9            Benefit of Agreement.

The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, estate, heirs and legatees.

4.10            Captions.

The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof.

4.11            Number and Gender.

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require.

4.12            Further Assurances.

The Parties hereby agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement.

4.13            Status.

Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, employer-employee or lessor-lessee relationship; but, rather, the relationship established hereby is that of purchaser and seller.

4.14            Counterparts.

This Agreement may be executed in any number of counterparts.  All executed counterparts shall constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart.

 

 

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement, effective as of the ____ day of May, 2013.

 

 

 

	 
Signed, Sealed & Delivered

In Our Presence:

	 	GRAN NEVADA Beverage, Inc. 
	 	 	 
	 	 	 
	________________ 	By: 	__________________ 
	 	 	_____________, President 
	________________ 	 	 
	 	 	 
	 	 	 
	 	 	 
HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC.

	________________	 	 
	 	 	 
	________________	By: 	___________________ 
	 	 	Fernando Oswaldo Leonzo, CEO 

 

 

 

  

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